All Basics of Indian Stock Market

Other related Topics
a) Offline and Online share trading
b) Indian Share market trading
c) Information about Online share trading
d ) Delivery based Trading/Investing
e) Limit order, Market order & Margin trading
f) Remember points to open Demat account 
g) To become success Trader
h) To become success Investor
i) Common terms used in Share Market
j) Calculation of Brokerage and Taxes
Topics covered in Share Market Basics section
• What is Share Market?
• What is Stock Exchange?
• How buying and selling of shares happens in share market?
• Type of Markets
• Who is Trader and Investor?
• Types of Trading and Investments
• How to Start investing and trading in share market?
Share is nothing but the Ownership of the company divided into small parts and each part is called as Share or Stock.
Share is also called by different names like equity, financial security and so on.
A person carrying a share of a company holds that part of ownership in that company.
A person holding maximum shares carry maximum ownership and designated like Fonder, chairman, Managing director etc

What is Share Market
A Share market is the place where buying and selling of shares takes place.
Now days due to internet and advanced technology there is no need to present physically in exchanges like NSE and BSE but in fact the buying and selling of shares can be done from anywhere through computer with internet connection.

One should have a demat and trading account, computer and internet connection and he/she can start the share trading or investing from anywhere.
Index consists of High market capitalization and high liquidity shares.

What is meaning of High Market capitalization
Market capitalization is the aggregate valuation of the company based on its current share price and the total number of outstanding stocks.

Definition: Market capitalization is the aggregate valuation of the company based on its current share price and the total number of outstanding stocks. It is calculated by multiplying the current market price of the company's share with the total outstanding shares of the company.

Description: Market capitalization is one of the most important characteristics that helps the investor determine the returns and the risk in the share. It also helps the investors choose the stock that can meet their risk and diversification criterion.

For instance, a company has 20 million outstanding shares and the current market price of each share is Rs100. Market capitalization of this company will be 200,00,000 x 100=Rs 200 crore.

Stocks of companies are of three types. The stocks with a market cap of Rs 10,000 crore or more are large cap stocks. Company stocks with a market cap between Rs 2 crore and 10 crore are mid cap stocks and those less than Rs 2 crore market cap are small cap stocks.

High Liquidity shares - Shares in the market with high volumes.

How to Start investing or trading in Share market

First let us understand the Working of a share market
To learn about how to earn in the stock market, one has to understand how it works.
When a person want to buy or sell shares in the share market then he has to first place the order through online trading system.To know more about online trading system please visit at online share trading

When you place the buy order through your trading account then that order is sent to exchange [either NSE {National Stock Exchange} or BSE {Bombay Stock Exchange}] and the order stays in the queue of exchange's other orders and gets executed if the price of that share comes to that value. Once you get the confirmation of the transaction, the shares purchased, will be sent to your demat account. The shares will be stored in demat account in electronic format. No physical copies of shares will be given.

Rolling Settlement Cycle: (RSC)
RSC means when you will get your shares in your demat account.
In a rolling settlement, each trading day(T) is considered as a trading period and trades executed during the trading day(T) are settled on a T+2 basis i.e. trading day plus two working days. So the conclusion is on third working day you will get the shares in your Demat account and same thing happens when you sell the shares. Markets are open from Monday to Friday and closed on Saturday and Sunday.
What is Demat account and why it is required?
Securities and Exchange Board of India (SEBI) is a board of India appointed by the Government of India in 1992 with its head office at Mumbai.

Its one of the function is helping the business in stock exchanges and in other security markets. In another word it is the regulator for stock exchanges. It monitors and regulates both (NSE and BSE) stock exchanges in India.

a) Demat (short form of Dematerialization) is the process by which an investor receives shares in electronic format. (physical share certificates are stopped)
converted into electronic form maintained in an account with the Depository Participant (DP). As you need bank account to save money, deposit cheques etc, likewise you need to have a demat account to buy and sell stocks in share market and to hold the shares.

b) DP could be organizations involved in the business of providing financial services like banks, brokers, financial institutions etc. DPís are like agents of Depository.

c) Depository is an organization responsible to maintain investor's securities (securities can be shares or any other form of investments) in the electronic form. In India there are two such organizations called NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Services India Ltd.)

d) Investorís wishing to open Demat account has agents who are part of either NSDL  or CDSL. All brokers will be part of these two agencies

e) Opening the Demat account is as simple as opening the saving bank account with any bank. Nowadays there are lot of brokers and banks offering demat and trading account at much lower rates.

f) All shares what you own will show in your demat account, so you don't have to possess any physical certificates. All shares will be held electronically in your demat account. As you buy and sell the shares, accordingly, your shares will get adjusted in your demat account.

