- The Exchanges
Most of the Exchanges on the Stock Market in India happen on two major exchanges – the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Almost all the major corporations are listed on both the exchanges. The BSE however, is the older exchange but has been surpassed by the NSE in terms of volume traded. Both their market caps lie around $2.3 trillion.
Equity spot settlements are following a T+2 settlement cycle (which will be changed to a T+1 cycle from early 2022). All trading on stock exchanges takes place between 9:55 a.m. and 3:30 p.m., Indian Standard Time (+ 5.5 hours GMT), Monday through Friday. On a few days the whole market is shut, such as on national holidays.
The two most popular indices in India are the SENSEX and the NIFTY (or the Standard and Poor’s CNX Nifty). The former comprises 30 odd stocks while the latter has 50. These companies are chosen because they influence both the economy and the stock market to a large extent. They are also therefore sometimes used as a proxy for the whole of the indian stock market.
There are several sector indices too – like NiftyPharma, which gives us insights into how a particular sector is performing at a given point in time.
- The WatchDog
The Securities and Exchange Board of India (SEBI) overlooks the Indian stock market. From development to the overall regulation and supervision – everything comes under the purview of the SEBI when it comes to the Indian stock market.
As an investor or a trader you are subject to certain taxation rules. Long term capital gains tax is applicable when you hold the shares for more than a year – you are liable to pay 10% over and above Rs. 1 lakh on sale of equity shares. Short term capital gains tax charges you 15% for shares held for less than 12 months.
- Primary and Secondary Markets
The primary market is where companies or businesses register themselves. They come in to raise funds for a listing through means like an IPO. The actual trading of shares takes place in the secondary market.
- Which stock to pick?
There are two ways of going about the journey of the Indian stock market – technical analysis and fundamental analysis. The former includes using various statistical measures like RSI, movement average etc. to make profitable trades. Fundamental Analysis on the other hand uses various ratios like Return on Equity, debt to assets ratio etc. among others.
- How to begin?
To begin your journey here you need to open two main accounts – a Demat Account and a trading account.
- The Various Kinds of Stocks
There are three kinds of stocks based on market capitalisation – large cap, mid-cap and small cap stocks. Large Cap stocks are well established in the market, and are the least risky from an investment point of view.
Mid-Cap stocks on the other hand are known for their potential for growth, and are more risky than large cap stocks. Lastly are the small cap stocks which are the most risky.
- Mutual Funds
A beginner can also start their journey by investing in Mutual Funds – Mutual Funds are a pool of shares chosen by a professional. Profits generated are distributed among the holders on the basis of the profits held by them. Investing in Mutual Funds gives you the advantage of diversification. It also lets one use the services of a financial professional at affordable prices.
Bottom line is that the Indian stock market is not a very complicated place – but only if one is equipped with the right knowledge. It is always best to do one’s own research before investing. Discipline should be inculcated – your portfolio should be monitored regularly. Lastly, remember that patience is key. Going after fast gains will inevitably lead to one’s doom.
If you wish to learn more about the share market in India, check out this course by FinLearn Academy which gives you an in-depth understanding of the stock market world and takes you through the basic and advanced trading strategies.