SHARE MARKET
Share
Market is the place where share of public listed companies are traded .Share
Market is the way where buyers and sellers of shares (also called stocks), which represent
ownership claims on businesses. The share
market is one of the most important ways for companies to raise
money. This allows businesses to be publicly traded, and raise additional
financial capital for expansion by selling shares of ownership of the company
in a public market. The liquidity that an exchange affords the investors
enables their holders to quickly and easily sell securities.
Bombay
Stock Exchange (BSE) is an Indian stock exchange located
at Dalal Street, Kal Ghoda, Mumbai (formerly Bombay), Maharashtra,
India. Established in 1875, the BSE is Asia’s first stock exchange, It claims
to be the world's fastest stock exchange, with a median trade speed of 6
microseconds,The BSE is the
world's 11th largest stock exchange with an overall market
capitalization of more than $ 2 Trillion as of July, 2017. More than
5500 companies are publicly listed on the BSE. Of these, as of November 2016,
there are only 7,800 listed companies of which only 4000 trade on the stock
exchanges at BSE and NSE. Hence the stocks trading at the BSE
and NSE account for only about 4% of the Indian economy.
NIFTY
50 index
is National Stock Exchange of India .Share market was launched on 21st
April 1996. Nifty is owned and managed by India Index Services and
Products (IISL), which is a wholly owned subsidiary of the NSE Strategic
Investment Corporation Limited. IISL had a marketing and licensing
agreement with Standard & Poor's for co-branding equity indices
until 2013.
Size of the Market:-
There are a total of 21 stock exchanges
in India, with the Bombay Stock Exchange (BSE) and the National Stock Exchange
(NSE) being the largest. Both offer stocks with volume and opportunity as India
and the exchanges continue to grow and attract foreign investments.
NIFTY
50 Index has shaped up as a largest single financial product in India, with
an ecosystem comprising: exchange traded funds (onshore and offshore),
exchange-traded futures and options (at NSE in India and
at SGX and CME abroad), other index funds and OTC derivatives
(mostly offshore). NIFTY 50 is the world’s most actively traded contract. WFE,
IOMA and FIA surveys endorse NSE’s leadership position.
NIFTY 50 covers 13 sectors of the Indian
Economies. I will show you Sector Wise Percentage in Nifty 50.
Full List of Companies in CNX NIFTY 50
Sector
|
Constituents
|
Weightage (%)
|
Cigarettes
|
ITC
|
6.78
|
Pharmaceuticals
|
Cipla
|
0.81
|
Dr. Reddy’s Lab
|
0.90
|
|
Lupin
|
0.92
|
|
Sun
Pharmaceutical
|
2.03
|
|
Aurobindo
Pharma
|
0.49
|
|
Information Technology
|
HCL
Technologies
|
1.32
|
Infosys
|
5.27
|
|
TCS
|
3.47
|
|
Tech Mahindra
|
0.75
|
|
Wipro
|
0.90
|
|
Cements
|
ACC
|
0.39
|
Ambuja Cements
|
0.52
|
|
Grasim
Industries
|
1.07
|
|
UltraTech
Cement
|
1.27
|
|
Automobile
|
Bajaj Auto
|
1.21
|
Bosch
|
0.60
|
|
Hero MotoCorp
|
1.22
|
|
Mahindra &
Mahindra
|
1.79
|
|
Maruti Suzuki
|
2.49
|
|
Eicher Motors
|
1.00
|
|
Tata Motors
|
2.47
|
|
Tata Motors
Ltd. (DVR)
|
0.41
|
|
Financial Services
|
Axis Bank
|
2.49
|
Bank of Baroda
|
0.51
|
|
HDFC
|
7.00
|
|
HDFC Bank
|
8.98
|
|
ICICI Bank
|
4.66
|
|
Indiabulls
Housing Finance
|
0.94
|
|
IndusInd Bank
|
2.08
|
|
Kotak Mahindra
Bank
|
3.10
|
|
State Bank of
India
|
2.65
|
|
Yes Bank
|
1.71
|
|
Metals
|
Coal India
|
1.04
|
Hindalco
Industries
|
0.83
|
|
Tata Steel
|
0.86
|
|
Energy
|
BPCL
|
1.08
|
GAIL (India)
|
0.78
|
|
IOC
|
1.29
|
|
NTPC
|
1.17
|
|
ONGC
|
1.51
|
|
Power Grid
|
1.31
|
|
Reliance
Industries
|
6.63
|
|
Tata Power
|
0.44
|
|
Telecom
|
Bharti Airtel
|
1.35
|
Bharti Infratel
|
0.53
|
|
Consumer Goods
|
Asian Paints
|
1.45
|
Hindustan
Unilever
|
1.92
|
|
Construction
|
Larsen &
Toubro
|
4.12
|
Media & Entertainment
|
Zee
Entertainment
|
0.83
|
Shipping
|
Adani Ports and
Special Economic Zone Ltd.
