This is a conversation between a theatre actress (Amita) and her make up man (Devesh). They
are both sitting in the green room. The actress notices injury marks on her make up man’s face
and enquire about the same.
Amita: Arry Devesh, tumhare face be kya hua yeh? Chot kaise lagi?
Devesh: Kya batao madam, biwi ne maara. Itni mehnat karke bhi poora nahi padta uska pet.
Bolti hai ghar chalaane ke liye aur paisa chahiye. Ab bataao, subah se shaam tak aapki naukri
karta hun. Kahan se kamaa ke laaon aur paisa?
Amita: Pagal yeh problem chal rahi hai tumhare ghar mein, pehle bataana chaahiye tha na.
Share market mein part time trading kyun nahi karte?
Devesh: Madam, shares bole toh???
Amita: Seedhi bhaasha mein, Shares bole toh small ownership piece of the company and is also
called a stock or scrip.
A company issues shares by selling them to the general public through an Initial Public Offering
or IPO. Once these shares have been sold, investors (or traders) can trade these stocks amongst
Devesh: You used the word IPO. What’s that? Is it similar to primary market? A friend
mentioned it to me.
Amita: When a company introduces share sale for the first time, it is called IPO. Here, you are
buying directly from the company issuing the shares.
However, there could be a case that your luck runs out and you are not allotted any share
during an IPO (could happen because of huge demand and limited supply).
If you are still confident about the company, you can buy the same stock from the secondary
Bhuljo naa, jo shares bya market ma trade ta thyan, hue peron IPO thi kare peno market mein
Devesh: Trade through secondary market???
Amita: Secondary market manjhe stock exchange bhau! Basically a company can’t go door to
door asking people if they want to buy or sell shares. Which is why a centralised market place is created in each country, which in India’s case is Bombay Stock Exchange or BSE (Asia’s oldest
stock exchange) and National Stock Exchange or NSE (established in 1994).
It’s been observed over the years that NSE is more popular and see larger volume as compared
to BSE. However, you can trade on any platform you like.
Before we move further, let us understand the market indices as well. The first is BSE Sensex,
which is the weighted average of prices of 30 select stocks listed on the Bombay Stock
Exchange. The weights are the market caps of the individual stocks.
Similarly NIFTY 50 is the weighted average of prices of 50 select stocks listed on the National
So next time you hear Sensex falls 500 points or NIFTY is down by 50 points, you know that the
prices of certain stocks have fallen.
Devesh: But why do prices fall? Why can’t they just go up and up?
Amita: Wrong question at the right time, bidhu! Remember, last year onion was selling at Rs
100/kg and this year at Rs 20/kg. Why? Because last year the demand was high and supply was
low while this year supply is in excess so the prices have fallen.
Similarly, stock prices fluctuate because of demand and supply imbalance. This imbalance is
caused by various factors such as economy, concerned sector, company events etc. These
imbalances make the investors reassess their expectations of the company profitability and
hence make them either buy/sell.
Devesh: Hmmm...Now I think I am ready to go to NSE building and start trading.
Amita: Dada, etah cholbe naa! Just as you approach a broker for buying or renting a house, you
have to approach a stock broker to open a demat account for you and only through that
account, you will be able to transact in a stock.
To simplify, you can think of these brokers are licensed members of BSE or NSE. They are duly
registered with the exchanges and act only as a mediator.
Whatever you buy or sell, they collect the money and deposit with the exchanges. For
facilitating all these transactions, they charge a basic fee from you.
Devesh: Can you throw some more light on demat account?
Amita: Just like you open a bank account for all your financial transactions, stocks are traded
through a demat account which you can open with any broker. Pricing, transaction charges etc vary from broker to broker. Which is why, do your research properly before opting for a stock
broker (By the way, you can also check out our free course on how to choose a stock broker).
The demat account is linked to your bank account. Toh bas, paise transfer karo aur utar jaao
market mein (marwadi).
Devesh: Listen, it may sound cheap to you but still I would ask. What if I don’t have money
and still want to buy a stock? Do these brokers also have a overdraft facility just like my
Amita: Yes, that facility is there. Suppose you buy a stock today, the settlement happens in T+2
days (two days after the day you have placed the trade). Some brokers extend this to T+5,
which means you can buy stocks with minimum margin money and pay up the entire amount in
the next five days. Still need a reason to jump in the market?
