Share market (also called stock market) is a platform where people can grow their wealth in a legitimate way. It is a proven way of making money since its existence. In India share market started in1875 and has been growing proudly since then. Today, millions of people invest in the stock market and are earning profits.
But, one truth is that there are many people in India who want to invest in the stock market but they are unable to do so. There is only one reason for this, and that is the fear of losing money. The only way to overcome this fear is to understand the rules and regulations of the share market and its strategic intricacies. However, many people remain stuck on “how to learn share market”. They remain stuck on this question and cannot move forward.
Therefore, in this article, I will tell you in detail about all the rules and regulations of the stock market and all its strategic nuances so that you can feel comfortable working with the stock market.
Table of Contents
Table of Contents
What is share market? in short
Share market is a platform where investors can buy and sell stocks, bonds, mutual funds, and other securities. It is also known as a stock market or equity market. It provides investors with an opportunity to make money by buying and selling securities and other investments.
Share market history of India
The history of the Indian share market goes back to the late 18th century when the East India Company was granted a Charter by the British Crown to trade in India. The Bombay Stock Exchange (BSE) was established in the year 1875, and it was the first stock exchange in Asia and is now one of the largest in the world. The National Stock Exchange (NSE) was established in 1992 and it is the second-largest stock exchange in India.
The Indian stock market has witnessed rapid growth in recent years. The market capitalization of listed companies has increased from Rs. 8.8 trillion in 2006 to Rs. 168 trillion in 2018. The number of listed companies has also increased from 5,000 in 2006 to 12,000 in 2018. The Indian stock market has also become more accessible to international investors. In 2016, the country implemented ‘Foreign Portfolio Investment’ (FPI) which allowed foreign investors to directly invest in the Indian stock market.
The Indian stock market has also been impacted by several economic and political events. The 1991 economic reforms, the liberalization of the economy in the 2000s, and the introduction of the Goods and Services Tax (GST) in 2017 have all had a positive impact on the stock market. On the other hand, the global financial crisis of 2008, the Indian currency crisis of 2013, and the demonetization of 2016 have all had negative impacts on the stock market.
Rules and regulations of share market in india
The Securities and Exchange Board of India in short ‘SEBI’ is the primary regulator of the securities market in India. It frames regulations and sets rules that govern the functioning of the stock market.
Some of the basic rules and regulations of share market in India are:
- All transactions in the stock market should be done only through a SEBI registered stock broker.
2. To trade in the Indian stock market, one must have a demat and trading account.
3. All transactions should be done only through a recognized stock exchange.
4. Insider trading and market manipulation are strictly prohibited.
5. SEBI has also introduced new rules such as the Prevention of Fraudulent and Unfair Trade Practices (PFUTP) to protect the interests of the investors.
6. SEBI also prescribes rules for the settlement of disputes between the investors and the stock market intermediaries.
7. SEBI also requires stock brokers to maintain a minimum capital adequacy ratio to ensure that their clients’ money is safe.
8. SEBI also conducts periodic checks of stock brokers and other intermediaries to ensure compliance with the regulations.
9. SEBI also monitors the stock market to identify any signs of manipulation.
10. SEBI also lays down guidelines for corporate governance that companies must follow.
These are some of the basic rules and regulations governing the share market in India.
How to learn share market?
Before you jump into the world of stocks, it’s important to understand the basics of the stock market. Learn about share market to know the different types of stocks, the different exchanges, and how the market works.
Understand the basics of stock market
When starting with share marketing you need to learn share market basics.
- What is the stock market?: The stock market is a public marketplace where stocks, bonds, and other securities are bought and sold.
- What are stocks?: Stocks are shares of ownership in a publicly traded company. They represent a claim on the company’s assets and earnings.
- What is a stock exchange?: A stock exchange is an organized market for the trading of stocks and other securities, such as bonds and options.
- How do stocks increase in value?: Stocks typically increase in value when a company’s earnings and outlook are strong. This causes investors to buy the stock, driving the price up.
- What are the different types of stock exchanges?: Major stock exchanges include the Bombay stock exchange (BSE) and the National stock exchange (NSE).
- What is a brokerage account?: A brokerage account is an arrangement with a broker that allows you to buy and sell securities.
