Basics of stock market

What is stock market?

Before starting the topic we need to clear some myths of stock market:

Myth(1)- Stock market is very risky: Yes stock market can be risky in short term but not in long term . 

This is the historical chart of nifty50 of last 20 year which has given around 800% return in last 20 year and around (-6%) in last 1 year, this analysis clearly shows that long term investment in stock market can not be negative

  Myth(2)-We need to have a very strong knowledge about finance: If we are a long-term investor then we don't need to have a lot of knowledge about finance we need only a common sense ,this can also be analyse from this example,we use some things in day to day life from too many years like colgate,nestle and unilever,which gives around 15% return every year from too many years even if there is a economic crisis for example we can see warren buffett who started investing when he was 11 year old and he also says that he started investing too late.

 Myth(3)-Small investor like me can not make money from share market:You can start investing in share market only with 100rs . For example if you invest 1000rs per month in stock market for 20 year then you will get minimum 25lakhs,so a small investor can also become rich by investing in stock market but you need a great patience.  

 now comes into the main topic what is the stock market:

What is share:Shares are equal parts into which a company's capital is   divided,actually shareholder is the owner of that part of the company which value share hold by him.like SBI share ,Tata Motors share etc.

  What is share market: Share market is actually like a supermarket ,where many sellers and buyers are available. In that market companies are seller who sell the shares and brokers are buyer who buy share on behalf of us.

 

 How to start investing in stock market: For start trading in stock market first you will need to open demat account which you can open account online through any broker you only need a saving bank account , identity proof and pan card or any income tax document, then you can start buying and selling stocks

What is NYSE,NSE and BSE: These are the markets where companies register as a seller and sell the shares. Companies that raise money by issuing shares to the public get listed on the exchanges. Through IPO, shares are issued to the investors in the primary market and once IPO gets over, the company gets listed on the exchange that gives an opportunity to trade in shares

What is nifty sensex and Dow Jones Industrial Average:

The Sensex ,Nifty and Dow Jones Industrial Average  are "indices(meaning indicator) of a stock market". There are many other indices other than these indices.These are the average of top companies which register in stock exchange.

You can also check live nifty ,live sensex and live dow jones  by clicking on this link: https://www.moneycontrol.com/markets/global-indices/

                       * i hope by now you have learned a lot about stock market *

      by: yash vishnoi (ca-inter)