|
0.76
|
TRADE:-
Trade
in share markets means the transfer of money from a seller to a buyer of stock.
This requires these two parties to agree on a price. Equities confer an
ownership interest in a particular company.
Once you do your financial
planning in detail, you know what your commitments are, as well as your risk
appetite.
Setting up a trading
account is the first step towards trading in Indian Stock Market. The basics of
Indian stock market and functioning of its stock exchanges are briefed here.
There are three major account needed to successfully execute a
trade.
1. Banking Account
2. Trading Account
3. Demat Account
1.
Banking
Account is required to transfer money to and from your trading account
for your transactions in the stock exchange. This could be your regular savings
or current account and should be linked to your trading account.
2.
Trading
Account is similar to a bank account that has to be opened with a stock
exchange registered stock broker. This account is used for buying or selling
shares in the stock exchange.
3.
Demat
Account is an account where your shares are held in a dematerialized
form. Instead of having a physical possession of the stock certificates, the
digital form is stored in the demat account. The demat account is required to
receive/transfer shares when you buy/sell shares through your trading account.
A Demat account can be opened by an investor only by registering
with a Depository Participant . A Depository Participant is an intermediary
between the investor and the depository. A DP is typically a financial
organization like a bank, broker, financial institution, or custodian acting as
an agent of the depository to make its services available to the investors.
How these accounts work?
When you buy a share - Trading account takes money from your
Bank Account (It’s already taken from your Bank account and saved in trading
account. You should do this manually) and buys shares and stores it in your
Demat account.
When you sell a share - Your trading account takes back the
shares from your Demat account to sell them in stock market and gets back the
money which goes back to your bank account (You should manually transfer it to
bank account from trading account).
Now, from where can we get this demat and trading account?
These accounts are provided by two kinds of organisations; One
is the subsidiaries of our banks like ICICI Direct, HDFC Securities, Kotak
Securities etc., others are the wide range of discount brokers, Zerodha,
Sharekhan, Motilal Oswal , Angelbroking to name a few. We will compare these
two categories to check out the pros and cons of each type in detailed way
later.
You need a PAN Card, an address proof, a cancelled cheque (for
verifying your banking details)/ Bank statement and a maximum of 4 passport
size photographs ready before you start with the application process of demat
and trading accounts.
You can visit any of the above-mentioned or any other brokerage
firm’s website to start of the application process. You will have an online application,
followed by personal verification/you will be asked to send the proof documents
via courier before your account is created.
In my opinion, discount brokerage firms are the best to start
with Zerodha and Upstox would be the hands down winner of the lot. You can
follow the below link to create your account.
https://upstox.com/open-demat-account/ with
my refer code (9CMT). I specially use
upstox account. Its brokerage is very low as compare to other accounts.
After Open the Demat and Trading Account you know about the
procedure who to trade with demat account and trading account.