Whether Demat account is must
YES. Demat account is must.
The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to open the demat account if you want to buy and sell shares in Indian share market.
Without this account you cant buy and sell shares in Indian share market.
How to open a Demat account?
You have to approach a Depository Participant (DP) to open a Demat account.
Most banks are DP participants so you can approach them or else you can contact us.
To have latest list of registered DP please visit websites and
A broker and a DP are two different people.
A broker is a member of the stock exchange, who buys and sells shares on his behalf and also on behalf of his customers.
A broker can also be a DP.
Following are the documents required to open Demat account
When you approach any DP, you will be guided through the formalities for opening a demat account.
The DP will ask to provide some documents as proof of your identity and address.

Any two documents from the below list are required to open demat and trading account. Pan card is mandatory
PAN card, Voterís ID, Passport, Ration card, Driverís license,
Photo credit card Employee ID card, IT returns, Electricity/ Landline phone bill etc.

Do you need any shares to open a Demat account?
NO. You need not have to have any shares to open a demat account.
A demat account can be opened with no balance of shares.
And also there is no restriction to maintain any minimum shares. You can have a zero balance (shares) in your account.

How much it cost to open a Demat account?
The charges for demat account opening varies from broker to broker or from DP to DP. Nowadays some brokers are offering free
account opening.
Generally some broker charge one time account opening fees
After successfully opening the demat account you are ready to do buying and selling of shares in share market exchanges like BSE
and NSE.

Important points to remember while opening online demat account

1) Do multiple enquiries with various brokers or DPís and try getting low brokerage charges.
2) Also discuss about the margin they provide for day trading.
3) Discuss about fund transfer facility. The fund transfer should be reliable and easy. Fund transfer from your bank account to trading
account and fund payout from your trading account back to your bank savings account.
Some online share trading account has integrated savings account which makes easy for you to transfer funds from your saving
account to trading account.
4) Very important is about service they provide, the research calls, investment stocks, daily trading tips and other advice.
5) Also enquire about their services charges and any other hidden fees if any.
6) Check how reliable and easy is to contact them in case of any emergency, like buying and selling of shares on immediate basis or
in case of any technical or other problems at your side while trading yourself.
7) You can also request to broker for demonstration of the trading terminal software and check how comfortable it is for you.

There are various brokers and DP, .

Secondary market
A market place where actual share trading (buying and selling) takes place is called secondary market.
Majority of share trading in India happens in top two exchanges called NSE and BSE.

Difference between Trader and Investor

Buying and selling of shares based on technical analysis or market trend taking into consideration very short duration like from a single day to couple of days is called trader and process is called as share trading.

Trader does either daily trading or short term trading like buying today and selling after few days or weeks. It is also called as Day trading or intraday trading.
Here Trader is not worried about the companyís performance or how good the company is, he just do trading at very low profits.
To know more about trading then please visit our learning section

Buying shares after analyzing the fundamentals of the company and holding them for long term like from couple of months to couple of years is called as Investor and process is called as Investing in share market.

Investor buys a company after analyzing its fundamentals and then invest for long term.
If the current stock price is available at discount (undervalued) then he buys it for long term prospective. If the stock price is expensive then it waits for correction and then buys it.
To know more about investing then please visit our learning section

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What is Stock Exchange
In India there are two major stock exchanges where majority of trading takes place.
Bombay stock exchange (BSE) and National Stock Exchange (NSE)

What is the meaning of Index in share market
Index consists of group of Top blue chip company shares.
Index denotes the direction of the entire market.
Like when people say market is going up or down that means Index is going up or down or majority of shares going up or down.

There are two Indices
Nifty belongs National Stock Exchange and it is group of top 50 company shares
Sensex belongs Bombay Stock Exchange and it is group of top 30 company shares
The information provided on this website is for educational purpose and not to be considered as investing or trading advice.
The investment and trading has to be done on sole discretion and or any person related to this site Should not be held responsible for the outcome.
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Type of Markets
There are two types of markets.
1. Primary market
2. Secondary market

Primary Market
A primary market is a place where companies, government and other corporate bodies sell new shares and other financial products.
In primary market, trading is not allowed.
For example If any company wants to get listed on stock exchanges then it has to list its shares and it is called as IPO (initial public offer) and this happens in primary market. Once it lists then it goes into secondary market for trading and investing.
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Welcome to Indian Share Market
First Learn and then Earn
Earning money in share maket  requires appropriate knowledge and experience, so it is highly advisable to gain adequate knowledge before start trading and investing in share market.

What is a Share