As Colin Powell said, "A dream doesn't become reality through magic; it takes sweat, determination and hard work." And if your dream is to become financially fit/stable then you are on the right page. This beginner's guide to Indian stock market will help you get familiar with all sort of institutions, and exercises to help you get financially fit. Hence, we have prepared this beginner’s guide to Indian stock market. Being financially fit is not limited to having a good bank balance but it's about generating the other source of income. And our guide on how to invest in share market for beginners will give a kick start to your journey in Indian stock market.
Beginner investors in Indian stock market are afraid because they assume it is risky, timely, and complex. Yet, in this guide to Indian stock market we have tried to simplify everything for you. This, however, is easier said than done. This guide teaches you how to invest in the share market for beginners. We provide a step-by-step guide to the Indian stock market to make the process easier.
For starters, what is the stock market? Where is it? How do I start investing? Such questions turned into a common theme last year (2020) we have seen an increase in number of people decided to put their money into stocks during the lockdown mainly to make a diversified stock basket. These are important questions because without knowing the answers to them, the base of your exercise, how do you expect to sculpt a generous and fit bank statement?
So, we decided to prepare a guide to the stock markets in India. We’ve cast our net far and wide and squeezed the information into a readable post; once you read it, you will not have to go anywhere else.
Stock(s) is a word used to describe the ownership certificate of a corporation. There are thousands of stocks like school students and the school they attend are called the stock markets.
Every school needs a principal and for the Indian stock markets, it is The Securities and Exchange Board of India (SEBI). Its preamble describes its duties as "...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto." The SEBI was established on 12 April 1992.
We then come to the stock exchanges where all the trading takes place. The Bombay Stock Exchange (BSE), established in 1875, and the National Stock Exchange (NSE) that was established in 1992 are the two main exchanges in India.
There are other regional stock exchanges such as the Ahmedabad Stock Exchange, the Hyderabad Stock Exchange, and the Bangalore Stock Exchange but most have phased out or exited the business.
Now arrive the market participants. While the markets are for everybody, the participants are divided into certain categories.
- Retail investors - Individuals such as you and I.
- Institutions - Corporate firms from India who invest in the markets.
- OCI and NRIs - Indian-origin people who do not live in India but invest in Indian exchanges.
- Asset Management Companies (AMC) - They handle mutual funds and invest in the stock markets.
- Foreign Institutional Investors - Foreign companies, AMCs, and investors.
When can these participants invest?
- The market opens at 09:15 AM and closes at 03:30 PM from Monday to Friday.
- However, these participants cannot invest directly, they need to be members of the exchange to do so. Because not everybody can be a member, those who have let these participants trade in the markets for a fee; are called brokers.
There are two types of brokers in India:
- The former has operated in this business for decades and not only lets you invest and trade in the markets but also offers you other services such as tax and retirement planning, portfolio management, and daily financial advice. A comprehensive stockbroker offers customers a range of financial services. In general, individually licensed stockbrokers are assigned to customers. Brokerage companies employ research departments that provide recommendations to analysts and access to initial public proposals (IPOs).
- On the other hand, are newer and only offer a tech platform (app and website) to trade on. No other services are offered here. They are also more affordable compared to full-discount brokers. Stockbrokers provide financial products, reciprocal fund access, banking products, and other services. A discount dealer offers a wide range of products and services which are similar to a full-service dealer, but with smaller commissions.
- We are clear on how to invest but in what do we invest? Which stocks to buy? A good starting point is an index. What is that? Think of it as a mirror that shows us the sentiment or the general market trend for a certain period of time. It is often made up of the most actively traded stocks in the market.
India has two main market indices: The S&P BSE Sensex and the Nifty 50. Many investors mirror their portfolios to reflect the Sensex of the Nifty 50. Adding to this, there are mutual funds that actively invest in them too.
This little guide should set you up for the basics of the Indian stock markets. But, always keep reading to add to your knowledge of the markets so that you are never caught unprepared.
GEPL's Capital is one of India's largest independent retail brokers committed to providing accurate and broad-based data for all online retailers. The web-based Indian internet brokerage industry is considered a house for the independent database. Our more than two decades of experience have helped us integrate the technology that we provide for our retail customers through various platforms in the broking industry.
GEPL Capital provides an online trading platform that is safe and seamless. This application for stock trading helps you to track your online investment. Expert research and portfolio maintenance services for technical analysis. Open Demat Account in a few clicks and make your first transaction by investing in your desired stocks.