STOCK MARKET FOR BEGINNERS IN INDIA

TO BEGIN WITH STOCK MARKETS IN INDIA , FIRST WE WILL START WITH BASICS .

WHAT IS STOCK MARKET ?

A Stock Market is a share market or platform for traders and investors to buy and sell shares of various companies listed . FOR EX : When a buyer buys a share of a company , he/she is actually buying a part of that company and the company gains funds by this method .The company uses these funds for their growth which in turn increases the revenue (Not Always ) and the share price are increased which profits the buyer .

STOCK EXCHANGES IN INDIA .

THERE ARE TWO MAJOR STOCK EXCHANGES IN INDIA .

1. BSE : BOMBAY STOCK EXCHANGE
2. NSE : NATIONAL STOCK EXCHANGE

BOMBAY STOCK EXCHANGE

It consists of SENSEX . Sensex is the sensitivity index of top 30 companies .

The top 30 companies are decided on the basis of MARKET CAPITALISATION ( market value ) = Share price * No of shares

NOTE : THE SHARE PRICE KEEPS ON CHANGING AND SO DOES THE MARKET VALUE .

NATIONAL STOCK EXCHANGE

It consists of NIFTY which includes the top 50 companies out of which top 30 companies remain the same and the last 20 companies have less weightage , so they almost run in parallel.

NIFTY AND SENSEX ACT AS BAROMETER OF ECONOMY

THERE ARE TWO WAYS :

• TRADING

• INVESTING :

Investing is the right way . It is believing in the future of the company and no matter what happens you wil have to be optimistic and as for the forthcoming generations , the consumption is going to increase , which in turn will increase the economy and hence will increase the share price of nifty and sensex

Knowledge required for investing ?

Investing requires a less knowledge than trading.  As in investing , you should have high school maths knowledge ( not even necessary ) . 

The basic rule is to protect your capital . For example , 50 % of your loss is covered by 100% of profit which is rare . So the basic thing is that you cannnot afford to loose your capital .

When you invest , you invest in the value of the company in regard to its future whereas when you trade , you invest in the price of the share of the company

• Do not blindly follow the herd . Dont just invest everything you have because everyone is doing.

DO NOT MEASURE THE DEPTH OF THE RIVER BY PUTTING BOTH YOUR LEGS , YOU WILL DROWN FOR SURE.

• Always have a valid reason for WHY you are investing in that company , is it just because of profit or you believe in the future of company.
• Learn to control your emotions as the market is full of ups and downs but in the end on a long term basis , it ends on higher note in majority of the cases.
• Always invest in the right company , the companies that are too big to fall . Would you like to buy a mercedes at discount or a toyota on a full price ?
• You should buy at lows and sell it when high whereas what other people do is they buy at full price and sell when it is low because they cannot handle their emotions or they invest in volatile companies that can shut down or go bankrupt
• Not all your investments are going to end big but they are goiing to teach you something that will make you end big .

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