Types of Trade:-
You can trade in
shares and commodities. However, in India, retail investors mainly trade in stock
futures and options . Trading means buying and selling a stock the same day or
holding it for just 2-3 days. The former is called intra-day trade. The latter
is called swing trade. Positional trade generally involves taking a longer
position and holding a stock for 2-3 weeks.
Types
of trading in Indian Market are as follows.
1.
Intraday Trading:- When you want to
buy/sell shares for a day. Like as market opens you bought some shares of icici
Bank at 300 in intraday option you have to square-off the trade before market
closes. So you have to square-off the trade within 15 minutes of market close.
In Intraday trading some broker give limits to you like 2 times/3 times of your
money so that you can trade more.
2.
Delivery Trading:- When you buy shares
for long term or even for 1 week or for 1 month. You have to pay full money for
what you buy.
3.
BTST :-Buy Today Sell
Tomorrow. In this people buy shares in anticipation of price will go up as
market opens next day and they buy shares and in this some times broker give
limit upto 2 or 3 times to carry shares for next day and as next day market
opens with good move hey all sell their shares and make profit from that.
4. Margin Trading:- It is very use-full
for person trading in Future and Options Derivatives. The concept of Derivative
is you have to buy a minimum lot of asset like buying/selling 100 shares of
reliance industries in one go. In this SEBI (Stock market regulatory) put some
margin in like 12–19% of the total value so 100 shares of reliance will cost
you around 10 lakhs so you have to pay 12–19% of 10 lakh to buy one lot of
future contract of reliance.
5.
STBT:- Sell Today Buy
Tomorrow. Only in Derivative this will apply because you can sell some asset
future and again buy as market open next day.
6.
Short Sell:- This means you sell
some shares which you don’t have with you only in anticipation of price falls
and you book profit and square off the position before market closes. In simple
terms it means selling shares and buying it back when price came down.
Future and option:- Apart from a cash market where shares are bought
and sold, the exchanges have a segment where futures and options on shares and
indices like Nifty and Bank Nifty can be purchased and sold. It is
the very effective and very easy way to earn money very quickly.I specially
trade in the option and I earn minimum 500 rupees in every day. Its very easy
to learn. I specially use upstox pro app. for options. I explain you trading first open the trading account in rksv with my refer code 9CMT and use my client code 284775.
What are futures and options?
Technically, a futures contract is an
agreement between buyer and seller to buy or sell a particular asset (eg
shares) some time in the future at a price agreed today. Futures contracts may
be cash-settled or require physical delivery of the underlying asset. For
equity futures, a cash-settled contract requires a cash amount to be paid on
the settlement day, reflecting the difference between the initial futures price
and the price of the underlying shares when the futures contract reaches
maturity. In doing this, the investor can buy and sell contracts without ever
owning the shares in the first place. This aspect is often quite attractive to
investors because it prevents them from paying stamp duty which they would otherwise
have to pay if they were trading shares.
Options give
investors the right, but not the obligation to buy or sell a particular asset at a fixed price on or before a specific date.
Unlike futures contracts, the potential loss to the buyer of an option is
limited to the initial price (or premium) paid for the contract, regardless of
the performance of the underlying share. Like futures, options can be used to
try to capitalise on an upward or downward movement in the market, but also
generate returns in a static market.
How do futures and options work?
Like insurance allows the owner of a car to protect their asset
for a premium, futures and options allow investors to protect their
investments. For example, suppose a fund manager knows they will have a certain
amount of money to invest in shares at a fixed time in the future, but they
believe the market is going to rise and there is a risk they will have to pay a
lot more for the shares. They can purchase options on the same shares for a relatively
small outlay (called a premium), and use the profit from the options to offset
the higher price they would have to pay for the shares when the money becomes
available.
Futures
and options were originally developed in order for investors to protect their
investments and manage their risks. Prices can change drastically over time and
investors are able to use futures and options markets to protect themselves
from uncertainty in price movements. The uses of derivative products have
broadened over time, and now investors also use these products for profit by
speculating on which way the market will move.
How can futures and options benefit private investors?
Broadly, futures and options allow investors to profit from a
rising, falling or static market.
