You are a beginner in the stock market and hesitant to invest in the stock market? Do you always think “Can the average person make money in the stock market?”
Understand the Basics of Stock Market. You can find below brief details of stock market for beginners.
There is no clear perception about the stock market in every individual who wants to enter the stock market. The stock market is easy to understand if you learn the basics of the stock market and follow with discipline. The answer to your question “Can the average person make money in the stock market?” will be YES
Basics of the stock market :
To begin with, any prospective investor who thinks that they don’t know about the stock market should understand the basics of the stock market.
The stock market also called as the equity market or share market which works as a middleman between buyers and sellers of stocks. Buying and selling happen via electronic trading platforms. Irrespective of Age, Gender, and profession, you may fulfill your dreams by investing in the stock market by following certain strategies of investment with interest and discipline. To start with, you are also required to have minimum funds to invest in the stock market.
If your dreams are high, then you have to plan accordingly to fulfill your dreams. It can be long-term plans or short-term plans. Every dream needs financial backup. Having good finances is possible by disciplined investment in the stock market. Everything in life has a risk factor and the stock market is not an exception. Each one of us has to take calculated risks to achieve our dreams.
Learn stock market
You get good guidance for understanding about the stock market. Read articles related to the stock market, watch videos and refer books. Above all, you can discuss with experienced investors/brokers who have succeeded in the stock market. Take advice from experts. Learn to analyse the market based on many factors.
Stock market for beginners
Let us understand about stock market investment. You can invest in two different ways. Either investment in the Primary market like IPO(Initial Public Offerings), or through the secondary market. In the primary market, the Company will come to the public by offering its shares through an Initial public issue. You can apply for such good companies’ public issues and get the allotment. To understand more about IPO click here. In the secondary market, you are going to buy and sell the shares through your stock broker where your trading account is held.
What are NSE and BSE ?
There are many stock exchanges in India, the largest and widely used exchanges are
1.National Stock Exchange
2.Bombay Stock Exchange
Understand more about stock exchange read this
What are Sensex and Nifty ?
BSE and NSE are stock markets. The real-time market movement of the stocks will be shown in the stock market index of BSE and NSE. The Sensex stands for “Stock Exchange Sensitive Index” of the Bombay Stock Exchange index and Nifty stands for “National Stock Exchange Fifty” of the National Stock Exchange index.
Stock market Indices
To make it easier to understand about stock market, there are different types of stock market indices in India.:
- Benchmark Index:
Benchmark index is a comparative statistical measure of Mutual Funds overall performance on investment as against how much it has earned in reality.
- Broad Market Index:
Broad Market index will validate more stocks into the index. For ex. BSE sensex represents the movements of 30 big companies listed on BSE. Likewise, BSE 100 represents the movements of top 100 big companies.
- Market Capitalisation Index:
This Index measured the total market value (capitalisation) of the companies of their outstanding shares. For Ex. BSE Smallcap, BSE Midcap.
- Sectoral or Industry-based Index:
Sectoral based Index gives you the details of sector based industrial performance. Like healthcare, energy, technology, Banking, Industrial goods etc. Ex. CNXIT, Nifty FMCG, Nifty Bank
Why is the stock market index important ?
Stock market indices depict the condition of the market. These indices will help the investor to understand the movement in the stock market. Let us understand how these stock market indices will help the investors.
- Acts as a guide to the beginners:
It is easy for the beginner to understand the trends in the market. It also helps beginners to understand sector-wise movement in the stock market.
- Easy to decide about the Right Stocks to Pick:
It is natural to get confused when you have thousands of company stocks listed on the Stock exchange. Choosing the right stock for investment is not that easy. In such circumstances, the stock market index comes to our rescue by classifying the company based on industry type and their financial position etc., thereby allowing investors to pick their stock with ease.
- Reflects the uncertainty of Financial Reforms:
You can see drastic movement in the index when any sentimental news comes to the public. For ex. New rules and regulations in any industry will impact the indices of that particular industry. This leads to panic sell or buy of shares shown for the short term
- Residual Income :
You can also invest on the portfolio which resembles the portfolio of NSE Nifty which require no research at your end. You can buy multiple stocks in a single click. The portfolio which resembles the portfolio of Nifty will earn the same amount of returns as Nifty portfolio. It is nothing but passive income you are earning without much of your effort.
To understand the Important Stock market trading strategies click here
You also have a commodity trading market in India.
In simple words buying, selling or trading a large range of commodities like Oil and gas, metals such as gold and silver and soft commodities like cocoa, coffee, wheat and sugar. Commodity trading is perhaps older than that of financial markets. In commodity trading, investors speculate on the expected future value of a given commodity.
You can trade commodities only through registered brokers of authorized exchanges such as NSE, MCX-SX,BSE. The Multi Commodity Exchange of India Limited (MCX) is India’s first listed exchange. The exchange started in November 2003, operates under the regulatory framework of the Securities and Exchange Board of India(SEBI)
If you are more interested to learn about Commodity trading click here.
What is Bull and Bearish Stock Market ?:
When stock prices rise by 20% or more in a Stock market Index for over a period of one to two months it is called Bull Market. You can see more buying activities in the rising bull market. In a Bear Market Stock Prices start declining and fall 20% or more from recent highs. Basically, a bear market means more sellers. In a fear of more negative fall in the stock market, investors do start selling their stocks.
Large Cap Stocks, Mid Cap Stocks and Small Cap Stocks
Though we discussed different indices in the Stock Market, Stocks are also categorized based on total worth of their shares. We call this as market capitalisation. Companies with big market capitalisation are called large cap stocks. Likewise, with medium market capitalisation are called Mid Cap Stocks and with small market capitalization are called small cap stocks.
Basically this is classified as companies having market cap of Rs. 20,000 crore or more are called Large cap companies. Market cap of Rs. 5,000 above and less than Rs. 20,000 are called Mid Cap Companies. Market cap of Rs. 5,000 crores and below and considered as Small Cap companies
What is the Stock Market Crash ?
Stock prices are volatile. Its prices often swing up and down. Another interesting factor is this up and down in the stock prices can be sectorial also instead of individual stock. We often listen to traders discussing that, ohh.. Bank index down today. Or Nifty fifty is up today.
When you find stock prices of various sectors decline drastically, in a verge of panic, investors start selling their shares at the same time and stock prices fall. This sudden drop in stock prices will trigger a bear market. This is what we call a Stock Market crash.
Stock market diwali muhurat trading
Muhurat means an auspicious time according to the Hindu calendar. Muhurat trading in the stock market is an age-old ritual being followed by Stock brokers. Muhurat trading will be held on Diwali for one-hour duration and mostly in the evening. The time will be specified by the stock exchange every year. It is believed, by trading at muhurat time investors and traders earn more profit which brings wealth and prosperity. Brokers will treat muhurat trading as the beginning of a new year. Muhurat trading is practiced only in India. Many new investors will start a stock investment journey on this auspicious day.
Start your trading journey with utmost care and patience. Consult a good advisor before investing if you are a beginner. Study the stock performance based on sectors, company size and other factors mentioned earlier. Trade with registered stock brokers only. Keep a watch on Sensex and Nifty index. Learn and absorb the movement of stocks you have invested. Invest in the right time with the right stock.