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Basic knowledge about indian stock exchange

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14597 Points)

25 November 2012  

What is Share Market

Share
Share is nothing but the Ownership of the company divided into small parts and each part is called as Share or Stock.
Share is also called by different names like equity, financial security and so on. 
A person carrying a share of a company holds that part of ownership in that company. 
A person holding maximum shares carry maximum ownership and designated like director, chairman etc.


Share Market
A Share market is the place where buying and selling of shares takes place.
Now days due to internet and advanced technology there is no need to present physically in exchanges like NSE and BSE but in fact the buying and selling of shares can be done from anywhere, where there is a computer with internet connection.
One should have a demat and trading account, computer and internet connection and he/she can start the share trading or investing from anywhere.

Index in share market

Index consists of group of shares. Index denotes the direction of the entire market. 
Like when people say market is going up or down then that means Index is going up or down.
Index consists of high market capitalization and high liquidity shares.
High Market capitalization shares - Companies having highest number of shares and highest price of each share.
Market capitalization is calculated by multiplying current share price and number of shares in the market. 
High Liquidity shares - Shares in the market with high volumes.
 
Two types of Indices
Nifty and 
Sens*x
 
Nifty - Nifty consist of a group of 50 shares. 
Sens*x - Sens*x consist of a group of 30 shares. 
 What is Share Market
 
 
First let us understand the Working of a share market
 
To learn about how you can earn on the stock market, one has to understand how it works.
When a person want to buy/sell shares in the share market then he has to first place the order with a broker or can do themselves using online trading systems (this will be discussed later).
When you place the buy order, the message is transferred to the exchange [either NSE {National Stock Exchange} or BSE {Bombay Stock Exchange}] and the order stays in the queue of exchange's other orders and gets executed if the price of that share comes to that value. Once you get the confirmation of this transaction, the shares purchased, will be sent to your demat account. The shares will be stored in demat account in electronic format.Index in share market
Index consists of group of shares. Index denotes the direction of the entire market. 
Like when people say market is going up or down then that means Index is going up or down.
Index consists of high market capitalization and high liquidity shares.
High Market capitalization shares - Companies having highest number of shares and highest price of each share.
Market capitalization is calculated by multiplying current share price and number of shares in the market. 
High Liquidity shares - Shares in the market with high volumes.
 
 
NSE and BSE are countries economic barometer. 
 
Stock exchanges like NSE and BSE are the places where the trading of shares takes place.  Demat account is must
YES. Demat account is must.
The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to open the demat account if you want to buy and sell shares in Indian share market.
So a demat account is a must for trading and investing in share market.
 
How to open a Demat account?
You have to approach a Depository Participant (DP) to open a Demat account.
Most banks are DP participants so you can approach them or else you can contact us.
To have latest list of registered DP please visit websites www.nsdl.co.in and www.cdslindia.com
A broker and a DP are two different people. 
A broker is a member of the stock exchange, who buys and sells shares on his behalf and also on behalf of his customers.
A broker can also be a DP.
 
Following are the documents required to open Demat account
When you approach any DP, you will be guided through the formalities for opening a demat account. 
The DP will ask to provide some documents as proof of your identity and address. 
Below is a list of documents out of which you have to submit one or two.
PAN card, Voter’s ID, Passport, Ration card, Driver’s license,
Photo credit card Employee ID card, IT returns, Electricity/ Landline phone bill etc.
 
Do you need any shares to open a Demat account?
NO. You need not have to have any shares to open a demat account. 
A demat account can be opened with no balance of shares. 
And also there is no restriction to maintain any minimum shares. You can have a zero balance (shares) in your account. 
 
How much it cost to open a Demat account?
The charges for demat account opening varies from broker to broker of from DP to DP.
Generally some broker charge one time account opening fees but currently due to high competition they are offering free account.
To have latest charges please visit websites of www.nsdl.co.in and www.cdslindia.com or else you need to contact the specific broker.
 
