If you are looking to improve your financial health and build on it, you need to invest. Leaving your money stagnating in the bank will cause it to depreciate due to inflation. While there are many different ways to invest, stock markets are considered one of the best. However, as a newcomer, you may be wary and there is nothing wrong with feeling scared and nervous.
You may have heard stories about how risky and complicated it is to trade in the Indian stock market. That’s why you need a beginner’s guide that will hold your hand and help understand the basics of the stock market. That will make the process of investing in the stock market easier and you will have more confidence.
What are Stocks?
Stocks can be defined as the ownership certificate of a company. When a company wants to raise capital, it issues shares (collectively known as stocks) that individuals and institutions can buy. When you purchase shares of a company, you own a part of the company proportionate to the number of shares you have. This does not give you the right to be part of the day-to-day operations of the company but you benefit from the profits that the company makes. It will pay you dividends based on the number of shares you own.
The Regulatory Body
The Indian stock market is regulated by The Securities and Exchange Board of India. The name is abbreviated to SEBI. It oversees the functioning of the stock market as well as handles the listing of companies on the stock exchange. SEBI has stringent guidelines that companies must adhere to before they can be listed.
The Stock Exchanges
The buying and selling of shares take place on stock exchanges. The two main exchanges in India are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE), which is the oldest exchange in the country. NSE was established in 1992. The stock exchanges are open from Monday through Friday, from 09.15 am to 3.30 pm. However, you cannot invest directly in the stock exchanges as you have to be a member. That is where brokerage houses come into play.
Brokerage houses charge a small fee to allow retail and institutional investors to buy and sell stocks. You can choose between full-service or discount brokerage houses. Each brokerage house has a trading account opening process that investors need to follow. Once your account opens, you will be able to buy and sell shares.
Full-service brokerage houses and brokers not only help you trade but also provide other services, such as portfolio management, tax planning, and financial advice. You will get a licensed stockbroker who will offer you insights, research, and other details to make informed investment decisions.
Discount brokers provide just a platform to buy and sell shares. Of course, you will need a trading account as well as a demat account but other than trading, these brokers will not offer other services. They will provide graphs and educational articles to help you understand trends, market conditions, and companies you should be investing in to diversify your portfolio. A discount broker is more affordable than a full-service broker.
Make sure you read online news to find out about upcoming IPOs and external factors that could affect share prices. When you stay informed and know the different trends, it will allow you to trade smartly and grow your investments if you want to invest more smartly then you should try the best algo trading app in india.
It is also prudent to research the different brokerage houses to choose one that is right for you. That can have a profound effect on your trading strategy and investment plan.
Read also:- Share Market Investment: What Is Stock Market In India?