How To Invest In Stock Market In India?

by Bizgurukul Official Bizgurukul | Top eLearning Platform

The interest of multiplying the surplus income into great wealth is what made people look for more opportunities like the stock market. This market is a great place to increase your money. We can agree that the whole notion of the stock market is twisted for Indians because of Bollywood movies and their influence on people. This concept seems to have taken a turn around with the recent Bloomberg data. India is now the world’s sixth-largest stock market, overtaking France for the first time in market capitalization, with the benchmark rising over 23% this year. Indian share markets are ruling at record high levels, adding nearly 30% higher so far this year.

But what is the stock market? Keep scrolling down to know everything about the stock market. What Is the Stock Market? The Stock Market can be considered a place where companies make an entry through an Initial Public Offering (IPO) in a quest of raising funds from the public with the issuance of their shares in the market. It is where individuals or institutional investors come together to buy or sell shares in a public venue. These exchanges take place in the electronic marketplace. When the demand for a stock exceeds the supply, there will be a rise in the price of a stock. While investing in the stock market can sound daunting, a careful understanding of stocks can help you kickstart your journey as a trader and an investor.

The BSE and The NSE

BSE is a short term of the ‘Bombay Stock Exchange.’ It was established in 1875. It is the oldest stock exchange in India with the largest securities market. On the other hand, NSE stands for ‘National Stock Exchange.’ It was founded much later than BSE in 1972. Both of these are leading stock exchanges of the Indian market with a common location in Mumbai. There are 1641 companies listed on NSE, and 5749 companies on BSE. Moreover, BSE is the oldest stock market, but NSE is the largest stock market if we talk in terms of volume.

How Does A Stock Market Work?

Before getting to know how to invest in the stock market in India, you will need to learn how it works. It works the same way every other marketplace does wherein buyers and sellers come together in a platform to negotiate on prices and trade stocks. The price of the stocks listed on the stock market exchange is somehow directly proportional to the demand of the stock. It generally depends on the business functions, such as acquisitions, expansion, upgradation, or it could be anything that possesses the potential to lay an effect on the financial status of the firm.

The stock market consists of two types of trades- Intraday and Delivery. Intraday trading is buying and selling the stocks on the same day before the market closes. The ultimate goal of intraday trading is to reap the benefits of everyday price fluctuations. If a trader fails to do it in a day, then the broker shifts it to delivery-based trading. While investing, your shares are deposited into your Demat account, and dissimilar to the shares you bought to trade within the same day, you will be keeping them in the holdings section of your portfolio.

Unlike intraday trading, delivery transactions do not allow an investor to buy and sell the stocks on the same day. The trader is given the opportunity to keep the shares for as long as he/she is willing to. The length of keeping the stocks varies from two days to two decades.

How To Invest In The Indian Stock Market?

The most important component of investing in the stock market is to understand the important documents needed to start your trading/investing journey.

Documents Required

The below-mentioned documents are necessary for registration.

PAN Card
Aadhaar Card
Name on a canceled check on an active bank account
Proof of residence
Documents stating your income
Passport size photographs

In India, people trade stocks on two platforms- NSE and BSE. In order to pave the way into these platforms, retail traders are supposed to register with brokerage firms and Depository Participants (DP’s). It is an integral part of the process to find the best DP as retail investors will have to buy, store, and sell stocks through them. Therefore, it is advised to get a 2-in-1 Demat and Trading account. These accounts let you access your portfolio from your home, you can look for different stocks to invest in, and learn almost everything.

Important Metrics Of the Market

Now, how to invest in the stock market and stay consistent with this. Before anything, a little research on the market and understanding the metrics of evaluating stocks could be of great help.

Once a month starts, set aside at least 10-20% of your savings for investing. Technically a trader would take out 10% of it. Depending on your future goals and the amount that your pocket allows, you should trade.
Another chief principle is to set your investment goals. Maybe you wish to buy a house in the future, maybe you wish to get a car or anything, start taking a fair percentage of your savings for investing.
Make sure to have a diversified portfolio which also means you will have to invest in multiple stocks. It brings balance to your portfolio.
If you are a complete beginner in the market, you can choose to select the large-cap stocks, it is better for you to avoid small-cap stocks in order to play on the safer side.
Penny stocks are high-risk securities with small market-cap. Trading penny stocks is not like trading your regular stocks. It lacks history which makes it highly risky. Hence, you should be more focused on lower-volatility stocks.
Always think long-term, as the risk involved in staying invested in any fundamentally strong asset reduces with the time you give your stock to grow.

It was the gist of the stock market, the details of every bit of information are mentioned in one of the best stock market courses in India, i.e., ‘Stock Market Mastery’ under the newly introduced segment “ACE.” Headstart your investing journey with the latest addition of the course based on Stock Market brought to you exclusively by Bizgurukul. Source: https://bigstartups.co/articles/article/how-to-invest-in-stock-market-in-india-