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Basic Information about Indian Stock Market |
This Article (Basic Information about Indian Stock Market) was published on TwinkleTalks.com
Basic Information about the Indian stock market.
First of all, When you are interested in the stock market, that’s fine but if you think that being a successful person in the stock market is a simple matter (or) “It takes just a few days to succeed” my dear friend it is a wrong assumption. “I will become a millionaire in a stock market within a few months” this ideology is very dangerous. So first gain the knowledge about stock market.
In this article, we are going to discuss few Topics on what? why? how? who? when is it?
- Why does the stock market exist?
- Why does the stock market go up and down?
- How does someone make money in the stock market?
- How do people lose money in the stock market?
- Is the stock market risky?
- Is it possible to invest in the stock market without taking anyone help
- Who are the Investors and Traders?
- Types of Traders.
- What Is a Demat Account?
- Who are the Brokerage Companies?
- Who are the Stockbrokers?
- What are the Stock exchange Companies?
- Types of Stocks?
- What is Book Value?
- What are Enquiry Tools?
- What are the Requirements to do Trading?
Basic Information about Indian Stock Market
1.)The stock market is there to raise money for the businesses
There are two types
Primary market and secondary market
- The businessman raised money from the IPO is called the primary market where IPO is called initial public offering
- the secondary market is a thing which is traded in the stock exchange during the trading time
2.) Why does the stock market move up and down
it’s not the money of the common people it’s about the money from the big players like FII and DII, how exactly they make money here in the market. Also, I have seen the success stories of some people and little success from myself as well. It’s the power of compounding which helps you make money in the stock market
- Foreign institutional investors these are the institutions from foreign countries investing in Indian markets example morgan Stanley, the pension fund of Canada
- Domestic institutional investors these are the institutions in India investing in Indian markets example LIC, HDFC, mutual fund
3.) How does someone make money in the stock market
People invest in good companies with good business, company grow in terms of sales and profit and the share prices go up and you make money
4.) How do people lose money in the stock market
These are the basics you have to know before trading impact cost and order book
the categories listed in the stock exchange is based on the impact cost and order book, companies listed in nifty 50 are based Impact cost per trade should not be less than 0.5 %
- the extra cost incurred when you give an extra price than the median price to execute a trade will be called the impact cost
if you are going to trade extensively you have a very high chance of losing money if you are doing in annual trade for every 10 people who told me they have lost money nine of them were traders. Whenever you get excited by the word trading just think about this costing and whether you will be able to trade profitably
5.) What are the risks of investing in the stock market
Risk comes from not knowing what you are doing
- Commodity price risk
- Headline risk
- Rating risk
- Obsolescence risk
- Detection risk
- Legislative risk
- Inflationary risk
- Model risk
Commodities risk
If the price of one commodity increase then the final product of the commodity may also increase.
Headline risk
This risk makes an impact on all the companies working on the services
Rating risk
There are two types of risk
The credit rating risk the ratings given by the credit agencies
this kind of rating impact the stock price for sure you have to keep watching what is the rating given by the majority of good fund houses, also what is the rating given as credit rating of the company.
Credit is very important which is one of the modes of financing. financing has to be cheaper and it will available so only if we have a good credit rating.
Obsolescence risk
It is the risk when the company grow older like 10 to 15 years you have to predict the future of the company like Nokia.
Detection risk
Detection risk is more to do with the detection of fraud or issues which were supposed to happen during the audits but it did not come out in time and by the time it was found it would have done too much of damage so this respect you will always be there examples Satyam IT company
Legislative Risk
Now consider oil marketing companies in government exam that whatever you’re selling you can keep 4% profit on that. And later if they think that all prices are getting high they will ask the companies to reduce the profit percentage to two percent and sell it to consumers as they feel its impact in the economy as a whole.
Inflationary risk
inflation is a sustained increase in the general price level in an economy for the hike in the prices of the enter commodity which a common man consumes
To curb the inflation RBI increases the interest rate of the commodities
Model risk
There are many other examples of where the model of the business itself got changed and the company didn’t even get a chance to react to the change example Nokia company
6.) Is it possible to invest in the stock market without taking anyone help?
