INVESTMENT IN THE STOCK MARKET FOR BEGINNERS

The stock market refers to public markets that exist for issuing, buying, and selling stocks that trade on a stock exchange or over-the-counter.  In simple terms, if A wants to sell shares of Reliance Industries, the stock market will help him to meet the seller who is willing to buy Reliance Industries.  A person can trade in the stock market only through a registered intermediary known as a stock broker. The buying and selling of shares take place through electronic medium.

There are two main stock exchanges in India where majority of the trades take place – Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Apart from these two exchanges, there are some other regional stock exchanges like Bangalore Stock Exchange, Madras Stock Exchange etc but these exchanges do not play a meaningful role anymore.

NSE is the leading stock exchange in India where one can buy or sell shares of publicly listed companies. It was established in the year 1992 and is located in Mumbai. NSE has a flagship index named as NIFTY50. The index comprises of the top 50 companies based on its trading volume and market capitalisation.  BSE is Asia’s first as well as the oldest stock exchange in India. It was established in 1875 and is located in Mumbai. BSE Sensex is the flagship index of BSE.

Securities Exchange Board of India (SEBI) is the regulatory body of the Indian Stock Markets. The main objective of SEBI is to safeguard the interest of retail investors, promote the development of stock exchanges, and regulate the activities of financial intermediaries and investors in the market. A stock broker also known as a dealer is a professional individual who buys/sells shares on behalf of its clients. In the stock market, stock broker is registered as a trading member with the stock exchange and holds a stock broking license. They operate under the guidelines prescribed by SEBI.

 ADVANTAGES OF INVESTING IN STOCK MARKET:

  •  the stock market can make great money in a short time of period.
  •  Unlike other investments, such as real estate and CDs, investors can easily access money in the stock market.
  • Investing in the stock market can help in our entire financial portfolio.

DISADVANTAGES IN INVESTING IN STOCK MARKET:

  • Investors can expect daily volatility in the stock market, but large failures in the system are less common.
  • In the stock market, there are winners and losers. Winners can make much money, but those who lose can see all of their investment disappear.
  • Every time an investor decides to buy or sell shares, he or she will have to shell out a certain proportion as brokerage fees to the broker.