DETAILED STOCK MARKET GUIDE FOR BEGINNERS
We all understand that a share in market parlance is part ownership in a company. So if a company has issued 100 shares and you own 1 share then you own 1% stake in the company. The big question is how to invest in shares and how to invest in the share market? Let us also grasp what is stock market, how to invest in share market and how to buy shares in India. Let us also look at equity markets and how to buy shares in Indian equity market.
What is the Stock Market and is it Different from the Share Market?
A stock market is a gathering of buyers and sellers of stocks in a single platform. Before BOLT was introduced in 1995, people used to trade standing in the trading ring. Nowadays, all trading happens on computer terminals at a broker’s office or through the internet. Share market and stock market is one and the same thing.
Share Market Basics
Before starting to invest in stocks, it is important to learn about what the share market is and how it works. It is where shares of different companies are traded. In India, there are two primary exchanges; the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Investment is a key to your safe and secured future. However, to overcome the impact of inflation, investments in plain old financial instruments does not seem to be adequate. To get something extra out of your investments, Share market offers the lucrative opportunity of purchase and trade of securities such as stocks and options..
What is the Difference Between Primary Markets and Secondary Markets?
When a company comes out with an initial public offer (IPO) it is called the primary market. The normal purpose of an IPO is to list the stock in the share market. Once the share gets listed it starts trading in the secondary market. Buying and selling shares is largely like buying and selling any other commodity.
What is Offline Trading and What is Online Trading?
How to purchase shares offline and how to purchase shares online? Online trading is all about buying and selling shares on the internet sitting in the comfort of your office or your home. You just need to log into your trading account and you can buy and sell shares. Offline trading is trading by visiting your broker’s office or by telephoning your broker.
What is the Role of a Broker in the Share Market?
The broker helps you execute your buy and sell trades. Brokers typically help buyers find sellers and sellers find buyers. Most brokers will also advise you on what stocks to buy, what stocks to sell and how to invest money in share markets for beginners. They will also assist you in how to trade in stock market. For that service, the broker is paid brokerage.
Can Anybody Buy and Sell Shares in the Share Market?
Any person who is competent to enter into a contract can buy and sell shares in the market. You need to open a trading account with a broker and you can buy and sell shares in the stock market after the trading account is opened?
Is the Trading Account Same as the Demat Account?
There is an important difference between the two. Trading account is where you execute your buy and sell trades. The demat account is where your shares are held in custody. When you buy shares in your trading account, your bank account gets debited and your demat account get credited. The reverse is true when you sell shares.
What is Meant by Trading and Investment?
The fundamental difference is that trading refers to short term buying and selling of shares whereas investment refers to long term buying of shares. A trader normally tries to churn the money rapidly whereas the investor tries to buy a good stock in the sharemarket and waits for the stock price to appreciate.
What is SEBI?
SEBI refers to Securities and Exchange Board of India. Because the bourses have inherent risks, a market regulator is required. The SEBI is provided with this power and has the responsibility of developing as well as regulating the markets. The basic objectives include protecting investor interest, developing the share market, and regulating it’s working.
What is fundamental and technical analysis?
Fundamental analysis is about understanding the business of the company, its growth prospects, its profitability, its debt etc.Technical analysis focuses more on charts and patterns and tries to find out past patterns to apply for the future. Fundamentals are used more by investors while technicals are used more by traders.
How to Invest with Little Money in India in the Share Market?
There is no minimum investment required as you can even buy 1 share of a company. So if you buy a stock with a market price of Rs.100/- and you just buy 1 share then you just need to invest Rs.100. Of course, brokerage and statutory charges will be extra.
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