Learn Share Market Basics For Beginners
Many individuals today invest in shares for wealth creation. While some see the share market as a risky avenue, studies show that putting your money in the right shares for a long period can generate significant returns. In fact, if you learn share market investing tricks, you can make more from your investments than from real estate and gold.
Some investors adopt short-term strategies for investing in the stock market. It requires tackling a lot of volatility. But by investing in the right shares, you can make quick profits.
What is the Share Market?
The market in which shares are traded or issued is known as the share market. A share market is similar to a stock market. So, if you learn share market basics, you learn stock market basics as well. A share market lets you indulge in the buying and selling of shares. A stock market lets you trade financial securities, such as mutual funds, bonds, derivatives, and listed company shares.
There are two types of share markets depending on the shares it trades in - primary market and secondary market.
Investing in the Share Market
You need a trading and Demat account to start investing in the share market. The trading account lets you buy and sell shares, while the Demat account stores your shares electronically. Both the accounts are linked to your savings account to allow for the smooth processing of money and shares.
Essential Financial Instruments Traded in the Stock Market
When you start investing, you will come across different financial instruments. It can be confusing to look at those instruments on online share market trading platforms. Here’s a brief introduction to help you get started:
Shares or stocks, or equities give you the ownership of a company. With the help of a broker, you can buy or sell shares.
- Mutual funds
For investments in mutual funds, many investors pool in money and then invest the amount in several financial instruments. Investors are known as unitholders. These unitholders receive profits in proportion to the units they are holding.
Bonds are used by government bodies or companies to raise money from investors. There is an interest rate agreed upon for a definite tenure. These fixed income instruments are also called debt instruments. In comparison to shares, bonds are less risky.
The most common derivatives are futures, options, forward, and swaps. They are in the form of financial contracts, and the value of the contract is derived from an underlying asset. Most importantly, the financial instrument helps to diminish several risks.
Also Read: What is Derivative Trading?
Quick Share Market Basics for Beginners
- Perform thorough research before investing. Read about the company in detail, its background, the management’s contribution, annual reports, etc.
- Do not make investment decisions based on rumours.
- Keep a watch on your investments to eliminate the loss-making stocks.
- Have patience. Deciding your moves impulsively can cause you to miss out on profits.
- Keep yourself updated with share market news.
- Take the assistance of research experts before investing.
You can make your journey of investing in the stock market very rewarding, especially if you avoid some of the pitfalls experienced by most new investors. Beginners must spend time to learn share market strategies and develop an investing plan that works for them. An important word of advice is to stick to the investment plan through the good times and bad.
Share Market Knowledge Centre
- Demat account
- Share market
- Trading account
- Online share trading
- Intraday trading
- Futures trading
- Commodities trading
- Currency trading
Portfolio Investment & Types Explained
A portfolio is a basket of different financial assets owned by an investor. The goal is to fulfil financial objectives. Your portfolio can include many types of financial assets. These include mutual funds, property, gold, equity shares, derivatives, debt funds, and more. With a diversified portfolio, you can cut your risk and earn greater returns....Read More
What is Option chain?
An option chain is a chart with detailed information of all option contracts available for Nifty stocks. At first, traders might feel overwhelmed by options. But after they understand how to read option chain data, they have access to more information and can make better decisions within the market....Read More
What is a Stockbroker and Its Types
There are eight stock exchanges in India, out of which the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are the two prominent ones. If you wish to invest in the share market, you must do it via these stock exchanges. However, as per the Securities and Exchange Board of India (SEBI) guidelines, a common man cannot trade directly with the stock exchanges....Read More
Frequently Asked Questions
Stock exchange refers to a place where buyers and traders come together to buy and sell stocks. In India, there are nine stock exchanges as per the official list by the Securities and Exchange Board of India (SEBI). Here is the official list of the stock exchanges in India. Out of these nine, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are the most popular and traded ones.
To learn stock market trading, it is first essential to know when you can buy and sell shares. In India, the operation hours for the stock market are from 9:15 am to 3:30 pm. The stock market is shut on some days of the year. These days are known as market holidays.
When you invest in shares, you own a part of the company’s value. Depending on what capital you invest, you obtain ownership rights of a certain percentage in the company. If you own 6% of the shares traded in the market, for instance, you have 6% ownership in the company.
NSE and BSE have hundreds of thousands of company listings. Nifty and Sensex are indices that compile the top stocks together. Sensex has a collection of the top 30 companies listed on BSE, while Nifty has a compilation of the top 50 stocks listed on NSE. These lists are prepared based on market capitalization.