Basics of Indian Share Market
The share market is a platform where buyers and sellers
come together to trade on publicly listed shares during
specific hours of the day.
★ Types of Share Market
1. Primary Share market
2. Secondary Share Market
1. Primary Share Market
When a company registers itself for the first time at the stock exchange to raise
funds through shares, it enters the primary market. This is called an Initial Public
Offering (IPO), after which the company becomes publicly registered and its shares
can be traded within market participants.
2. Secondary Share Market
Once a company’s new securities have been sold in the primary market, they are
then traded on the secondary stock market. Here, investors get the opportunity to
buy and sell the shares among themselves at the prevailing market prices.
Typically investors conduct these transactions through a broker or other such
intermediary who can facilitate this process.
Difference Between Equity, Currency, Commodity Markets
➔ Equity
Equity refers to a shareholder's ownership in the company. It is the amount that a shareholder
will receive after deducting the liabilities from the company's total assets.
Time: 9:15 AM to 3:30 PM
➔ Commodity
A commodity market is a marketplace for buying, selling, and trading raw materials or primary
products. (Ex. Oil, Gold etc)
Time: 9:15 AM to 11:30 PM
➔ Currency
The international currency market is a market in which participants from around the world buy
and sell different currencies.
Time: 9:15 AM to 05:30 PM
What is Market Capitalization?
The value of the company that us traded on the stock market, Calculated by multiplying the total
number of shares by the present share price.
Classification of Companies based on their capitalization
❏ Large-Cap companies
1st 100 companies in terms of market capitalization
❏ Mid-Cap companies
101st to 250th companies in terms of market capitalization
❏ Small-Cap companies
From 251st and onwards in terms of Market capitalization
What is Trading?
Trading is defined as buying and selling of shares of particular company or indexes like nifty and
banknifty etc.
❖ Types of Trading
1) Scalping:
Scalping a trading style that involves opening and holding position for very amount time, few
seconds a few
The idea to open trade and exit as soon the market moves in favour - taking frequent profits.
Scalping often considered much quicker and more intense form requires traders focus on markets
that are extremely liquid experiencing strong trends. This enables traders to open positions and get
out them soon as
The style not generally used by part-time traders it requires lot and performing analysis.
2) Intraday Trading:
Day trading is a style that specifies a trader will open and close all their positions before the
markets close each evening.
Day traders will buy and sell multiple assets within the trading day In doing so, they avoid
position overnight.
Intraday trading takes time, focus and dedication to a trading plan To reduce the risk of losses,
day traders often use stops & limits.
Attaching a stop-loss to a position will enable a trader to keep their risk at a known level, while
limits will lock in any profits.
3) Swing Trading:
Swing trading is a style that focuses on taking a position within a larger move.
It involves holding a trade over several days or weeks, in order to take advantage of short- to
medium-term market movements.
A swing trader will use technical analysis to identify these key price points. They are looking
for two types of market movement: a 'swing high', which is when the price moves upwards,
and a 'swing low', which is when the market price declines.
4) Positional Trading:
Position trading involves holding a trade for a long period of time, whether this is weeks,
months or even years.
Position traders are unconcerned with short-term market fluctuations they focus on the
overall trend. position trading can refer to short positions to sell an asset as well, unlike
pure traditional investment
While this increases the potential for profit, it also increases the trader's exposure to risk.
Position traders need to have a large amount of patience to stick to the rules laid out in
their trading plan - knowing when to close a position and when to let profits run.
Difference between Investment and Trading
INVESTMENT TRADING
Long Term Very Short term
Fundamental Analysis Technical Analysis
Wealth Creation Additional Monthly Income
Long term goals Short Term Goals
What are Indices?
Stock Market Indices give an insight into the overall trends of the capital markets and sentiment
of the investors towards a particular stock or set of stocks in an industry.
Some of major Indian Indices are as follows :
● BSE Sensex
● NSE Nifty
● Bank nifty
● Sectoral indices like BSE Bankex and CNX IT.
● Market Capitalization based indices like BSE smallcap and BSE midcap
Trading and Demat account
● Trading account
In trading account buying and selling takes place
a. Online trading with app or web portal
b. Offline trading at broker's end
● Demat account
A Demat account is an account to hold financial securities in electronic form. In India,
Demat accounts are maintained by two depository organisations,
1) National Securities Depository Limited (NSDL).... works for NSE
2) Central Depository Services Limited (CDSL)....works for BSE
Why you need a broker
● Why you need Broker ?
It is compulsory to have a broker for stock trading/investment in India as per SEBI
rules. For trading you cannot directly go to exchange. All brokers are registered
with SEBI.
Broker provides trading platform in which you can directly trade online or you can
place offline orders.
● Types of brokers
Online brokers
Offline brokers
a) Main broker
b) Sub broker
Trading Processes
★ Buy & Sell:
When price is going up we BUY shares & when it reaches to some target or profit
we SELL
Example:
In Intraday trading, we have bought 100 share of SBI at Rs 200 at 10am In some
time share moves to Rs 202, in this case we are making profit of Rs 200 ( 100
shares x 2) so we have sold 100 shares at 202.
★ Short sell & Buy:
When the price or market is expected to fall down, in this case we initiate sell
positions instead of buy. Suppose we do not have shares in our Demat account but
still we want to trade in falling market, in this case we can initiate Short sell which
means we are selling those shares
which we don't have in our Demat account.
It looks impossible, or sounds strange....
But it is possible to sell those shares which you don't have, but condition to that you
have to compulsory buy those shares before market ends. One need to complete
above transaction before 3:15pm on same day, because this action is valid for same
day.
Thank You !
