How to invest in share market?
If you are new to stock markets and are wondering how to start investing, this article is for you! But before we understand how to invest money in the stock market, it is important to understand the basics of how the stock market operates.
What is a stock market?
The stock market is a system of exchanges where buyers and sellers transact in shares of companies. Buyers buy stocks because they expect them to rise, whereas sellers sell the stocks as they expect them to fall.
The demand and supply dynamics between the two parties help in determining prices of stocks. This means that if at any given time, the number of buyers exceed the number of sellers, they dominate the price action and the stock goes up. This is because there is more demand for stock than supply. Economics 101. Similarly, if the number of sellers exceed the number of buyers, the stock goes down.
Now, you may be wondering when are more people willing to buy a stock than sell it and vice versa? It depends on various factors, both internal and external. Internal factors include, company specific news, earnings, etc, whereas external factors include political upheaval, interest rates, current events, natural calamities etc. If the news is positive or is expected to be positive, the stock goes up. If negative, the stock goes down.
Where and how do I invest in stocks?
Stocks are bought and sold on specified markets called exchanges. In India, the two main stock exchanges are the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE).
Note that investors cannot directly buy or sell shares on a stock exchange. The stock brokers or trading members who are registered members of a stock exchange make trades on behalf of an investor.
These stock brokers can be a part of a brokerage firm or offer independent services. Trading is performed under a specific set of regulations that have been laid down by the market watchdog Securities and Exchange Board of India (SEBI).
How to invest in stock markets
As mentioned above, the only way to invest in stock markets is through brokers. Hence, if you want to invest in stock markets, you need to open a trading account with a broker firm. If you wish to open a trading account with Espresso, here’s how you can do it:
After clicking on ‘Open Account’ in the top right corner, you will reach a page where you enter the mobile number. Enter captcha and OTP. On the next screen, you will be asked for a few details, such as name, email id and city.
The next screen starts the account creation process, which you can finish in four steps. This will take you about 15 minutes.
You will be required to enter key details such as Photograph, PAN, AADHAR, bank information, along with a few more personal details, need to be submitted to open the Demat account.
Once all the documents have been verified, the Demat account will be opened.
These are the basics of how to start investing in the stock market. Before you can actually begin investing your money, you must read and research thoroughly about the market. Your broker or intermediary is not just your representative, but they will also be your guide to your investment. They will inform you about the shares, their prices, their potential returns, etc.