markets as on: 10-03-2017 16:00 hours

SENSEX 28,946.23 17.10 USD 66.60 0.11
NIFTY 8,934.55 7.55 EUR 70.70 0.12
BSE-100 9,208.05 0.46 GBP 80.91 0.30

The content educates a beginner on basics of shares trading through relevant definitions and working processes. The guidelines for investing in shares and the importance of stock market are also mentioned here.

Stay in Touch
RSS Face Book Tweeter

Guidelines for Beginners Investing in Shares

With positive signs in your professional career and the previous pay hike that you received, you have been noting the investment options adopted by your friends and colleagues. Now the term ‘shares’ strikes you every now and then. When searched on internet, a tall glass building and a graph is seen (stock exchange building). The problem of not understanding an investment option can pull down the interest of an investor. An overview with few basic guidelines in this regard can boost the interest of potential investors. Don’t get intimidated by the various mighty sounding terminologies that govern the stock market. If you follow the basic rules of the game and keep it simple you can make distinct in-roads into this mammoth financial world of shares.
Before you start off…
  • 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. 
How does stock market work?
  • 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. 
How to make shares work for you?
There are many strategies that work in the stock market and it is important that you realize your needs and your limitations in the first place to make the stock market work for you. Here are few points that can educate a person about the basics of such strategies.
  • 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. 
Importance of stock market in India – Generalized View:-
Stock market has been one of the major areas of economy, which has brought our country to lime light over the last two decades on a global level. The establishment of SEBI, changes in foreign investment policies has played a major role in this regard. The government of India has been bringing timely reforms and restructuring the regulations related to stock market in India. These timely reforms in regulations taken to protect the interest of investors, in turn tend to improve the investment in stock market and hence increase the value of stock. It is always noted that a positive trend in a country’s stock market is an indication of the economic strength of the nation.

    Please provide guidelines for share market investment. Want to know more about the stock market.
    03-Jun-2016 06:41 PM
    Stock market is a place where many new stock market traders join the share trading league daily and trade daily in NSE and BSE. Intraday traders, stock market investors and market beginners should understand the meaning of the stock market for beginners cutting the learning curve
    03-Jan-2013 01:27 PM
  • Samar:
    Good review.
    12-Dec-2012 12:09 AM
  • devendra:
    this is site has very good knowledge about market, but i want some more knowledge about it because i want to become an investor. Please help. Give me some advice.
    28-May-2012 12:15 AM
  • M V V S SARMA:
    please provide guidelines for share market investment. Want to know more about the stock market.
    07-Mar-2012 10:32 PM