What is a Stock Market?
A Stock Market is a trading place where traders and investors buy/sell shares of Company, Commodities, Derivatives and other available asset classes.
What are the types of Stock Market?
There are broadly 2 types of Stock Market:
Primary market: In this type of stock market, the Company just enter this new environment of fund raising through an IPO (Initial Public Offer). One token price is selected during the IPO, which is further changed to permit trading activities in the other type of market i.e. Secondary Market.
Secondary market: Once this particular IPO stock comes into the Stock market, then its time to do some selling too. This is done in the secondary market. There is Bid price (selected by Buyers) and Ask price (selected by Sellers). The matching of Bid price and Ask price completes one trading transaction.
What is NSE and BSE?
NSE(National Stock Exchange) and BSE(Bombay Stock Exchange) are the exchanges/places where one gets to actually purchase/sell shares. Shares are listed with prices entailed with it over these exchanges. Some shares are listed over multiple exchanges. Also note that there many other stock exchanges in India other than these, but these are more dominating ones.
What is Nifty and Sensex?
Nifty and Sensex are market indices of NSE and BSE respectively. Market Index represent the major and overall performance of the Stock Exchanges.
Can I do trading on Stock Indices?
Yes, you can do trading over the Stock indices too. This is possible using Derivatives, which consist of Future & Options. Derivatives do possess a higher level of risk.
Who is a Broker and his role?
Broker is an intermediate entity for the buyer/seller and the Exchange to get their buying/selling done completely.
What is the difference between Investing and speculation?
Investing is staying on hold position without selling the purchased shares for a period of weeks or months or even years, after performing proper research work on the shares. In the contrast, Speculation is just to react to Market movements and is less recommended all time.
What is a Trading account? What is a DEMAT account?
For purchasing shares, for example there are 100 shares of Rs 600 per share. Hence, we need Rs 60,000. This amount should be credited by the buyer into the “trading account” which is then debited for the stock purchase by the opposite party.
Once we purchase/sell shares, the receipt of our transaction comes in “DEMAT account”
What is SEBI?
SEBI (Security Exchange Board of India) is the regulatory body to ensure that buyers and sellers are following proper norms of trading.