Yes, we can invest in the stock market without taking anyone help. But, it is possible when only we get command on the Technical Analysis and Fundamental Analysis. For getting the command and full knowledge about those analyses we must follow the suggestions and practise the charts and by watching the tutorials of the experts.
7.) Difference between Investing and Trading?
Investing is the process of buying stocks and Hold them for a long time period.
Trading is the process of buying stocks and holding them for a short time of period.
8.) Who are the Investors and Traders?
Investors: These are the people who invest the money to buy the shares and hold those shares for a long time period (Investing).
Traders: These are the people who buy the shares and sell them in a short time of period (Trading).
9.) Types of Traders:
| Types of Traders | |
| Scalper | Holds trades for seconds (or) Minutes at most |
| Day Trader | Opens and closes the trade positions within the day |
| Swing Traders | Typically holds Trades for 2 to 6 days at a time |
| Position Traders | Holds trades for weeks, months, even years (long term Investment) |
10.) What is a Demat Account?
It is a Dematerialised account provides the facility of holding the shares and securities in an electronic format. This Demat Account was provided by the various Brokerage companies like Zerodha, Up stock etc.,
This Demat Account is a user friendly, we can use this account on our mobile also.
11.) Who are the Brokerage Companies?
The Mediator/Bridge between the People and the Stock exchange companies. These Brokerage companies are providing the Demat account to the people. At present, the Top Stock Brokerage companies are Zerodha and Up stock.
Click here to visit >>>>>>>> Zerodha
Click here to visit >>>>>>>>> Up stock
12.) Who are the Stock Brokers?
If you’re too much busy in your daily activities or if you don’t have any knowledge about the stock market the brokerage companies will provide a stockbroker to the people to maintain their Demat Account and helps to trade. These stockbrokers collect some amount of fee for there service.
13.) What are the Stock exchange Companies?
These stock exchanges are providing the platform to the Companies to allow the investment in their firm and also to the people to buy the shares of the listed companies and create the digital ownership of the listed companies.
In India, the Major Stock Exchanges are;
National Stock Exchange ( NSE ) called Nifty.
Click here to visit >>> National Stock Exchange
Bombay Stock Exchange ( BSE ) called as Sensex.
Click here to visit website >>>> Bombay Stock Exchange
14.) What are the Types in stocks?
| Stock Types | |
| Blue Chip | Large cap stocks with a solid history of long term growth |
| Cyclical | Stock Affected by changes in the overall economy |
| Defensive | Stock that are less sensitive to Market Conditions |
| Dividend | Stock with a Track Record of paying out regular dividends |
| Growth | Stock with Earnings and revenue expected to grow rapidly |
| Penny | Stock with Prices under Rs.30 share and known to be volatile |
15.) What is Book Value?
The exact value of the company at which it stands today it represents the total amount of the company is work all its assets are sold and all the liberties of paid back.
16.) What are the Enquiry Tools?
Enquiry Tools are nothing but the websites which are providing the Stock Price Action during market periods and full data about all listed companies. They also give Updates and News about Markets.
Check some Enquiry Tools below.
| Enquiry Tools | |
| Website | Link |
| Money Control | https://www.moneycontrol.com/ |
| Screener | https://www.screener.in/ |
| Ndtv Profit | https://www.ndtv.com/ |
| NSE India | https://www.nseindia.com/ |
| BSE India | https://www.bseindia.com/index.html |
| Economic Times | https://economictimes.indiatimes.com/markets |
17.)What are the Requirements to Succeed in the Stock Market?
- Knowledge about market
- Demat Account
- Capital Investment
- Patience
- Risk Management
- Maintain Emotional Discipline
- Time Investment on Learning
You don’t have to be rich to start trading but, you have to start trading to be rich. Start small, start today, repeat tomorrow Definitely, One day you will thank yourself for learning to Trade. I hope this Basic Information about Indian Stock Market may helps you to gain knowledge.
These are the few topics regarding Basic Information about Indian Stock Market in the next article we will discuss another topics in further articles.
Thank You for reading Basic Information about Indian Stock Market
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