Basics of Indian Share Market
Basics of Indian Share Market
Basics of Indian Share Market
Share -
Share is nothing but the Ownership of the company divided into small parts and each part is called as Share or Stock.A person carrying a share of a compnay holds that part of ownership in that company.
A person holding maximum shares has maximum ownership like directors, chairman etc.
Share Market -
A Share market is the place where buying and selling of shares takes place.Nowdays due to internet and advanced technology buying and selling of shares takes place anywhere in india and also from foreign country, there is no need to be physical present in exchanges like NSE and BSE.
Share market and its analysis
Financial markets like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are countries economic barometer (a guide to economic growth).
Stock markets like NSE and BSE enable trading of a company's stock.
First let us understand the Working of a share (stock) market
To learn more about how you can earn on the stock market, one has to understand how it works. A person want to buy/sell shares in the share market has to first place his/her order with a broker or can do themselves using online trading systems (this will be discussed later).
When the buy order of the shares is communicated to the exchange [either NSE {National Stock Exchange} or
BSE {Bombay Stock Exchange}]. The order stays in the queue of exchange's other orders and gets executed if the
price of that share comes to that value. The shares purchased will be sent to the you either in physical or demat format.
Rolling Settlement Cycle: (RSC)
RSC means when you will get your shares in your demat account or in physical form.
In a rolling settlement, each trading day(T) is considered as a trading period and trades executed during the trading day(T) are settled on a T+2 basis i.e. trading day plus two working days.
What is Demat account and why it is required?
# Securities and Exchange Board of India (SEBI) is a board (corporate body) appointed by the Government of India in
1992 with its head office at Mumbai. Its one of the function is helping the business in stock exchanges and any other
securities markets.
# Demat (short form of Dematerialization) is the process by which an investor can get shares (also called as physical
certificates) converted into electronic form maintained in an account with the Depository Participant (DP).
# DP could be organizations involved in the business of providing financial services like banks, brokers, financial
institutions etc. DP’s are like agents of Depository.
# Depository is an organization responsible to maintain investor's securities (securities can be shares or any other form
of investments) in the electronic form. In India there are two such organizations called NSDL (National Securities
Depository Ltd.) and CDSL (Central Depository Services India Ltd.)
# Investor’s wishing to open Demat account has to go DP and open the account.
# Opening the Demat account is as simple as opening the bank account with any bank. As you need bank account to
save your money, make cheque payments etc, likewise you need to open a demat account if you want to buy or sell
stocks.
# All shares what you possess will show in your demat account, so you don't have to possess any physical
certificates. They are all held electronically in your demat account. As you buy and sell the shares, accordingly your
shares will get adjusted in your account.
Is a demat account a must?
The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to open the demat account if you want to buy and sell shares.
So a demat account is a must for trading and investing.
How to open a Demat account?
You have to approach a DP to open a Demat account.
Most banks are DP participants so you may approach them or else you can contact us.
To have latest list of registered DP please visit websites www.nsdl.co.in and www.cdslindia.com.
A broker and a DP are two different people. A broker is a member of the stock exchange, who buys and sells shares on his behalf and also on behalf of his customers.
Following are the documents required to open Demat account.
When you approach any DP, you will be guided through the formalities of opening an account.
The DP will ask to provide some documents as proof of your identity and address.
Below is a list but you may not require all of them.
PAN card, Voter's ID, Passport, Ration card, Driver's license, Photo credit card Employee ID card, IT returns, Electricity/ Landline phone bill etc.
Do you need any shares to open a Demat account?
No. You need not need any shares to open a demat account. A demat account can be opened with no balance of shares. And there is no minimum balance to be maintained either. You can have a zero balance in your account.
How much it cost to open a Demat account?
The charges for account opening, annual account maintenance fees and transaction charges vary between various DP’s. To have latest charges please visit websites of www.nsdl.co.in and www.cdslindia.com
Finally -
After successfully opening the demat account, the DP will allot “Beneficial Owner Identification” Number, which will be needed to mention for all your future transactions.
If you want to sell your shares, you need to place an order with your broker and give a 'Delivery Instruction' to your DP.
The DP will debit your account with the number of shares sold. You will receive the payment from your broker.
If you want to buy shares, inform your broker about your Depository Account Number, so that the shares bought are credited into your account.
Important points to remember while opening online account
¨ Make multiple enquiries and try get low brokerage trading account.
¨ Also discuss about the margin they provide for day trading.
¨ Discuss about fund transfer. The fund transfer should be reliable and easy. Fund transfer from your bank account
to trading account and visa versa. Some online share trading account has integrated savings account which
makes easy for you to transfer funds from your saving account to trading account.
¨ Very important is about service they provide, the research calls, intraday or daily trading tips.
¨ Also enquire about their services charges and any other hidden if any.
¨ And also see how reliable and easy is to contact them in case if any emergency. Emergency closing or squaring
off trades in case of any technical or other problems.
Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but DayTradingShares.com does not warrant or guarantee their accuracy or date.
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