What Is Stock Market & How Does It Work? | My Espresso

What is Stock Market and How to start Investing in it

When you start working on your first job or earn a hike in your salary, the surplus income needs to be utilised in a beneficial way.

Published on 19 January 2023

You can use the income to fulfil additional family obligations or grow your savings. However, if you think of investing in the stock market, here are some important questions you need to ask.

  • What should I invest in?
  • Are the funds sufficient for stock investments?
  • Is my risk profile suitable for stock investments?
  • What returns can I expect?

If you are a new investor and are yet to start to invest in the stock market, you may not have all the answers. However, with time, experience, and the help of a reliable stockbroker, not only will you be able to understand how to start investing in the stock market but also learn to gauge your risk profile and diversify your investment portfolio.

Quick Guide to Investing in the Stock Market

  • Find a suitable stockbroker

Consider a reputed stock broker as your main support system initially. Your broker will not only provide you with the demat account and trading account but can also guide you with the help of financial advice, real-time stock updates, market research, and trading tools.

Ensure that the stockbroker is registered with the SEBI (Securities and Exchange Board of India) so that you are in good hands. You will also need to find out the brokerage charges for opening the account and the financial services you avail of.

  • Provide the necessary documents

For investing in the stock market, your demat and trading accounts will help you store your securities and execute your trades, respectively. And since the trading account will comprise financial transactions, your PAN card will be necessary.

Apart from that, you will also have to provide your Aadhar card for the e-KYC process and verification. This will enable smoother transactions in the long run. Some brokers may also need additional documents, such as proof of income. However, the PAN card and Aadhar card are always mandatory.
Also Read: Documents required for opening demat & Trading account

  • Research companies

Stocks of publicly listed companies can be traded in the stock market. However, not every company’s stocks perform well. This could be due to the demand and supply of the stocks. The demand-supply factor, in turn, may be determined by the general common sentiment of all the participants and elements in the market.

But as an investor yourself, do your research and pick stocks of companies that are performing or belong to growing sectors and industries. While stock recommendations may help, they need to come from experienced investors.

  • Balanced diversification

When investing in the stock market, your stock portfolio should be a mixed bag of stocks. Unfortunately, most new investors tend to fill their portfolios with several stocks from the same company. This can be dangerous since the market is quite volatile sometimes.

While you can certainly select stocks of your choice, be sure that they are from various companies and sectors. At the same time, do not overdo it. Over-diversification in your portfolio can also dilute any chance you have at earning profits from the stocks.
Also Read: Portfolio Investment


The stock market presents a lot of opportunities. However, as an investor, you should always be updated with the right knowledge and the mindset needed for investments and trading. There is no one right way to understand the stock market; you could simply start by reading blogs by experienced investors or follow online lectures, read different books written by market experts and also start making small investments.

Chandresh Khona
Team Espresso

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