Finally
After successfully opening the demat account you are ready to do buying and selling of shares in share market exchanges like BSE and NSE.
 
Important points to remember while opening online demat account
1) Do multiple enquiries with various brokers or DP’s and try getting low brokerage charges.
2) Also discuss about the margin they provide for day trading.
3) Discuss about fund transfer facility. The fund transfer should be reliable and easy. Fund transfer from your bank account to trading account and fund payout from your trading account back to your bank savings account. 
Some online share trading account has integrated savings account which makes easy for you to transfer funds from your saving account to trading account.
4) Very important is about service they provide, the research calls, intraday or daily trading tips.
5) Also enquire about their services charges and any other hidden fees if any.
6) Check how reliable and easy is to contact them in case of any emergency, like buying and selling of shares on immediate basis or in case of any technical or other problems at your side while trading yourself.
7) You can also request to broker for demonstration of the trading terminal software and check how comfortable it is for you.
There are various brokers and DP, please contact us for more information of brokers.
 
 
Stock exchanges
Mainly there are two exchanges in India.
NSE (National stock exchange) - Nifty is listed with NSE.
BSE (Bombay stock exchange) - Sens*x is listed with BSE.
 
NSE and BSE are countries economic barometer. 
 
Stock exchanges like NSE and BSE are the places where the trading of shares takes place.
 
Thanks for Reading This Article friends,
 
Regards,
RAJESH CHOUDHARY
 

 41 Replies

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)   (85905 Points)
Replied 25 November 2012

Thanks for sharing yes

1 Like

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 25 November 2012

very nice sharing bro... keep it up...

Urvashi Saini (Difference between Peak Performers & everyone else is what "everyone else" thinks)   (1494 Points)
Replied 25 November 2012

It really helps me to understand share market...

I have so many confusion regarding that which I find clear now.....

Bookmarking for future reference...

yes

Ashwini Kumar Rohilla (M.Com and CA-FINAL) (949 Points)
Replied 25 November 2012

yesyesyesyesyesyesyesyesyes

Venky (Student ) (98 Points)
Replied 25 November 2012

Thanx bro keep sharing...

Ranganathan K (Manager-Accounts & Audit)   (329 Points)
Replied 25 November 2012

wow!!!....its a nice hand guide to understand stock exchange, tks.

Banupriya (student) (85 Points)
Replied 25 November 2012

thanks for sharing friend

Hardik Dave (IPCC and CS Professional(FINAL) Student)   (15528 Points)
Replied 25 November 2012

Realy wonderful article.smile. Important article. Thanku for sharing bhai.

Ki$hor B (Training & Advisory) (3015 Points)
Replied 25 November 2012

yes superb!!

CA Bhargav Nathwani (CA in Practice) (8307 Points)
Replied 25 November 2012

Good one this Article contains basic information about share market that we cant study in our study material and for mark.. !!!

1 Like

Bhushan Jaju (Student) (970 Points)
Replied 26 November 2012

Very excellently explained....Rajesh Bro...thanks for sharing.....Explained in very sipmle and lucid manner..

Worth Bookmarking....yes

1 Like

(Guest)
Originally posted by : Bhargav Nathwani

Good one this Article contains basic information about share market that we cant study in our study material and for mark.. !!!

 

Thanx 4 sharing....................yes

Ramesha.M (Accountant) (800 Points)
Replied 26 November 2012

Dear sir,

Really Good work sir..........till date nothing know about  the stock market but u can updated it is really helps to me i can  understand simply  about the share market 

 

Thank you so much for updating 

 

Best Regards

Ramesha.m

Komal Sharma (Assistant Accountant) (1887 Points)
Replied 26 November 2012

Thanx for sharing this usefull post................yes

I have knowledge about share market but with some confusions specially about DMAT A/c, but now my all confusions are clear..........

Thanx once again.............................smiley


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