Understanding the Stock Market
The stock market is a marketplace where shares of publicly-listed companies are bought and sold. It's like a supermarket, but instead of groceries, people trade ownership stakes in businesses.
How the Stock Market Works
When a company wants to raise money for expansion, it can "go public" by listing its shares on a stock exchange like BSE (Bombay Stock Exchange) or NSE (National Stock Exchange). Investors can then buy these shares, becoming part-owners of the company.
Key Players in the Stock Market
- Stock Exchanges: BSE and NSE - platforms where trading happens
- SEBI: Regulator ensuring fair practices
- Brokers: Intermediaries who execute your buy/sell orders
- Investors: People like you who buy and sell stocks
- Companies: Businesses whose shares are traded
How Trading Actually Works
- Open Demat & Trading Account: With a broker (Zerodha, Groww, etc.)
- Add Money: Transfer funds to your trading account
- Place Order: Choose a stock and quantity
- Order Execution: Broker sends order to stock exchange
- Matching: Exchange matches your buy order with someone's sell order
- Settlement: Shares credited to your Demat account in T+1 days
💡 Market Timings
Indian stock markets are open Monday to Friday, 9:15 AM to 3:30 PM. There's a pre-opening session from 9:00-9:15 AM and post-closing session till 4:00 PM.
Understanding Stock Prices
Stock prices are determined by supply and demand:
- High Demand: More buyers than sellers → Price goes up
- High Supply: More sellers than buyers → Price goes down
Factors affecting stock prices include company performance, economic conditions, industry trends, news, and investor sentiment.
Important Market Indices
- Sensex: Top 30 companies on BSE
- Nifty 50: Top 50 companies on NSE
- Nifty Bank: Banking sector performance
These indices act as barometers of market health. When you hear "Sensex is up 500 points," it means the overall market is performing well.
Types of Market Orders
- Market Order: Buy/sell immediately at current price
- Limit Order: Buy/sell only at your specified price or better
- Stop-Loss Order: Automatic sell if price falls to protect losses
Bull Market vs Bear Market
Bull Market: Prices rising, investors optimistic (bull attacks upward with horns)
Bear Market: Prices falling, investors pessimistic (bear swipes downward with paws)
Getting Started Tips
- Start with small amounts
- Learn before you invest
- Diversify your portfolio
- Invest for long-term (5+ years)
- Don't invest borrowed money
- Avoid tips and rumors
The stock market offers great wealth-building opportunities, but it requires patience, discipline, and continuous learning. Start your journey today!