Stock Market FAQs

by Pankhudi Dave Head Finance Manager

A share market is defined as a place where publicly listed companies trade share units. A private company must first list itself on the primary market with an initial public offering (IPO) after which it can begin selling shares in the secondary market for interested investors to buy. The idea is for you as an investor to purchase shares at lower prices and sell them upon booking a profit. Both, Primary and Secondary markets are governed by SEBI (Securities and Exchange Board of India), which is the regulatory authority in India. Here are the answers to some common stock market FAQs.

FAQ 1: What are the different types of instruments traded in the share market?

Answer: There are several different types of investment instruments that are trade in the share market. The most popularly traded investment instruments traded on the market include units of stocks and equities, mutual funds, Initial Public Offerings, futures and options.

FAQ 2: Where can I purchase these stocks?

Answer: Stocks are typically traded on the stock exchange – the BSE and NSE; however you cannot purchase stocks at the exchange directly. To purchase stocks, you need to appoint the services of a suitable broker. Alternatively, you can hire the services of an investment company, who can purchase shares on your behalf. Such companies generally provide online trading platforms, where you can manage all your investments, including purchasing and selling shares, with the help of an investment advisor.

FAQ 3: How should I pick a stock?

Answer: You need to keep tracking and analysing the stocks you find profitable and those that can help you fulfil you financial goals, over a specific period of time. Also, you need to consider your investment objectives and risk appetite before investing. You can appoint the services of a share trading company that offers a trading platform on which you can get research reports regarding shares you are interested in. Such reports can help you select the right scripts matching your investment objectives and risk profiles.

FAQ 4: How can I know about the right time to purchase or sell a stock?

Answer: You need to research and monitor the stocks and review their performance over a specific period of time in order to understand the right time to purchase or sell a stock. If you do not have the time to research and monitor your investments, you can take help from an advisory service company that provides various trading tools such as mobile applications and research reports through which you can monitor your investments. You can also consult your investment manager before taking a decision.

FAQ 5: How is the price of a share determined?

Answer: There are several factors that play a crucial role in determining the current value of a particular stock. The three most common factors that determine the price of a given share are its demand and supply, its potential for growth and basic fundamentals about the company trading the shares such as its business prospects in the short and long term and the quality of company management.

FAQ 6: Why do I need a trading platform?

Answer: A trading platform can help you manage all your investments under one account. It also enables efficient trading, while providing you investment tips about the different investment options. Such a platform can keep you updated about market movements.

If you are a new investor, you must read more share market FAQs on the internet to understand how the market works. Try to familiarize yourself with the various terms and jargons surrounding share market investment.

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Created on Sep 15th 2019 21:42. Viewed 237 times.

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