First lets look the definition of stock market- The stock market refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place. Did not understand? Okay let me brief you through example: I am a person who regulary buy vegetables or fruits for our own use but in share market, we buy shares in virtual form where we get some partnership on the company (according to the no. of shares. So, why people invest in share market? Definitely to get profit. It is also true that we get high profit in share market than other options available like savings, Fixed deposits , government bonds etc. But, as we can get high return, so the risk is also high. We may loose our money if we invest carelessly, Perfect example is 2008 crisis, you may go through it.
Now, i am only going to brief you about the stock market , after that it is better you to decide whether you want to invest or not?
Now, this is the process of how share market works. Suppose I am reliance and I need money, so i will launch IPO (initial public offering which means the company is offering its shares for sale to the public for the first time.) I want to introduce 10000 shares of my company, then first i have to go to SEBI ( which regulates all the processes right from beginning to end) and have to verify all my documents and have to get approval. After getting approval , i will approach stocks, BSE and NSE, which will help me to get capital for my shares. Now, there is a term called DP (Depository Participant) like Angel broking, zerodha etc. There are more than 15000 registered DP is there. It is a platform which deals with the users to invest their money . It helps investors to buy or sell stocks.
Now, the question comes, how DP deals with the users?
So, here Demat and trading accounts, play the role. Demat Account is an account that is used to hold shares in electronic format. During online trading, shares are bought and held in a Demat account. It is controlled by government under CDSL and NDSL. Now, after reliance will get capital, he does not have any role in the scene. So, there are three accounts that we need to do all these transaction, savings account( when you want to withdraw money), trading account( through which we will trade) and demat account. Now, DP opens the demat account and trading account. So, these all are the hierarchies that we need to know before investing.
So, why all these companies, exchange and DP are doing this? what are their benefits in this point? we might loose our money but all these companies, DP, SEBI, exchange, they will surely get their money with 0 risk in the form of taxes and brokerage.
Now, lets see, where, how, when , what we should invest?
Equity: Equity is the shares which we buy or sell. There are two types of equity
Delivery: When you buy share and want to keep it in your demat account, , may be for long period of time. Its upto you (you can sell share except on the same day when you buy).
Intradey: Intradey is the same day selling and buying process. you cannot keep it with yourself. If you would not sell it, then it automatically be sold at the end of the day ( which is called square off)
MY OPINION IS TO INVEST IN DELIVERY
There are other options are also available:
F&O, Future and option which is an assumption that which share price will go high or low ( watch the movie Bazaar)
commodity like gold, petrol, diesel, natural gas, silver etc which you can buy or sell virtually
Currency ( currency of different countries like dollars, singapore dollars etc.)
But i will suggest only Delivery and we will talk only about it.
Now, how we calculate maket is up or down?
Here SENSEX and NIFTY will play the role. SENSEX and NIFTY are the top 30 and 50 companies respectively which forces market price.
Now, how the DP gets their money:
This is how, DP makes their money as we can see above.
You need to provide your aadhar card, pan card etc. as your document. In some DPs , you can use digilocker also.
Where to invest? how to invest? you will get all these answers , when you start working on it.
There is a concept called stop loss.
For example, let’s say that you bought 200 shares of a company ABC at Rs 100. However, you do not want to lose more than 5% of your money, in case the trade didn’t work out as expected because of any reason. Here, you can put a stop loss to automatically sell your shares if its price falls below Rs 95.
Therefore, by putting a stop loss, you are limiting your losses. You are booking a loss at 5% and avoiding the scenario in case the trade might turn out ‘sour’ and the share price falls more than 5% (say 7 or 10%).
Choose a company which has a good past record and it also depends on the type of companies which has a good startup ideas( like ola, oyo etc.). You can visit moneycontrol.com where you will get all the details about the companies (balance sheet, records etc)
How all the companies and these segments make money
At the end of the day (after you done your buying and selling process) , you will recieve a contract note in which you can see all of your taxes that is levied.
we can assume that, In an investment of 1 lakh, you have to pay 300-350 *(approx) as your taxes and brokerage.
After that you also need to pay income tax in it. If you buy delivery and within 1 year, if you make a profit (through buying and selling) then you have to pay 15% flat tax. eg. If you buy a share in delivery and you sell it in 15-20 days and you got a profit of Rs. 1000 then you need to pay 15% of your profit.
Second one is long term capital gain, In these scenario, if you buy a share and sell it after 1 year then you will be charged 10% tax only if you make a profit of more than Rs. 1 lakh, otherwise you will not have to pay taxes.
But if you trade in intradey, and you get a profit of ‘X’ amount then you will have to pay tax according to the slab decided by government ( during the budget).
After you open your demat account, you will recieve a message from CDSL where you can create your own login details under CDSL. As you can fet your information from DPs also, but if the DP get fraudlent then you can also see your all details under CDSL Login details.
This was just a basic about stock market which you can refer while opting for stock market. There are many concepts to learn about stock market which you would get while trading.
Thankyou!!!!!!!!!!!!
SANJAY KUMAR 