Top 15 Frequently Asked Questions(FAQs) on Stock Market| Espresso

Top 15 Frequently Asked Questions(FAQs) on Stock Market

Investing in the stock market can be curiosity-inducing but nerve-racking, especially for beginners. Even expert traders often have questions about the stock market and the factors that influence it. So, as a lay investor, it is only natural to be confused about the ways of the stock market and its vast terminology.

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But once you start reading some frequently asked questions in stock markets, you will realise that you can grasp the stock market with time and research. Reading stock faq on share market also helps you realise that everyone is a beginner at one time. So get started on your trading journey with some of the most common questions about the stock market.

Here are the Top 15 Stock Market FAQs

1. How many stock-market sectors can I choose from?

There are 11 stock market sectors and various sub-sectors. The sectors include information technology (IT), energy, real estate, healthcare, financial, consumer staples, industrials, telecommunication, consumer discretionary, utilities, and materials. In India, sectors like IT, infrastructure, pharmaceuticals, and banking thrive more than others.

2. Should I over diversify my portfolio to reduce risk?

You should never over diversify your stock market portfolio to reduce risk. That said, you must also be careful to not under-diversify it. Instead, experts suggest having a balanced number of stocks to even out risks.

3. How to find good publicly listed companies?

To find good public companies to invest in, you can use online stock screeners or financial advisories that provide insight on a company’s valuation, fundamentals, market cap, and more.

4. What time can you trade in the stock market?

The general operating hours of the stock market are from 9.15 am to 3.30 pm only on weekdays. But you can also trade after hours and place After Market Orders (AMO) if you fail to buy or sell during work hours.

5. How much time should I research before investing in a particular stock?

The amount of time you dedicate to research depends on the timeframe of your investment. If you want to trade for the short-term, you can quickly check the market trends. But if you have a long-term horizon over a year, you must analyse the company’s fundamentals, financial statements, and other reports in detail.

6. Can a beginner trade in unlisted stocks?

A beginner can trade in unlisted stocks, but financial experts advise against them. As unlisted stocks are not with the market regulating authority – the Securities and Exchange Board of India (SEBI), it is not safe to invest in them.

7. Can I trade during a bear market?

You can trade during a bearish or low market if you know how to find good stocks and strike the rod when others are too busy selling their shares.

8. Where can I find the information on a company’s financials?

You can find all the information about a company, including its financial records, Price to Earnings (P/ E) ratio, company size, dividend history, revenue growth, and more, on the verified websites of reputed stock exchanges NSE and BSE. You can also find it on the company’s website.

9. Will investing in small-cap companies be profitable?

Investing in small-cap companies can be profitable if their prospects and growth potential is promising.

10. Do I need a demat account for stock market trading?

A dematerialised (demat) account is necessary to trade in the stock market as trading shares is now possible and available only online in the electronic or digital form.

11. Is it wise to trade when the stock market is high?

Most share market purchases are carried out when there is a bull (high) market. As investors are more eager to buy, the stock prices are valued at a higher price. However, you have to be careful not to pay too much for overpriced stocks.

12. Should I invest in an IPO?

You can invest in an initial public offering (IPO) provided you have done in-depth research on the company going public and offering the shares on sale.

13. Is the stock market open on the weekends?

The stock market is not open on Saturdays, Sundays, and public holidays. It only operates during the given time window on weekdays.

14. Do you need a stockbroker to invest in the stock market?

Yes, you need a stockbroker to function as an intermediary for trading in the stock market.

15. What is the P/E ratio?

The price to earnings ratio is a ratio where a company’s share price is divided by the company’s earnings per share. The P/E ratio gives insight into whether a company’s shares are over or undervalued.

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Frequently Asked Questions

As with anything, success in stock market trading also comes only with patience and practice. However, you can become a millionaire if you research companies, keep up with factors that influence share prices, and do your due diligence from time to time.

You can trade when the stock markets are not operational on the weekends and holidays. This is called passive investing, after market orders, or after-hours trading.