Know The Basics Of Indian Share Market

The investment opportunities today are multi faceted and have a diverse return range. Different sets of individuals are setting out as you read this on a venture which is suited to their investment goals. However, it has often been felt that while the share market offers great returns, it is not for all.

Wealth creation is a basic objective for all when investing and the share market can do that and more for you if this avenue is tapped prudently. Some basic ideas which would come in handy are:

  • Equity shares or stocks provide a holder the right to vote since they also entail a partial ownership in the enterprise. When one invests in the stock market, it is a share or a stock which is being bought and sold.


  • In India, there are primarily 2 stock exchanges, the BSE or the Bombay Stock Exchange and the NSE or the National Stock Exchange. The major Indian companies are all listed on either or both of these.


  • BSE is the oldest Asian exchange where 5000 plus companies are listed. However, of all the stocks listed on the BSE and NSE, only one third see trading every day.


  • In order to invest in the stock markets in India, one must comply with the regulations in force as laid out by the Securities and Exchange Board of India (S.E.B.I.).


  • In order to invest in the share market one must go into a Member- Client contract with the broker or Broker-Sub Broker and client tripartite contract depending on the investment medium being a broker or a sub broker as the case maybe.


  • In order to make sure that the concerned broker or sub broker is a registered or authorised check and confirm the registration number through a credentials check with the S.E.B.I. and or the relevant exchange. The registration number will begin with INS for a sub broker and there is no sub broker for derivatives. It will begin with INB for a broker and the same becomes INF for the segment dealing with derivatives.


  • One can place buy or sell orders either by visiting the broker/sub-broker’s office or even via e-mail or over the phone.


  • The transaction settlement cycle is Trade date plus 2 business days.


  • The Sensex and Nifty are indexes of the two exchanges which measure the overall performance of the stocks listed by measuring the activities of the 30 and 50 most actively traded shares or stocks.

Foreign Institutional investors hold a larger share of Indian listed companies than Indian financial institutions, however if the projected GDP growth rates are achieved higher Indian household participation can be expected.

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