Guidelines for Beginners Investing in Shares

• There are certain terminologies that one comes across when he/she starts investing in the stock market. It is better to know the meaning of each of these to have a better understanding about this wonderful investment arena.
• Share or stock is an individual unit of a company’s investment that is purchased by the investor (share holder). The entity that is connected to selling, exchanging and other related activities of suchunits is called a stock market. So you will be the owner of certain shares of one or many companies when you invest and purchase them from stock market.
• All these purchases are made with an intention to obtain profit on short or long term basis. An index is the value of bunch of shares of different companies across various sectors, which is graphed, measured and stated with respect to time. An index helps a person understand the performance of the stock market and hence it is of pivotal importance to keep track of the index.
• Stocks and shares are financial products that are sold, purchased and also exchanged. There is a time when the company shares are released into the market for the first time. This is called theprimary market. The event of selling or exchange that takes place after the purchase of these shares from the company or government happens in the secondary market.
• Securities and Exchange Board of India, SEBI is a government body that is responsible for regulating rules and guidelines related to the stock market.
• A person who wishes to invest in stock market in India makes his investments through a demat account. This account holds the shares which are actually certificates of ownership of an investor. The certificates are in the form of electronic documents and since there is actually no physical presence of this certificate, it is called a dematerialized account. It is just like any other bank account and can be easily operated.
• There are certain centers (banks, financial institutes etc) that are approved by NSDL and CDSL, who have the authority to hold demat accounts of customers. These centers are called depository participants and act as a media between the customers and companies in transactions related to shares. 

• The purchase of shares of companies cannot be done directly from stock exchange. They have to be purchased through intermediate brokers.
• Once the purchase is made, the particular stock reaches the demat account of the person (owner of share) in the specified settlement cycle (T+2) through few transactional instructions or operations between the exchange and the broker. The dividend earned on the stocks is directly received in the savings bank account of the owner.
• If an owner wishes to sell his shares he can approach a broker to sell his shares. 

• Investment based on timely goals: It is often noted that people invest in shares having short, medium or long term goals. Based on these goals a person looks into various factors of a particular stock as mentioned below.

1. Short term – based on short analysis and also timely updates
2. Medium term – based on the economic status of the company for a period of one year
3. Long term – based on the long term objectives of a company and on detailed analysis of a company’s profile

• Typically a person can also choose to trade shares rather than making it an investment option. In this case there are various other short time strategies to trade in stock market.
• Nevertheless, one must always bear in mind the risks associated with the stock market. Cutting your losses is an operational necessity rather than caution.