Futures
and options are capital efficient investment tools, which can offer private
investors greater exposure to the market than traditional investments, for a
smaller initial outlay.
In
particular, equity derivatives offer private investors the opportunity to
enhance their equity portfolio by increasing the range of investment
opportunities and tools available. They can help to reduce costs, enhance
returns and manage price risk with greater certainty, precision and economy.
Are futures and options confusing?
While futures and options are often perceived as complex or
confusing, the reality is that the principle of futures and options is no more
difficult than the underlying shares market. If used correctly, futures and
options can be powerful investment tools that provide many advantages over
trading shares including high liquidity, low transaction costs and leverage.
Are futures and options too risky for private investors?
Derivatives such as futures and options were originally
developed in order to help investors manage risks and ensure money wasn't lost
in the event of the market going against their position.
One
of the unique aspects of futures is the high gearing or leverage that they
provide. This means investors have the ability to obtain exposure to a
relatively large asset amount for a small initial outlay. The result is a high
risk/high reward investment. For example, The London Clearing House requires
investors to deposit an initial margin which is refunded when the futures
position is closed out. If the market goes the wrong way, it is easy to lose
more than the initial margin deposited because the initial margin gives the
trader exposure to a portfolio value that is many times greater than the
initial margin amount.
Unlike
futures contracts, the potential loss to the buyer of an option is limited to
the initial price paid for the contract, regardless of the performance of the
underlying share. This helps investors to control the amount of risk assumed.
However the seller of an option is exposed to a higher degree of risk. Holding
underlying shares against which calls are sold, or cash against which puts are
sold, ensures that the seller has a 'covered' position.
Like
most investments, trading futures and options can be a potentially high risk
strategy. Private investors can lessen the risks of trading by ensuring they
have a high degree of product knowledge, they always invest within their means
and they deal with a broker who is experienced in the futures and options
industry.
Is it a bad time to invest in equity markets when they are
falling?
Falling markets can be a very lucrative time to invest in the equity market.
Many bargains can be found in the share market because investors are
effectively buying when prices are low therefore obtaining more value for
money.
Futures
and options can be used to make a profit when stock markets are falling by
taking an opposite position to the market. For example, Universal Stock Futures
allow investors to make gains from a fall in the stock market by selling a
Universal Stock Futures contract, without owning the stock in the first place,
and then buying the contract back at a lower price to realise a profit.
.BROKERAGE
The
biggest problem in share market is brokerage.I have suffered alot because of
brokerage. I share you my experience from starting to now. When I was started
to invest money in share market I have
no experience at that time. My friend
told me that the easiest trick to earn money through share market
without any hard work. But he don’t tell me the brokerage role in the share
market . dats y I share you about my experience to new trader in share market.
I was first open demat account in kotak Mahindra bank and its brokerage is very
expensive at that time. i was trade alot
at that time through kotak Mahindra demat account but mostly, Im in loss
because of high brokerage.
So
I wanted to know the tactics behind this then started trading, intraday,
commodity trading as well as stock trading when I got my first salary itself.
In beginning I lost more money as I don't know about technical, fundamental and
brokerage.
Later I started trading by
getting stock advisory calls with higher capital I thought they are best and
will definitely make me rich but ended with more loss.
Finally I learned
that ITS MY MONEY why should I allow others to play with my
money. So I wanted to learn Fundamental and Technical analysis by watching
YouTube videos and reading local author books and ended up with some decent
profit. I have done many paper trading ( i.e not real trade).
Now it is time to take
longer step I watched Foreign authors YouTube channel for Technical and
Fundamental analysis .
I put lot of my time and
efforts to learn each and everything. I use rksv demat account for trading nw.
its mobile apps upstox pro is very easy to learn and use for trading. In rksv
the brokerage is very low as compare to other demat accounts. Its brokerage per
trade is 20 rupees(F&O) . If u
want to trade in Indian market I prefer to you open demat account in rksv because
of very low brokerage.