Devesh: Lekin market mein utar ke karun kya?
Amita: Ippudu miru anni tigalapai kottaru!! Once you have a demat account in place, you can
either buy a stock for a short term (even for 5 minutes) or for long term (say 50 years provided
the company survives till then).
Buy at X and sell at 2X, simple. Even to do that, you need to be sure about the stocks bro. The
company, management, profits, products, market share, you need to learn all about these
before you actually buy a stock.
Seems difficult? It is but I am sure you would put in some efforts to protect your hard earned
Devesh: And how would I decide whether I have to trade or invest?
Amita: Simple hai naa! Invest for long term if you are looking for dividend as well as price
appreciation. Take a position for couple of days if you are looking for price appreciation across
And mota bhai, tamey ek divas maa paisa banava maango cho, toh become a day trader.
Devesh: Price appreciation is clear to me but what’s dividend?
Amita: Ooppsss! Sorry I missed that bit. Woh kahawaat suni hai naa, “Aam ke aam, guthliyo ke
daam”! When you buy a stock, you become a part owner in the company and hence as and
when a company earns handsome profits, it distributes a part of it to shareholder as dividend.
If profits are low or negative, the company might not pay dividend.
Devesh: Dude, profits can be negative also, really? I am screwed if that happens!
Amita: Ama Anna, iduku dan vidham vidham ah stocks lah invest pannanum. For example if you
have Rs 50,000, you can either choose to invest in one company or spread your risk by investing
in couple of companies. The benefit is that even if company does not perform, others will take
care of your portfolio.
This diversification would depend entirely on the returns you want and the risk you are willing
to take for the same. And, you might get lucky if it’s a bull market!
Devesh: Ab bull kaha se aa gaya share market?
Amita: Kaha se aaya woh toh pataa nahi but since ages, a bull is only driving a positive market
while a bad market is pulled down by a bear. If someone says market looks bullish for next
week, it means it looks good. While a bearish trend means market is going to go down.
Devesh: This means I would be able to make money on every transaction during bullish
Amita: Paaji pher tey phatte chakk diyaange! And if you do that, don’t forget to call Warren
Buffet and offer some tips to him as well since even he could not achieve 100% success rate.
Otherwise, just remember one thing that irrespective of market condition, not 10 out of 10
transactions will make you money. Probably 6 out of them would do. But make sure that these
6 should take care of the losses you suffered on the other 4.
Devesh: So I have to keep a track on entire gamut of world news to ensure that I do not lose
Amita: Naah naah. Remember the dudes who are opening your demat accounts? Apart from all
the services they provide you, a lot of them offer research reports which tell you about the
stocks, sectors and major financial events. Why do they do that? Because they will make money
only if you are making money!
Devesh: What all can be traded on stock exchanges apart from stocks?
Amita: Well, stocks comprise of what you call equity. The other things that you can trade in are
derivatives, commodities and currencies.
Devesh: Wait...wait...wait. I tried buying a stock sometime back but it asked me to fill
whether market order or limit order.
Amita: As you start buying the stock, you fill in quantity and then it asks you whether you have
a price in mind for the stock or you want to buy at the current market price.
So if you have an idea about the price, select Limit and add your price. Else, trust market and
select Market order. And your order would be placed at the current market price.
And since we are talking about placing order, do not forget to also state your stop-loss order
(for traders only) which gets activated only when the price of the relevant share reaches a
threshold price specified by the investor in the form of 'Stop Loss Trigger Price' (SLTP).
Once the price of the stock surpasses the SLTP, the order becomes activated and then on
behaves as a normal limit order.
Devesh: Yuppie, now I will buy/sell all day long!
Amita: You won’t be able to do that my friend because Indian exchanges allow you to trade or
invest only between 9:15am to 3:30pm. You can pre-order a stock starting 9am.
Lekin pre-order karogey kaise? Kaun sa stock lena hai, decide kar liya?
Good if you have decided on the same. If not, here’s a course for you on How to scan stocks!
After all, Padhega India tabhi toh Invest Karega India!!!