Your online trading journey in Stocks, F&O, Commodities, Currencies begins here!
A stock market is a place where you can buy & sell shares of companies like Reliance, TCS, Bharti Airtel, and more. These publicly traded companies list their shares on exchanges like National Stock Exchange and Bombay Stock Exchange. Given that there are a whopping 5000+ stocks in India, exchanges like NSE and BSE have indices that track the performance of a set of stocks. For example, Nifty 50 by NSE tracks 50 of the largest companies in India by market capitalization. Furthermore, a stock market is also a place where shares are issued for the first time by companies. Issuance of shares generally happens with an Initial Public Offer (IPO).
It's easy to think that investing in the stock market means just buying and selling stocks. The truth is, a stock market is a diverse place that gives you access to trading and investing in stock futures and options. There’s more! The stock market also gives you access to ETF investments. ETFs or Exchange Traded Funds are mutual funds that trade like stocks on an exchange. Not to forget, shares of a company are issued for the first time via an IPO which also happens on the stock market. Here’s a summary of all the securities that you can invest in on the stock market:
Types of Investments | Details |
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Stocks | Investing in stock is also known as an equity investment. It consists of buying stocks that would give investors a part of the ownership of that company. Investors invest in markets with an aim to earn returns from an increase in stock price or through dividends. |
Futures & Options | Derivatives/F&O is a type of trading where Futures and Options are traded. A Future is a contract to buy or sell an underlying stock or other assets at a predetermined price on a specific date. And, the Options contract gives an opportunity to the investors/traders the right but not the obligation to buy or sell the assets at a specific price on a specific date, also known as the expiry date. |
Commodities | A commodity is a raw material that is used in the manufacturing of finished goods. Commodities are traded on Multi Commodity Exchange (MCX) in India through futures contracts and options contracts and can also be bought and sold in their physical states. The most commonly traded commodities include Crude oil, Coffee, Natural gas, Gold, Wheat, Cotton, Corn, Sugar, Silver, and Copper. |
Currencies | Whenever any Currency is bought or sold for another, the transaction is known as 'Currency trading'. Currency trading is the largest financial market in the world. Investors, speculators, and corporate are involved in cross-border Currency trade. Foreign exchange is the simultaneous buying of one currency and selling of another. Currencies are traded through a broker or dealer and are executed in currency pairs. For example the Euro and the US Dollar (EUR/USD) or the British Pound and the Japanese Yen (GBP/JPY). |
Initial Public Offering (IPO) | An IPO (Initial Public Offering) refers to the process of offering shares of a private company to the public in a new stock issuance. An IPO allows a private company to raise capital from public investors. |
Exchange Traded Funds (ETF) | Exchange-traded funds mimic the performance of an underlying index through passive investing. In other words, ETFs portfolio matches the composition of an Index in the same proportion. An exchange-traded fund mimics and tracks the performance of the index. Hence ETFs are not actively managed by a portfolio manager. |
A stock exchange is a marketplace where buyers and sellers can connect to trade shares of companies like HDFC Bank, Wipro, ICICI Bank, and more. Think of National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Securities and Exchange Board of India (SEBI) regulates stock exchanges in India. Unless a share is listed on an exchange, it can not be bought and sold. That’s why stock exchanges are crucial to the share market investment ecosystem.
Here are a few important pointers you need to consider before setting off on your investment journey.
Here is a step by step guide on how to invest in share market India?
Investing in the primary market requires investors to have a Demat account. Shares are distributed based on demand and availability of shares. This is what it means to invest in an IPO. Once the IPO period is over, the shares can be traded on the secondary market that most investors are familiar with.
Secondary market is place where shares of the companies are traded. For investing and trading in secondary market an individual must have a demat account with a stock broker. To carry investing / trading activities investors also require a stock trading app. The shares that you own will be stored in the Demat account and once you sell a stock, it’ll be transferred to the buyer’s Demat account.
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