2023-12-07
What are Stock Indices? From the companies listed in the stock exchanges, a few similar stocks are grouped together to form an index. The classification may be on the basis of company size, industry, market capitalization, or other categories. The Sensex is the oldest index comprising shares of 30 companies and represents roughly 45% of the free-float market capitalization. The Nifty includes 50 companies and accounts for approximately 62% of its free-float market cap. Others include sector indices like the Bankex, market cap indices like the BSE Midcap or the BSE Small cap, and others. What is Offline Trading and What is Online Trading? Online trading is all about buying and selling shares on the internet sitting in the comfort of your office or your home. You just need to log into your trading account and you can buy and sell shares. Offline trading is trading by visiting your broker’s office or by telephoning your broker. What is the Role of a Broker in the Share Market? The broker helps you execute your buy and sell trades. Brokers typically help buyers find sellers and sellers find buyers. Most brokers will also advise you on what stocks to buy, what stocks to sell and how to invest money in share markets for beginners. For that service, the broker is paid brokerage. Can Anybody Buy and Sell Shares in the Share Market? Any person who is competent to enter into a contract can buy and sell shares in the market. You need to open a trading account with a broker and you can buy and sell shares in the stock market after the trading account is opened? Trading Account vs Demat Account? There is an important difference between the two. Trading account is where you execute your buy and sell trades. The demat account is where your shares are held in custody. When you buy shares in your trading account, your bank account gets debited and your demat account gets credited. The reverse is true when you sell shares. What is Meant by Trading and Investment? The fundamental difference is that trading refers to the short-term buying and selling of shares whereas investment refers to long-term holding and buying of shares. A trader normally tries to churn the money rapidly following short term events and market movements of prices of stocks of any company whereas the investor tries to buy a good stock in the sharemarket and waits for the stock price to appreciate over time. What is Rolling Settlements? Every order that is executed on the share market must be settled. Buyers receive their shares and sellers receive the sale proceeds. The settlement is the procedure wherein the buyers procure their shares and sellers receive their monies. The rolling settlement is when all trades have to be settled at the end of the day. In other words, the buyer must pay for his purchase and the seller delivers the sold shares in one day on the share market. Indian share markets adopt the T+2 settlements, which means the transactions are completed on Day One and the settlement of these trades must be completed within two working days from Day One. However, T+1 is currently being adopted in phases. What is SEBI? SEBI refers to the Securities and Exchange Board of India. Because the bourses have inherent risks, a market regulator is required. The SEBI is provided with this power and has the responsibility of developing as well as regulating the markets. The basic objectives include protecting investor interest, developing the share market, and regulating it’s working. Are the Equity Market and the Derivative Market One and the Same? Both equity market and derivative market are part of the overall stock market. The difference lies in the products traded. The equity market deals in shares and stocks whereas the derivative market deals in futures and options (F&O). The F&O market is based on an underlying asset like equity shares. What is fundamental and technical analysis? Fundamental analysis is about understanding the business of the company, its growth prospects, its profitability, its debt etc.Technical analysis focuses more on charts and patterns and tries to find out past patterns to apply for the future. Fundamentals are used more by investors while technicals are used more by traders. Minimum investment in the Share Market There is no minimum investment required as you can even buy 1 share of a company. So if you buy a stock with a market price of Rs.100/- and you just buy 1 share then you just need to invest Rs.100. Of course, brokerage and statutory charges will be extra. Banknifty Nifty Finnifty Index Trading