Basics of Share Market.
What is share market?
It’s never too early or too late to start investing. But if you’ve never invested before, how do you get started?
Also known as the equity market, the share market is one of the most vital components of a free-market economy. It provides companies with access to capital in exchange for giving investors a slice of ownership.
Primary Market: where the first sale (or offer) of stock by a private company to the public happens. Learn more about initial public offerings (IPOs).
Secondary Market: where any subsequent buying or selling – often called trading – of a company’s stock takes place.
There are many different players associated with the share market, including stockbrokers, traders, stock analysts, portfolio managers and investment bankers. Each has a unique role, but many of the roles are intertwined and depend on each other to make the market run effectively.
The share market allows companies to raise money by offering stock shares and corporate bonds. It lets investors participate in the financial achievements of the companies, making money through. Dividends are cuts of the company’s profits as they may payouts.
HOW TO BUY SHARES ONLINE?
There are 5 steps by which you can buy shares online.
Obtain a PAN card
You have to obtain a PAN card. Obtaining a PAN number is a primary requirement for entering any form of financial transactions across our country.
Open an operative Demat account
To facilitate the easier transition of buying and selling shares, you need to necessarily open a valid Demat account.
Get yourself a broker
If you are directly transacting with stocks or shares by going to a broker’s office, you will definitely have a broker who gives you guidance on the day to day aspects of the share trading. These individuals are certified by the SEBI board (Securities Exchange Board of India) and given license to act as brokers.
Depository Participant or DP
There are 2 types of Depository Participant in India. These are NSDL (National Securities Depository Limited and CDSL (Central Securities Depository Limited). The DP’s or Depository Participant help you to store the shares you hold. They provide you with a unique account number pertaining to the same.
Professional investors make use of UIN
UIN is known as a Unique Identification Number. UIN is Mandatory for investors who transact with a capital of 1,00,000 and above. For usual or low key investors a UIN would not be needed.
Learn how to buy shares through Demat. Buy shares online to sell them for a reasonable level of profit.
- Choosing an Online Trading Account
- Educate Yourself
- Practice with an Online Stock Simulator
- Chose the Low-Risk High-Reward Trading Method
- Make a Plan
- Keep Excellent Records
- Make Long-term Investments
- Diversify Your Stockholding
- Protecting the interest of investors
- To ensure Development activities in the Stock Exchange
- Regulate the business of stock exchange and activities of the stock exchange
- To Regulate Insider Trading
There are so many people doing it and they’re so damn good at it!
90% of the trading in markets is by professionals and those people make prices very efficient. What does efficient mean? It doesn’t mean the price is always right, but it does mean that nobody knows for sure whether prices are too high or too low right now or where they will be tomorrow.
Even Warren Buffett celebrated as the most successful active stock picker of all time, says people should not pick stocks anymore. This seems like sensible advice.
Buffett is tremendously skilled, but being good at picking underpriced ‘value stocks’ isn’t the full story of his success. Buffett has been actively involved in the management of the companies he invests in and is able to create deals nobody else could, like investing in Goldman Sachs preference shares during the financial crisis.
FOUR THINGS YOU WILL LEARN:
- Why picking stocks or trying to time the market is pointless
- Why fund managers have become ‘the market’ (and what that means)
- How behavioural biases lead us to make bad investment decisions
- Why index investing is the smart investor’s choice
1. Share exchanges
A share exchange is an organized market in which an investor can trade securities in a publicly visible manner, under rules that apply to all users of that exchange.
2. Other marketplaces
Shares are also traded through:
Alternative trading systems (ATSs): Automated trading systems that bring together dealers and institutional investors who trade large quantities of stocks, and
Over-the-counter (OTC) markets: Dealer networks where “unlisted” stocks are traded.
Buyers and sellers alike participate in share markets to increase their earnings. Companies use share markets to raise capital by selling shares of their business to investors. Similarly, investors use the share market to buy into a portion of a company’s expected future profits.
Share market trading is accessible through an exchange or over-the-counter market. Both acts as a meeting space for the market itself and are used to facilitate trade executions. When you prepare to enter the share market, consider which method of execution best coordinates with your needs and interests.
A share exchange facilitates share transactions using a highly organized electronic or open-outcry system. Electronic exchanges use networked computers to organize incoming and outgoing trades. Potential buyers and sellers submit their bids and ask, and the electronic exchange then matches them and executes the trade. An open outcry exchange, on the other hand, uses a physical trading floor where traders gather, coordinate, and carry out trades in person. In the open outcry system, traders submit verbal bids and ask.
Over-the-counter (OTC) market
The OTC market also referred to as an off-exchange market, has no formal location, electronic or otherwise, and is less regulated than an exchange. Transactions are arranged informally using multiple means of communication. OTC bid and ask prices are published daily in a document referred to as pink sheets, which is why OTC stocks are also called pink sheet securities. However, because these stocks are unlisted and trade interaction is conducted through various means, prices may not be publicized and may actually differ between executions.
Settlement Cycle and Trading Hours
All trading on share exchanges takes place between 9:55 am and 3:30 pm, Indian Standard Time (+ 5.5 hours GMT), Monday through Friday.
The two prominent Indian market indexes are Sensex and Nifty. Sensex is the oldest market index for equities; it includes shares of 30 firms listed on the BSE, which represent about 45% of the index’s free-float market capitalization.
Another index is the S & P CNX Nifty; it includes 50 shares listed on the NSE, which represent about 62% of its free-float market capitalization.
The overall responsibility of development, regulation and supervision of the share market rests with the Securities & Exchange Board of India (SEBI).
This question may not have a hard and fast answer, but there are many who believe certain methods of analysis can be used to help predict share market activity. The two main approaches to share market analysis are technical and fundamental analysis.
Technical analysis studies the market itself using quantitative techniques and charts. This method of evaluation searches for patterns in market activity and attempts to use these observations to gauge future pricing.
Fundamental analysis, on the other hand, studies a particular company and its context in the current economy. It looks at a company’s financial statements, growth, business trends, and capabilities to determine its market behaviour. This method also considers how the health of the economy will impact the company’s share.
Successful share traders use fundamental and technical analysis to forecast and strategize. Follow the steps for using these tools in the list below and you’ll be well on your way to unlocking the secrets of the Indian stock markets.
- Determine the economic cycle position.
- Determine position within sector rotation.
- Decide which sectors are ascending.
- Determine leading stocks in the ascending sector.
- Evaluate the Bank of India and Federal Reserve positions.
- Confirm the economic cycle with index charts.
- Determine whether leading sectors are range bound or trending.
- Determine whether leading stocks are range bound or trending.
- Enter the trade only if the stop-loss point is nearby.
- Trade within your preferred time frame.
TOP SHARE TRADING WEBSITES FOR INDIANS
The Internet is a valuable tool that stock traders can use to sharpen their skills. Indian traders have a wealth of online resources available to them. The following list offers links to Web sites that offer general trading education and information, analysis of companies, and trading tools and advice.