Today everyone is talking about the stock market/ share market. If you are a beginner… you must learn stock market basics. Read this ‘STOCK MARKET BASICS FOR BEGINNERS’ article to learn and understand the working of the share market/ stock market in India.
#Stock market basics.# Basics of the Share market by masterfm.in.
WHAT IS SHARE/ STOCK MARKET?
A Stock market/ Share market is a marketplace where you buy and sell shares. Usually, we think the stock market and share markets are one and the same.
- The Stock Market allows the trading of financial instruments.
- they are Bonds, Mutual funds, Derivatives, and Shares of Companies.
- share market only allows trading of shares.
NOTE: In India, you cannot buy and sell shares directly in the stock market all by yourself. The only way is you will have to buy /sell shares through registered stock brokers.
TYPES OF SHARE MARKET
There are two kinds of share markets in India. They are known as primary and secondary markets.
PRIMARY MARKET:
Companies issue their securities for the first time in the Primary market. That means here only the securities are created and the Initial Public Offering (IPO) of the company is made available to the people for the first time.
The company has to adhere to the guidelines and procedures laid by the exchange and regulatory body, the Securities Exchange Board of India (SEBI).
SECONDARY MARKET
The secondary market is the electronic platform where the buying and selling of shares and other financial instruments take place. You know where the investors trade amongst themselves is the secondary market.
This means, If you are buying 100 shares of ONGC, some other investor is selling 100 shares of ONGC. The company whose stock is being traded is in no way involved in the transaction.
WHAT IS STOCK EXCHANGE?
A stock exchange is a market where the exchange of stocks and other financial instruments is facilitated. The exchange provides services to stockbrokers and traders to buy sell stocks.
In India, there are primarily two stock exchanges. They are:
1. BOMBAY STOCK EXCHANGE (BSE)
2. NATIONAL STOCK EXCHANGE (NSE).
Apart from these two, there a few national and regional stock exchanges in India.
Ex:
- Hyderabad stock exchange, Hyderabad.
- Bangalore stock exchange, Bangalore
- Delhi stock exchange, Delhi
- Over the counter exchange of India, Mumbai
- Canara stock exchange, Mangalore
IN India most of the trading happens through BSE and NSE.
BSE and NSE are work for 5 days a week and remain closed on Saturdays, Sundays, and on all national holidays and some festival days.
STOCK MARKET TRADING TIME
Normally Trading in the Indian Stock Exchanges in the Equity and derivatives segment takes place between 9.15 A.M to 3.30 P.M. The Currency Derivatives segment is Open from 9.00 A.M to 5.00 P.M.
HOW THE STOCK MARKET WORKS?
In India transactions in shares are done through online computerized systems. BOLT (BSE Online Trading) is the trading system of BSE. And NEAT (National Exchange Automated Trading) is the trading system of NSE.
The online trading system has facilitated the traders with more transparency, efficiency.
the online trading system facilitated automatic order matching and speedy processing of the transactions.
STOCK MARKET INDICES
An Index is a basket of securities of the exchange which measures the value of a section of the stock market. It indicates the economic health of the country.
In the Indian stock market, the prominent indices are the SENSEX and the NIFTY.
The S&P BSE SENSEX is the primary index of BSE. It comprising 30 stocks.
The NIFTY 50 Index comprising 50 stocks (actually 51 stocks) is the market index of NSE.
SENSEX and NIFTY are calculated based on the market capitalization and include heavily traded shares from key sectors.
MARKET REGULATOR: SEBI
The Securities and Exchange Board of India Is known as SEBI. It can regulate the functioning of all the stock exchanges, brokers, depositories, mutual funds, and other market participants in the country.