Stock Market in India
The Stock Market in India
A stock market is a place where stocks are traded with the listed company on the stock exchange. The companies will buy or sell or issue their shares which are done physically or online.
Indian stock exchange is divided into 2 which is
- The Bombay stock exchanges.
- The national stock exchanges.
The Bombay stock exchanges [BSC]
Bombay stock exchange [BSC] is the oldest stock exchange in the world. It was introduced in 1875 by a merchant named Premchand Roychand, a businessman. In 2021, BSC was ranked as the 9th largest stock exchange with a market capitalization of over ₹255.003 trillion.
The National stock exchange [NSC]
The National Stock Exchange was introduced in 1992 by major financial institutions, banks, and insurance companies. It is located in Mumbai and it is the first electronic exchange in the country. It was a modern approach for stock exchanges with a screen-based electronic system that is automatic and helps in easy trading.
What are the Features of the Stock Market?
In the stock exchange market, only the kinds of securities traded are listed in stock exchanges by fulfilling certain criteria you can list your stocks in the market.
The stock market is an organized structure with a committee that decides the management and operations of stocks.
The tradings in the stock market are done only through members who are authorized in the stock exchange. Every person who wants to buy or sell stocks should take the help of authorized members.
What is the Role of the Stock Market in India?
The role of the stock market is explained below,
- The stock market helps in valuing the stocks depending upon demand and supply and other various factors such as the securities must be beneficial and growth-oriented.
- The stock market provides safety for the transactions made at the time of buying or selling stocks.
- The stock market provides a platform for trading various stocks of the companies, this helps the companies to increase their capital.
- Investment in the stock market by the companies will have a direct effect on public interest in investing in those stocks.
- It is made easier for companies who want to liquidate their stocks into cash for any emergency.
- As the trading process of stocks is actively made, this helps the companies to earn maximum profits and the capital for the company can be raised.
- Compared to other investments, stock exchange investment is good in terms of returns.
Advantages of the Stock Market
- In the span of a short time, the companies that have invested in the stock market can earn huge returns. Yes, it comes with risks, but taking the correct amount of risks can yield you a lot of profits.
- It kind of gives you ownership of the company shares you have purchased irrespective of what quantity of shares you have purchased.
- You can also raise your voice against the functioning of the company, whose shares you have purchased.
Disadvantages of the Stock Market
One of the main disadvantages is the unpredictable changes in the rates of the stock market, let’s see others.
- The individual who wishes to invest in the stock market should completely understand the functioning of stocks, the risks involved in it, and invest properly. Otherwise, it leads to losses of your money.
- If the companies want to invest in the stocks, often appoint a broker who helps them in the process of investment. This will be an extra cost for the company.
- The process and formalities included in the purchase or sale of stocks are very time-consuming and complicated.
So these are the advantages and disadvantages of the stock market which should be understood before you start investing in them.
How to invest in the Stock Market in India?
Stock market investment is both a risky and a saving platform. Taking a risk with a good understanding can help you to gain more profits, for that you need to follow these steps to register for investing in the stock market.
- The first step is to open a trading account with the help of a broker or a stock trading platform for buying and selling stocks.
- The next step is to open a Demat account. The function of the Demat account is that it holds securities you have purchased in your name.
- The trading account and Demat account are both connected to your bank account.
- These are the documents required for opening both Demat and trading accounts which are identity proof such as voter id or Aadhar card or driving license or passport and address proof copy of the applicant.
- The process of opening an account is now made online. So the time of the applicant will be saved.
- You can even trade your stocks online or through a phone call whichever is convenient for you.
So these are the steps you must follow to get registered for investing in the stock market.