In India, share markets are broadly classified into Primary Markets and Secondary
Markets. Let us understand the difference between the two.
There are 3 reasons people invest in the share markets in India. Here we are referring
to the secondary markets in particular.
Stock exchange is a platform for investing in shares. You buy and sell shares in
the stock exchange. In the old days you had to go to the ring and execute traders.
However, today you can trade on both the stock exchanges (NSE and BSE) using an
online trading platform by sitting on your computer. You can also trade using your
mobile app. A little more about the 2 stock exchanges in India
The share market plays 3 important roles to help the investors and the brokers.
Brokers are your intermediaries for trading in the share markets. Here are the 3
critical functions that share markets actually perform in India.
Stock markets are share markets are one and the same. In India they were always
referred to as the share market. Stock market is a US term where they refer to equity
as stocks rather than as shares. Both stocks and shares represent a share of the
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We normally understand trading as a short term activity in the stock market and
investing as long term investing in stock market. That is broadly correct. However,
it would be better to look at some key differences between trading and investing.
The stock is like your friend, philosopher and guide in the stock market. The stock
broker will not only execute your transaction but also advise on what to buy and
when to buy and sell stocks to help you get good returns. Here are 3 ways stock
brokers add value to you.
Investing in the stock market entails the following steps:
A stock and a share are essentially one and the same. They both represent a part
of the capital of a joint stock company. In India it was always called shares whereas
in the US they have been referred to as stocks. They essentially mean the same thing.
The stock market trades equity shares of various listed companies. In addition,
the markets also trade other instruments like index futures, index options, stock
futures, stock options, VIX futures etc. Both equity and derivative products are
traded in stock markets.
There are various sources for finding stock related information like the newspaper,
websites, company annual reports etc. Brokerage houses like Tradebulls also provide
a plethora of rich stock market content and analytics on the website itself.
Price of the stock is normally determined by growth prospects and the profitability
of the company. Normally, based on the attractiveness of the stock a P/E ratio is
assigned by the market. Stock prices also depend on demand and supply as well as
You choose stock by screening the stocks in the market on profitability, risk, valuations
etc. Such analytics are available on the Tradebulls website for traders to easily
create a portfolio. It is always advisable to check with your RM or advisor before
taking portfolio decisions.
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