golden Basics Of Stock Market

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Basics Of Stock Market
• The money you earn is partly spent and the rest saved for
meeting future expenses. Instead of keeping the savings idle
you may like to use savings in order to get return on it in the
future. This is called Investment.
• One needs to invest to

  1. earn return on your idle resources
  2. generate a specified sum of money for a specific goal in
  3. make a provision for an uncertain future
    When to Start Investing
    • The sooner one starts investing the better. By
    investing early you allow your investments more time
    to grow, increases your income, by accumulating the
    principal and the interest or dividend earned on it,
    year after year.
    • The three golden rules for all investors are:
  4. Invest early
  5. Invest regularly
  6. Invest for long term and not short term
    Where to Invest
    • One may invest in:
  7. Physical assets like real estate, gold/jewellery,
    commodities etc
  8. Financial assets such as fixed deposits with banks, small
    saving instruments with post offices,
    insurance/provident/pension fund etc or securities
    market related instruments like shares, bonds,
    debentures etc.
    Short & Long Term Options
    for Investment
    • Short Term:
  9. Savings Bank Account
  10. Money Market or Liquid Funds
  11. Fixed Deposit with Banks
    • Long Term:
  12. Post Office Savings
  13. Public Provident Fund
  14. Bonds
  15. Mutual Funds
    Before investing in a Market
    • Before investing, it is always wise to learn the Basics
    of Stock Market. We have compiled articles and
    tutorials on the Share Market Basics. Also included
    here explanation of Stock Market Terms and jargon
    used by people involved in trading stocks and
    shares. Whether it is Bombay Stock Exchange (BSE),
    National Stock Exchange (NSE), London Stock
    Exchange (LSE) or New York Stock Exchange (NYSE),
    trading terms or more or less similar
    Why Trade In Stock Market
    • 1. You do not need a lot of money to start making money, unlike buying
    property and paying a monthly mortgage.
    • 2. It requires very minimal time to trade – unlike building a conventional
    • 3. It’s ‘fast’ cash and allows for quick liquidation (You can convert it to cash
    easily, unlike selling a property or a business).
    • 4. It’s easy to learn how to profit from the stock market.
    But You need to have your basics clear. Unless you do….you will be wasting
    your time and loosing money. You need to be crystal clear of each and every
    aspect of Investments, stock options, Stock Trading, Company, Shares,
    Dividend & Types of Shares, Debentures, Securities, Mutual Funds, IPO,
    Futures & Options, What does the Share Market consist of? Exchanges,
    Indices, SEBI , Analysis of Stocks – How to check on what to buy?, Trading
    Terms (Limit Order, Stop Loss, Put, Call, Booking Profit & Loss, Short & Long),
    Trading Options – Brokerage Houses etc.
    Stock Market System
    • Primary market
    • stock market is a secondary market
    • trade stock for listed corporations
    • Progressive development of stock
    Primary Market
    • The primary market provides the channel for sale of new
    securities. Primary market provides opportunity to issuers of
    securities; Government as well as corporate to raise resources
    to meet their requirements of investment and/or discharge
    some obligation.
    • They may issue the securities at face value, or at a
    discount/premium and these securities may take a variety of
    forms such as equity, debt etc. They may issue the securities
    in domestic market and/or international market
    Why Companies need to issue shares to
    • Most companies are usually started privately by their
    promoter(s). However, the promoters’ capital and the
    borrowings from banks and financial institutions may not be
    sufficient for setting up or running the business over a long
    term. So companies invite the public to contribute towards
    the equity and issue shares to individual investors.
    • The way to invite share capital from the public is through a
    ‘Public Issue’. Simply stated, a public issue is an offer to the
    public to subscribe to the share capital of a company. Once
    this is done, the company allots shares to the applicants as
    per the prescribed rules and regulations laid down by SEBI.
    Secondary Market
    • Secondary market refers to a market where securities are
    traded after being initially offered to the public in the primary
    market and/or listed on the Stock Exchange. Majority of the
    trading is done in the secondary market. Secondary market
    comprises of equity markets and the debt markets
    • Difference between Primary and Secondary Market is
    In Primary Market securities are offered to public for
    subscription for the purpose of raising capital or fund
    Secondary Market is an equity trading venue in which
    already existing/pre-issued securities are traded among
    Equity Investment
    • When you buy a share of a company you become a shareholder in
    that company. Shares are also known as Equities. Equities have the
    potential to increase in value over time. It also provides your
    portfolio with the growth necessary to reach your long term
    investment goals. Research studies have proved that the equities
    have outperformed most other forms of investments in the long
    • Equities are considered the most challenging and the rewarding,
    when compared to other investment options.
    • Research studies have proved that investments in some shares with
    a longer tenure of investment have yielded far superior returns
    than any other investment.
    • However, this does not mean all equity investments would
    guarantee similar high returns. Equities are high risk investments.
    One needs to study them carefully before investing
    Types of investors
    • Speculators
    • Hedgers
    • Arbitragers
    Important Jargons
    o BSE Sensitive Index or SENSEX
    o Bull Market
    o Bear Market
    o Delivery
    o Intraday
    o Dematerialization
    o Long Buy
    o Short Selling
    o Stop Loss
    o Portfolio
    o Tick Size
    o Averaging
    o Booking Profit or Loss
    o Crash – Curciuts
    o Right Issue
    o Stock bonus
    o Stock Split
    Nifty CNX 100
    Nifty Junior
    Future Index
    Future Contract
    Market lot
    Roll over
    Long Positions
    Short positions
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