Detailed Stock Market Guide for Beginner Investors
We all know that in the parlance of the stock market, you own a share means you have ownership in the company. In such a situation, if a company has issued 100 shares and you have only one share, it means that you have 1% stake in the company. The big question is how to invest in stocks and how to invest in share market? We also have to understand what is share market, how to invest in share market and how to buy shares in India. Let us take a look at the equity market and know how shares are bought in the Indian equity market.
What is stock market and is it different from stock market?
The stock market is a common platform for buyers and sellers of shares. Before the introduction of BOLT in 1995, people used to do transactions standing in the trade ring. Nowadays all trading takes place from a broker’s office or via the Internet at computer terminals. Stock market and stock market are both names of the same platform.
Basics of share market
Before starting investing with the basics of the Indian stock market, it is important to know what the stock market is and how it works. It is a place where shares of various companies are traded. There are two primary exchanges in India – National Stock Exchange (NSE) and Bombay Stock Exchange (BAC). Investing is the key to your safety and secure future. However, investing in ordinary and old financial instruments is not enough to avoid the effects of inflation. The stock market offers a lucrative opportunity to buy and trade securities in the form of stock options to get some extra income from your investments. Angel Broking gives an opportunity to every keen investor to understand the modalities of the stock market by providing information about the fundamentals of the stock market, how to trade, types of financial instruments and successful trading strategies. Helps him to become a more sensible investor than a normal investor so that the investor can get better returns through investment.
What is the difference between primary markets and secondary markets?
When a company comes out with an initial public offering (IPO) it is called a primary market. The general purpose of an IPO is to list a stock on the stock exchange. Once the stock is listed, then trading starts in the second market. Buying and selling shares is like buying and selling any other commodity.
How are the prices of shares decided in the stock market and who determines them?
Understanding the basics of share trading, it is important for us to know that the market determines the price of the shares. Usually the value of shares increases when the company is growing very fast or making very good profits or the company has got new orders. As the demand for a stock increases, more and more investors want to buy that stock at higher prices. In this way the price of that share increases. The share price is dependent on demand and supply.
What are stock indexes?
If you want to know the basics of Indian stock market, then it is important for you to know that companies list their shares on Indian stock exchanges and some of these similar stocks are grouped together to form an index. It can be classified on the basis of company size, industry, market capitalization or other categories. BSE Sensex comprises 30 stocks and NSE comprises 50 stocks. Others include sector indexes like Bankex, BSE Midcap or BSE Smallcap etc.
What is offline trading and what is online trading?
How can shares be bought offline and online? Online trading means you can buy or sell shares through the internet from the comfort of your office or your home. You just need to log in to your demat account and you can buy and sell shares. To trade offline, you need to visit the broker’s office or telephone the broker to ask to trade.
What is the role of a broker in the stock market?
Broker i.e. broker helps you in buying and selling of shares through trade. The broker usually helps the buyers find the seller and the sellers to find the buyer. Most brokers give advice on which stocks to buy, when to sell and how to invest money in the stock market for beginners. They also help you to trade in the stock market. The broker is given a fixed amount as brokerage for their services.
Can anyone buy and sell shares in the stock market?
Any person who agrees to all the terms and conditions can buy and sell shares in the market. For this you need to open a trading account through a broker. Buying and selling of shares becomes possible after opening a trading account.
Is trading account same as demat account?
There is an important difference between the two. You buy and sell shares through a trading account. Shares are kept safe in a demat account. When you buy shares through your trading account, money is debited from your account and money is credited to your demat account. When you sell your shares, the exact opposite happens.
What is meant by trading and investing?
Trading refers to short term trade buying and selling of shares, whereas investing refers to long term buying of shares. A trader normally tries to make quick money while the investor tries to buy a good stock in the stock market and waits for the stock price to rise.
What is Rolling Settlement?
Every order issued for the stock exchange is required to be settled. Under this method the buyers get their shares and sellers get the proceeds from the sale. Settlement is the process in which buyers buy their shares and sellers get their money. Rolling settlement occurs when all such transactions are settled at the end of the day. In other words, the buyer has to pay for his purchase and the seller delivers the sold shares to the buyer within a day through the stock exchange. The stock markets follow the T+2 mode of settlement, which means that the transaction has to be completed within a day and the trade needs to be settled within an additional two working days in addition to the first day.
What is SEBI?
SEBI means Securities and Exchange Board of India. Since investing in the stock market involves risk, a market regulator is required. SEBI is officially conferred such powers and is given the responsibility to develop and regulate the markets. Its basic objectives include protecting the interests of investors, developing the stock market and regulating its functioning.
Are equity market and derivatives market same?
Both the equity market and the derivative market are part of the overall stock market. The difference lies in the turnover products. Equity market deals with shares and shares whereas derivative market deals with trading in futures and options (F&O). The F&O market is based on an underlying asset such as equity shares.
What is fundamental and technical analysis?
Fundamental analysis is done to understand a company’s business, its growth prospects, its profitability, the nature of its debt. Technical analysis focuses more on charts and patterns and tries to trace past patterns to apply for the future. does. Fundamentals are used more by investors whereas technical analysis is used more by traders.
How to invest in stock market in India with little money?
There is no minimum investment required as you can also buy one share of a company. If you buy a stock of market value of Rs 100 and in such a situation you buy only one share then you have to invest only Rs 100. Of course, you will have to pay brokerage and notional charges in addition.
Why do we have to pay statutory fees to the broker?
Statutory charges like GST, Stamp Duty and STT are levied by the Central or State Government. Brokers do not get the benefit of these. The broker collects these only on his behalf and deposits them with the concerned government.
About the Author- Gaurav Heera is a stock market analyst & trainer with many years of experience in the field. He also heads DelhiCourses, an institute known for its best Technical Analysis Course in Delhi.
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