- How do you make money in the stock market?: Making money in the stock market involves buying and selling stocks at the right time. When stocks are undervalued, investors can purchase them and then sell them
Understand the risk of stock market
Investing in stocks involves risk, so it’s important to understand what you’re getting into before you start buying and selling. Make sure you understand the different types of risk involved, know share market up and down, and the potential rewards and losses.
Risk involved in stock market:
- Market Risk: The risk of loss due to changes in the overall stock market.
- Liquidity Risk: The risk of not being able to find buyers or sellers when needed.
- Interest Rate Risk: The risk that rising interest rates will decrease the value of stocks.
- Political Risk: The risk of suffering losses due to changes in government policies.
- Currency Risk: The risk of losing money due to fluctuations in currency exchange rates.
- Inflation Risk: The risk that inflation will decrease the purchasing power of investments.
- Business Risk: The risk that a company’s business will suffer due to increased competition or other factors.
- Credit Risk: The risk that a company will default on its debt obligations.
- Volatility Risk: The risk that prices of stocks will rise and fall suddenly and unpredictably.
- Legal Risk: The risk of suffering losses due to litigation or other legal issues.
Do research on stocks
Researching stocks is the key to success in the stock market. Make sure you understand the company, its products and services, its financials, and its competitors. The more you know, the better your decisions will be.
Make a plan
Develop a plan for your investments, including how much money you want to invest, how much risk you’re willing to take, and what types of stocks you’re interested in.
Choose a broker
A broker is a financial professional who can help you buy and sell stocks. Make sure you understand the fees and services the broker offers before you open an account.
Before you dive into the stock market, it’s a good idea to start small and learn about share market as you go. Consider investing in just a few stocks at first, and gradually increase your investments as you gain more experience.
Track your investments
Once you’ve invested in stocks, it’s important to keep track of your investments. Monitor the performance of the stocks and adjust your strategy as needed.
Staying on top of the news is an important part of investing in stocks. Follow the news, read financial publications, and talk to other investors to stay informed.
Don’t forget taxes
It’s important to understand the tax implications of investing in stocks. Make sure you understand the different taxes you may be subject to and how they may affect your investments.
How to learn Share Market basics as a Beginner?
There are many tools and resources available online that will help a beginner to understand the basics of share marketing. How to learn share market? Here is a handy list for where you need to focus.
1. Read Books: Books are always the prime source of learning anything new. A book written by an experienced author can help you a lot to learn about share market which will be helpful to start a career in share market.
2.Get support of an advisor: An experienced advisor can guide you adequately on the complex aspects of share marketing. And thus, you can learn about share market many more.
3. Join Online Courses: This would be a great way to learn the stock market. There are many online courses available on stock marketing which are provided by experienced instructors with certificates.
Simple maths of stock market
Stock market math involves the use of mathematics to analyze the performance of stocks and other investments. It can involve basic mathematics such as calculating averages and ratios, or more complex calculations such as using regression analysis to determine the future performance of a stock. Stock market math can also be used to analyze the performance of an entire portfolio of stocks, bonds, and other investments.
Stock market math involves calculations such as the price-to-earnings ratio, return on equity, and dividend yield.
For example, the price-to-earnings ratio is calculated by dividing the current stock price by the company’s earnings per share. For example, if a company’s stock is trading at ₹50 per share and it has earnings per share of ₹4, the price-to-earnings ratio would be 12.5.
Return on equity is calculated by dividing a company’s net income by its total equity. For example, if a company has a net income of ₹1 million and total equity of ₹20 million, its return on equity would be 5%.
Finally, the dividend yield is calculated by dividing the annual dividend by the current stock price. For example, if a company pays an annual dividend of ₹1 per share and its stock is trading at ₹50 per share, the dividend yield would be 2%.
Learning the stock market can be a daunting task but with dedication and focus, it can be a very rewarding experience. Start by familiarizing yourself with the basic terms and terminology used in the stock market. Once you have a good understanding, begin researching the different types of stocks, the different exchanges and the different strategies used by investors. Once you have a good understanding of the basics, you can begin to create a portfolio and start trading. Monitor your investments and learn from your mistakes. Lastly, always keep an eye on the market, stay informed, and be prepared to make decisions when needed. With focus and dedication, you can become a successful investor in the stock market.
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