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Stock Market: A Beginner’s Guide to Understanding the Basics.


A share market, or stock market, is a platform where buyers and sellers trade publicly listed shares.
The share market allows companies to raise money by selling shares to the public. Investors can buy and sell shares in those companies.
The share market is also called an equity market. The term “share market” is often used interchangeably with “stock market”.
The share market is a regulated and controlled environment. In India, the two main stock exchanges are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
There is no minimum investment required to invest in the share market. Investors can buy as little as one share of a company. For example, if a stock has a market price of Rs. 100 and if an investor buys one share, they would need to invest Rs. 100. However, brokerage and statutory charges will
be extra.

The stock market is an established organization wherein investors connect to buy and sell companies- these companies are listed on the stock exchange. When you purchase a particular company stock by default, you become a shareowner of the company. The companies range from small to mid to large capital share, so you have an array of companies and prices to choose.
The Stock Exchanges in India are two that is the Bombay Stock Exchange -BSE where the trading of companies initially began and later the National Stock Exchange -NSE was incorporated with automated systems in place. Today both these exchanges dominate the Indian stock market, without
which you cannot buy and sell shares. They are the premier stock exchanges of India. Some stockbrokers are registered with the stock exchanges, to trade company stocks and other types of securities. A share may be bought or sold only once listed on the stock exchange. Thus, the share market meaning is a place where buyers and sellers come together only to trade stocks.

The stock market offers several advantages, making it an attractive option for investors.

Here are some of the key advantages: it can even better investment option than gold and real estate.

1. Potential for High Returns: Investing in stocks has the potential to provide high
returns over the long term. Historically, stocks have outperformed other asset classes like bonds and savings accounts in terms of returns on investment.
2. Liquidity: Stocks are highly liquid investments, meaning you can easily buy or sell them on the stock exchange. This liquidity makes it convenient for investors to access their funds when needed.
3. Diversification: The stock market offers a wide range of investment opportunities across various sectors and industries. This allows investors to diversify their portfolios, spreading risk and potentially increasing the chances of earning a profit.
4. Ownership Stake: When you buy shares of a company’s stock, you become a Shareholder and have partial ownership in that company. This ownership can come with voting rights and the potential to benefit from the company’s success through dividends and capital appreciation.
5. Accessibility: With the advent of online brokerage platforms, investing in the stock market has become more accessible to individual investors. You can start investing with a relatively small amount of money.
6. Professional Management: Many investors prefer to invest in mutual funds or exchange-traded funds (ETFs) that are managed by professional fund managers. These funds provide diversification and expert management, making it easier for investors to participate in the stock market without extensive knowledge.
7. Inflation Hedge: Historically, stocks have been a good hedge against inflation. As the
value of a currency decreases due to inflation, the value of stocks can potentially rise,
helping investors maintain purchasing power.
8. Dividends: Some companies distribute a portion of their profits to shareholders in the
form of dividends. These payments can provide a steady income stream for investors, especially those seeking regular cash flow.
9. Tax Benefits: Depending on your country’s tax laws, there may be tax advantages associated with investing in stocks. For example, some countries offer preferential tax rates on capital gains or dividends.
10. Long-Term Wealth Building: The stock market is a popular choice for long-term wealth building and retirement planning. Consistent investing in quality stocks over time can lead to substantial wealth accumulation.

How to invest in the share market

To invest in the share market, you need to open a demat account and trading account to put your shares. for opening a demat account we need to present the necessary documentation for it (aadhar card, PAN card, and 6-month bank statements) after the successful verification of your account we are ready for trading. After that select the share you want to buy or sell. then wait for the buyer or seller to fulfil your request. When the exchange is finished, you either get shares for the stocks you trade. Then you are the owner of the share, you can sell your share whenever you want.

