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Share Market Investment Guides

8 Jan 2016 | 12:45PM



Angel Broking explains what does SENSEX, BSE, NSE and Nifty mean?

Investment is a key to your safe and secured future. However, to overcome the impact of inflation, investments in plain old financial instruments does not seem to be adequate. To get something extra out of your investments, Share market offers the lucrative opportunity of purchase and trade of securities such as stocks and options.  Angel Broking empowers every eager investor to understand the working of the share market by providing information on stock market basics, how to trade, types of financial instruments, and successful trading strategies that offer better returns for you to become someone more than a regular investor.

Trading in the Indian share market primarily occurs on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). More than 7,000 shares are listed on the BSE with approximately 3,000 shares traded actively.

Share Market Investment guides

To start trading, an investor requires three types of accounts. The trading account is used for buying and selling financial products. A demat account is required to hold the investments electronically. And finally, one needs a bank account to transfer and receive funds.

  • Trading Account:

    Investors can open an offline or online trading account with any broking firm that is registered with the stock exchange. The primary function of the trading account is facilitating purchase and sale of various financial products available on the share market.
  • Demat Account:

    Since 1996, all investments like bonds, mutual funds, and shares have been dematerialized. This means the instruments are now available electronically. This makes it mandatory for investors to avail a demat account to buy and sell financial products traded through the trading account.
  • Bank Account:

    Investors can link their savings bank account with the trading account. This enables quick and efficient transfer of funds for all trades that are successfully executed in the trading account.

Most broking companies provide a complete solution for investors and offer all the above three accounts. This makes it easier and convenient for investors to trade in the Indian stock market.

Participants in the Stock Market

  • Stock Exchanges:

    These are the platforms where different products like equities, bonds, derivatives, and mutual funds are traded. All market participants have to register on these exchanges and the Stock Exchange Board of India (SEBI).
  • Brokers:

    These service providers act as intermediaries between the stock exchanges and the investors. Before offering broking services, they need to register with the stock exchanges. The brokers provide information about client trades to the exchanges, which then search for a matching order.
  • Traders and Investors:

    These are individuals or institutional entities that buy and sell various financial products available on the stock exchanges. The traders trade in different instruments to make profits either for themselves or for their clients. Individual investors often invest in different products to gain profits in the short and long term. Traders and investors are advised to follow the share market basics to mitigate the inherent risks of stock investing and to maximize the potential returns.
  • SEBI

    Stock investing is risky and regulation is crucial to protect the investors’ interests. SEBI is provided with this responsibility and develops various rules and regulations to develop the stock exchanges while protecting the investors.

Order Processing

  • Traders and investors place their orders through the trading account
  • The broking agencies direct these to the stock exchanges
  • The exchange searches in an open environment for matching counter-party offers
  • The exchange confirms trades to both the buyer and seller
  • The broker debits the demat account (sell order) and credits the account (purchase order)

The settlement procedure (T+2) takes place, which is when the buyers receive the shares and sellers receive their money within two working days of the trade.