The stock market has two kinds of investors, one who is experienced and the others who are novice traders. This makes both look at the market opportunities differently and make decisions that turn out to be profitable or adverse for them. The article is focused on the stock market in India and how both the investors can begin trading step by step to earn profits.
The Indian stock market has an exchange equivalent of less than 3% of the global market capitalisation. Traders can make investments in the stocks of companies that are doing well and have a bright future. Stock trading is not a simple job; traders have to study the market, its risks, compare their risk tolerance capacities and analyse the market before they invest in any stocks.
So, here we have the stock market of India and how to start trading stocks to be a top-notch market earner. Let’s analyse the Indian stock market closely and make most of trade and investments.
Stock Market
The stock market is the oldest and traditional financial market where investors buy and sell stocks to earn high profits. The volatility of the market provides investors ample opportunities to make investments, although the risks of the market are also high. The main factors behind the fluctuations of stock price are the company’s brand name, products manufacturing, demand and supply, news related to the industry, etc.
Investors trade in stocks by buying and selling the stocks of companies sold in the market. The companies issue their stocks in units called shares which are then traded. The main reason for the issue of stocks of a company is their requirement for funds, business growth or expansion, product development and many others.
When the stocks are issued, traders buy them and hold them for a period of time by paying for the stocks. Thus, the company gets funds and traders stock along with the following benefits:
- Right to vote
- Position of shareholder
- Dividends
- Investment gains
- Liquidity
- High short term returns
- Portfolio diversification
- Continuous trading
- Well protected by SEBI
- Flexible trading
So, a trader enjoys many advantages if they invest in stocks of a company. Although, they have to select the stocks with proper market research.
Types of stocks or shares in the market is also an important part of the stock market that investors should be aware of. The stock market is divided into two basic types:
Equity stocks are the common stocks of the company, which means a shareholders equity or ownership that is represented by the amount of money that the company shareholders when the company liquidates. The equity shares, moreover, give investors many rights.
Traders can have voting rights, share profits and claim assets of a company. In addition, some companies provide dividends though it is not fixed.
Preference shares are the preferred stock of the company, which has some extra benefits for the traders. Investors of such shares have fixed dividends, paid out first during liquidation and have the disadvantage of not having voting rights. Equity is ownership in the company which preference shares do not provide.
Indian Stock Market
The article has discussed here what the stock market is and its types, but for investing, better traders should be aware of the Indian stock market, as the title says how to start stock market trading in India? Moreover, we’ll know how to do online trading in India for an advanced investment.
The Indian stock market has two basic exchanges where most of the trading takes place:
- the National Stock Exchange (NSE)
- the Bombay Stock Exchange (BSE)
Being in the Indian stock market for years now, the two have taken the stock market of India to the next level with their technical and supportive services.
The Bombay Stock Exchange (BSE) was established in 1875, and the National Stock Exchange (NSE) was launched in 1992 and began trading in 1994. The two stock exchanges of India have the same process and mechanism of operating. Traders can invest with any of the two exchanges and trade in the stocks of top-notch companies in India.
The National Stock Exchange has 1920 companies listed with it as of January 2022, whereas the Bombay Stock Exchange has over 5400 companies, and in fact, the two exchanges have some companies in common. So, both have the significant firms of India listed with them.
Investors can create their accounts online with the brokers or exchanges and start investing in the stock market with the required information and services.
Bombay Stock Exchange is the oldest player of the Indian stock market, while the National Stock Exchange is among the largest if compared in the volume of trade. Hence, investors can take advantage of the two best stock exchanges of India with market efficiency, reduced costs, innovation, customer services and the best companies to trade.
In addition, the arbitrageur’s factor present in the two stock exchanges keeps the prices of the stock exchanges in a tight range. Hence, investors can trade in the stocks of companies without worrying about the transaction costs or extra payments.
How to Trade in Share Market of India?
To know how to do online trading in India, the paragraph is highly significant for beginners of the Indian stock market. Traders can easily, within some steps, invest their funds and get hold of the shares of companies. Below mentioned are the steps for trading online:
The first step of trading online is opening a Demat or online trading account with a reputed stockbroker. For this, investors have to find a stock broker that has the best services for stock trading. As with the Demat account or trading account, traders are able to invest in the market.
They can buy the stock, store them and then sell it whenever they find a great opportunity. Moreover, the Demat account has the facility of storing the shares in digital format.
For the stock broker selection, traders can have these points in watch:
- Charges of the broker for a trading account or Demat account and what are the annual maintenance charges.
- Brokerage charges are charged by the broker whenever the trader executes an order in the stock market.
- Reputation of the broker in the market
- Services offered
- Trading and analysis tools
- Trading platforms
- Range of trading accounts
- Commission and spreads
- Customer support
- Deposit and withdrawal process
- Regulatory body
- Trading instruments
The next step after the selection of a brokerage firm is opening the demat or trading account. For this, investors have to get themselves registered with the brokers by filling a form. This requires a name, email address, contact number and password. The process hardly takes 15 minutes for the trader. After this, traders have to follow the given instructions:
- Provide detailed information that the broker has asked for, like income source, tax payments etc
- Provide the address and bank details
- Upload the documents
- Choose one trading account
- Get verified by the broker
The third step after filling the form is getting verified. This may take one business day as the broker thoroughly investigates the trader for security reasons. Once the account is created after registration, traders can log in to the demat or trading account with their login credentials.
The following process involves depositing the funds in a trading or Demat account. The funds were added to give access to the trading facilities of the broker. Investors can then use the trading platforms, tools and other analysis services to do market research, have updated trade information and market position of different stocks etc.
The final step includes going through the details of various stocks of the company, having a comparison and then selecting the one that gives profits to the trader in future. Lastly, traders can invest their funds and execute the order to invest in the stocks.
With this simple process, traders can start stock market trading in India. Stock market investment online is simple and has advanced tools and techniques that make it feasible to trade globally using mobile applications and the operation of tools on all devices.