Share market basics important terms

  • . Demat account: a Demat account is a computerized account that stores pre-owned protections like Shares, bonds and mutual fund units reserved electronically.
  • stock broker: A stock broker is an intermediary organization between a trader or investor and a stock exchange. Brokers carry out buying and selling transactions on stock exchanges on behalf of traders or
  • trading account: A trading account is an electronic account provided by a stock broker. Traders and investors can use this account to buy and sell shares and other securities on stock exchanges.
  • portfolio: A portfolio is a collection of assets that an investor invests in. It can either consist of multiple types of the same asset class or different asset classes.
  • index: An index is a collection of stocks listed on a stock exchange that is used to measure the performance of the stock market as a whole or just a segment.
  • Sensex: Sensex is a board market index created by the Bombay Stock Exchange (BSC) that comprises the top 30 companies listed on the BSC and index constit. it is made of units across several key sectors and
    industries of the economy.
  • Nifty: nifty also called nifty 50. nifty is a board of index created by the National Stock Exchange (NSC). It is made up of the top 50 companies listed on NSC in terms of market capitalization. nifty also constitutes
    stocks from major sectors and industries of the economy.
  • Bank nifty: Bank Nifty is a stock market index that tracks the performance of the banking sector in India. It includes the 12 most liquid and large-cap Indian banking stocks.
  • Fin nifty: Fin nifty, or Nifty Financial Services Index, is a stock market index that tracks the performance of Indian financial services. It was launched in January 2021 by the National Stock Exchange (NSE). The
    index consists of 20 stocks of financial sector companies such as banks, insurance companies and housing finance companies. Stocks are selected based on their free float market capitalization.
  • Bullish market: A bull market is a financial market where prices are rising or are expected to rise. The term is most often used to refer to the stock market, but it can also apply to other traded goods such as
    bonds, real estate, currencies, and commodities.
  • bearish market: A bear market is a period of falling prices of stock prices, securities, assets, currencies, investment instruments or commodities.
  • opening price: The initial price of a security is the price at which it is first available for trading. The opening price is the price of the first trade for any listed stock on a trading day.
  • closing price: The closing price is the last price at which a security was traded before the market closed for normal trading. The price at which a stock “closes” at the end of the trading day.
  • Bid price: The bid price is the highest price a buyer is willing to pay for a good, stock or commodity. It is also called “Bid”. The bid price is usually lower than the ask or “offer” price.
  • Ask price: The asking price is the lowest price the seller is willing to accept for the stock. It is also known as the purchase price. The ask price is usually higher than the bid price.
  • initial public offering (IPO): IPO stands for Initial Public Offering. It’s the process by which a private company becomes a publicly traded company. In an IPO, a private company lists its shares on a stock
    exchange, making them available for purchase by the general public.
    dividend: A dividend is a portion of a company’s profits that is paid to its shareholders. Dividends are usually paid quarterly and can be issued in various forms such as cash, stock or other forms. The board of directors of the company decides the dividend and it requires the approval of the shareholders.
  • commodities: A commodity market is a market where people buy, sell and trade raw materials and primary products. Commodities are goods that can be exchanged in any market around the world. Examples of items include in Crude oil, precious metals, natural gas, spices, wheat, steel, coffee, gold, diamonds, silver, and platinum.
  • Derivatives: Derivatives are financial contracts between two or more parties. Their value is derived from the underlying asset, group of assets or benchmark. The underlying asset can be stocks, currencies, commodities or a combination of different securities.
  • Equity market: An equity market is a marketplace where stocks and shares of companies are traded. It is also known as the stock market or share market. In the equity market, buyers and sellers can trade in
    equity or shares on the same platform.
  • Future trading: Futures trading is a financial derivative that involves an agreement between two parties to buy or sell an asset at a fixed price and date in the future. The buyer and seller are bound to abide by
    the contract and complete the trade at a predetermined date and price.
  • Options trading: Options trading is a form of financial trading that allows investors to buy or sell the right to buy or sell an underlying asset at a fixed price at a future date. Options trading involves the buying and selling of financial contracts called options. These contracts give the holder an option to buy or sell a collection of underlying securities at a fixed price by a specified date.
  • Delivery trading: Delivery trading is a form of stock market investing where traders buy shares and hold them for a fixed period of time, usually more than a day. Traders then sell the shares to make a profit.
  • Intraday trading: Intraday trading, also called day trading, is the buying and selling of stocks and other financial instruments on the same day. The objective of intraday trading is to make profits in the short term.
  • Forex trading: Forex trading, or foreign exchange trading, is the buying and selling of currencies. It is a global marketplace where businesses, investors and governments can exchange currencies to facilitate international trade.
  • Scalping trading: Scalping is a short-term trading strategy in which assets are bought and sold multiple times during the day to profit from price differences. Scalpers buy assets at low prices and sell them at
    high prices.
  • Swing trading: Swing trading is a trading strategy where investors buy stocks or other assets and hold them for a short period of time, usually a few days to several weeks. The goal is to make a profit in the
    property from a few days to several weeks.
  • Momentum trading: Momentum trading is a strategy that involves buying and selling assets to profit from market trends. Momentum traders buy or sell assets that are moving in one direction and exit
    when the movement shows signs of reversing. They avoid buying or selling assets that are moving sideways.
  • Positional trading: Positional trading is a trading strategy where traders buy and sell stocks based on their market position. Positional trading aims to capitalize on long-term trends in the market rather than
    focusing on short-term fluctuations. Traders typically hold their positions for extended periods, which can range from several weeks to months or years.
  • Fundamental trading: Fundamental trading is a method of trading where the trader focuses on company-specific events to decide which stocks to buy and when to buy them. Fundamental trading is
    more closely related to buy and hold strategy than short-term trading.
  • Technical trading: Technical trading is a trading strategy that uses historical data to predict the future price movements of a stock or other asset. Technical analysts believe that past trading activity and price
    changes can indicate future price movements. They use charts to identify trends, patterns and technical indicators.