In this post you will know what is a share market and how to invest money in a share market and what is a demat account and how to open it. Share market, Stock market, stock exchange are all the names of the same place. Where the shares of the listed company are bought and sold.
There were many stock exchanges in our country but at present there are only two national level stock exchanges:
- Bombay Stock Exchange (BSC)
- National Stock Exchange (NSC)
What is Share/Stock:
Shares are also called equity. Share means a share in a company, that is, if you have shares of a company, then you become the owner of that share of that company, as many shares as you have.
In this way you become a shareholder in any company. After buying the shares of a company, you also get the rights which are with the shareholder. You can also sell your shares along with buying them in the stock market.
What is share market:
The buying and selling of shares in the stock market is done entirely by computer. And if we talk about the process of buying shares in the stock market, then it is a little different.
Here there are brokers who are members of the stock exchange and they have the right to trade in the stock exchange. Clients cannot directly buy or sell shares, but this work can be accomplished only with the help of a broker.
How do companies issue shares?:
First of all companies bring Initial Public Offering (IPO) by listing their shares on the stock exchange and issue their shares to the public at the price fixed by them.
Once the IPO is completed, Shares enter the market and are bought and sold by investors through stock exchanges and brokers. As soon as the stock comes on the exchanger, then trading (buying and selling) starts in the company’s shares by the people.
How do the price of shares change?:
The price of the shares varies depending on the Demand and Supply of the market. The price of shares is decided by the company while bringing the IPO, but once the IPO is completed.
This change happens on the basis of important information given by the demand and supply companies from time to time. If that company makes good growth in future, then the one who has bought shares from the company benefits.
But if that company does not grow well, then the person who has bought the shares will suffer a loss.
You can understand it like this:
If the opposite happens, that is, the number of people selling is more than those who buy, then the price will be lower.
Sellers ^ Buyers
And If the number of people buying shares is more than those selling shares, then the price of shares will increase.
Buyers ^ Sellers
SEBI (Securities and Exchange Board of India):
Securities and Exchange Board of India was established on April 12, 1988. And got statutory recognition under SEBI Act 1992 on January 30, 1992. The stock exchange is controlled by SEBI which is a government organization.
SEBI Headquartered in the business district of Bandra Kurla Complex in Mumbai.
- New Delhi
SEBI which constitute the market:
- Investors (Money Protection)
- Market intermediaries
- Issuers of securities
SEBI function and Power:
- Registration of Brokers
- Inspect the accounts of financial intermediaries.
- Rules/laws of Securities exchanges.
It takes a lot of money to run any company. Hence the shares of the company are added to the exchanger. By which any person can buy and sell the shares of that company. And can become a partner of that company.
What is Sensex?
BSE Sensex is a stock market sensitive index. The Sensex was created on 1 January 1986. Today BSE Sensex is counted in major index not only in India but also abroad.
30 companies are included in BSE Sensex. Which is calculated on the basis of market capitalization-weightage.
if the Sensex falls, it means that the performance of most companies is deteriorating. And similarly If the Sensex increases, it means that most of the companies registered in the BSE have performed well.
- Sensex Trading Symbol is ^BSESN
- Normal trading time for equity market: 9:15 am to 03:30 pm, Monday to Friday.
What is Nifty?:
The Nifty was created on 21 April 1997. Nifty is an index of 50 major stocks on the National Stock Exchange. Nifty is made up of two words; National and Fifty. The term Nifty is based on the top fifty stocks on the National Stock Exchange.
If Nifty falls this means that NSE companies have performed poorly. And If Nifty increases, it means that companies registered in the NSE have performed well.
- Nifty Trading Symbol is NIFTY
- Normal trading time for equity market 9:15 am to 03:30 pm, Monday to Friday.
What is Demat Account?:
After choosing a broker, you should also have a demat and trading account, only then you will be able to buy and sell shares.
In demat account your shares are held in electronic format and through trading account you can buy and sell shares. As per SEBI guidelines in India, Demat service is offered by 2 entities:
- NSDL (The National Securities Depository Limited)
- CDSL (Central Depository Services (India) Limited)
You can open Demat account with:
- Angel Broking
So these two institutions are called Depositories. To open both these accounts, you have to go to your broker or brokerage firm, where both your accounts will be opened easily.
What is a Trading Account?:
Now it’s time to buy shares, you can place orders in 2 ways while buying shares:
- Market rate
- limited rate
Market rate means to buy at the same rate at which the share is being traded in the stock market.
Whereas limited rate means that you can specify a limit rate so that the broker should not buy shares for you if the rate is higher
Trading Account is used to make share sell and purchase in Trading. You can open this account with a good broker and due to the online facility, you can buy and sell shares at any time with the help of this account.
Zerodha is my favorite because it is reliable and secure. I only trade in Zerodha.
How to open a demat account?
To open a trading and demat account, it is necessary that you open it from a best broker such as Zerodha.
Documents you will need to open a Demat and Trading account
- Aadhar Card
- Pan card
- Cancel Cheque
- Income Proof (For IPO only)
- Live photo with code
You can open a demat account in Zerodha from your mobile or computer in a few minutes and start buying and selling shares after the account is activated.
Fees and charges ( Zerodha):
- Free equity delivery all equity delivery investment (NSE, BSE), are absolutely free – ₹ zero brokerage.
- Intraday and F&O trades Flat Rs. 20 or 0.03% (whichever is lower) per executed order on intraday trades across equity, Currency, and commodity trades.
- Free direct MF All direct mutual fund investment are absolutely free – Zero commission & DP charges.
Trading in Zerodha is absolutely free, you do not have to pay any fees or charges, only you have to pay a fee of 300 rupees for opening an account. And if you do intraday trading then you will have to order at 20 rupees.
While submitting all these documents, keep in mind that in all these certificates, your name should be correctly and clearly written and written in the same way.
Buy and sell shares
First of all, you have to open your demat account on Broker, which is very easy, after this, when your demat account is activated, you will login and research it first and you will benefit in buying shares of which company.
You buy Stocks (Shares) in two ways:
- Intraday trading (Buy in the morning and sell in the evening) which is called intraday trading
- long term trading (stocks (Shares) for a few days or months)
Both methods are good in their place but for long term it is best to invest in the shares market in which the loss is less and profit is more.
Dividend is that part which is paid by the company to the shareholder. Whose shares have been bought by the shareholders. That part of the company’s profit which is received on those shares is called dividend.
It is the right of the shareholder to receive dividend on his shares. This dividend can be in the form of cash or shares. If the dividend is in cash form, then it will directly reach the bank account.
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