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Share Market for Beginners

by Daniel

Investing in the share market can seem daunting, especially for beginners. However, with the right understanding and tools, you can navigate the world of share market trading and make informed decisions. This guide aims to demystify the share market for newcomers by explaining key concepts and offering practical tips on how to invest in shares. We’ll cover everything from “What is the share market?” to “How to start investing in the share market?” and “How to invest in stocks using a share market app.”

What is the Share Market?

The share market, often referred to as the stock market, is a platform where individuals and institutions buy and sell shares or stocks of publicly listed companies. A share represents ownership in a company, and by purchasing shares, you become a shareholder or part-owner of that company. The value of these shares fluctuates based on market conditions, company performance, and other factors.

Investors can make money in two ways:

Capital Gains: When the value of the share increases over time, and you sell it for a profit.

Dividends: Some companies distribute a portion of their profits to shareholders as dividends.

Difference Between Stocks and Shares

Though often used interchangeably, stocks and shares have subtle differences. A stock is a general term referring to ownership in one or more companies. A share specifically refers to ownership in a single company. For instance, you might own “stocks in various companies” but hold “shares in XYZ Company.”

How Does the Share Market Work?

The share market functions through exchanges like the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India. These exchanges are platforms where buyers and sellers come together to trade shares.

There are two types of markets:

Primary Market

This is where companies first offer their shares to the public through an Initial Public Offering (IPO).

Secondary Market

After the IPO, shares are traded among investors in the secondary market, which is where most trading occurs.

Prices of shares are determined by supply and demand. If more people want to buy a stock (demand) than sell it (supply), the price rises, and vice versa.

When Does the Share Market Open?

In India, the share market operates from 9:15 AM to 3:30 PM, Monday through Friday, with a pre-opening session from 9:00 AM to 9:15 AM. There are no trading hours on weekends and public holidays.

What is Delivery Trading?

Delivery trading involves buying shares with the intention of holding them for a longer period, usually beyond one trading day. Investors own the shares and can benefit from capital appreciation and dividends. This method contrasts with intraday trading, where shares are bought and sold within the same day.

How to Start Investing in the Share Market?

For beginners, investing in the share market may seem overwhelming, but breaking it down into smaller steps can simplify the process.

Open a Demat and Trading Account

The first step is to open Demat account online and a trading account with a registered stockbroker or through a share market app. A Demat account holds your shares in electronic form, while a trading account allows you to execute buy and sell orders.

Many brokers and financial institutions offer these accounts online. You can also download a share market app from your preferred broker to trade on the go.

Choose the Right Share Market App

Choosing the right share market app is crucial for smooth trading. These apps provide real-time data, trading platforms, and investment tools that help you make informed decisions. Before you proceed with a share market app download, consider factors such as ease of use, speed, charges, and customer support.

Learn How the Share Market Works

Before jumping into the market, take time to learn how the share market works. Read books, attend webinars, and watch educational videos on how to invest in the share market for beginners. Many apps also offer tutorials for new investors. Understanding the basics will help you minimize risks and maximize your returns.

Start with Small Investments

It’s advisable to start small, especially when you’re a beginner. Choose a few stable and well-established companies to invest in. This will help you understand the process and give you a sense of how share market investments work without risking too much capital.

How to Learn Share Market? Resources for Beginners

Online Courses

Several websites and apps offer paid and free courses on share market basics and advanced trading techniques.

Books

Some popular titles include “The Intelligent Investor” by Benjamin Graham and “A Random Walk Down Wall Street” by Burton Malkiel.

News Portals

Keeping an eye on financial news is crucial to understanding market trends.

Financial Advisors

Consulting a financial advisor can provide personalized advice based on your goals and risk tolerance.

How to Trade in the Share Market?

Once you have opened your Demat account and selected your share market app, you’re ready to start trading. Here’s a simple breakdown of how to trade in the share market:

Place a Buy Order

Use your trading account or share market app to place a buy order. You’ll need to specify the stock, quantity, and price.

Execution of Trade

When your order matches a seller’s offer, the trade is executed, and the shares are credited to your Demat account.

Sell Shares

When you want to sell, you place a sell order similarly. If the market price matches your offer, the trade will go through, and you’ll receive the proceeds in your account.

How to Invest in Stocks Using a Share Market App?

Thanks to technology, investing in stocks has become easier than ever. A share market app allows you to buy and sell shares directly from your smartphone. To invest in the stock market through a share market app, follow these steps:

Share Market App Download

Choose a reliable share market app from platforms like Google Play or Apple App Store. Ensure it has good reviews, low fees, and robust features.

Sign Up

Create an account by entering your personal information and completing KYC (Know Your Customer) verification.

Add Fund

Link your bank account to transfer funds to your trading account.

Start Trading

Browse the list of stocks, read company reports, and place orders directly through the app.

Conclusion

Investing in the share market can be a rewarding experience if done correctly. As a beginner, it’s important to start with small investments, do thorough research, and use technology-oriented share market apps. Whether you’re looking for long-term growth or short-term profits, having a clear strategy and understanding the fundamentals of share market trading is crucial.

With the availability of India share market apps like HDFC Sky that offer real-time information, educational tools, and low transaction fees, you can easily begin your journey towards building wealth through share market investments. Remember, the key is to remain patient and informed. The more you learn, the better your decisions will be, leading to a more successful investment experience.