Stock Market Basics

Stock Market Basics

Stock Market Basics - Guide

When coming to invest in Stocks, New Investors need some Quick Reference to understand, How Stock Market Function? in this way provides some "Stock Market Basics" and This "Stock Market Tutorial" purely for beginners not for experts. Widely used keywords "Definitions" in Share market are explained here.


Stock Market : "Stock Market" or "Equity Market" or "Share Market" is a public market for the trading of listed company stocks (shares) and derivatives (Future and Options) at an agreed price. Simple Definition is a place to Buy or Sell Stocks of listed companies.

Stock Exchange : "Stock Exchange" is an entity which provides "trading" facilities for "Stock Brokers" and traders. In simple words Change the ownership of Shares from Seller to Buyer, Collects some fee to process the Trades. Stock Exchanges regulated by authorities to protect Investor Wealth.

Stocks Analysis
Technical Analysis : "Technical analysis" is a security analysis for forecasting the direction of prices through the study of past market or stocks price data, primarily price and volume. Sometimes use Charts, Pivot points, Fibonacci calculator, Elliot theory, Resistance and Support prices, Automatic Technical analysis software, Etc...

Fundamental Analysis : Definition of "Fundamental Analysis" is a method of security valuation ("Stocks Analysis") which involves examining the company's financials and operations, especially sales, earnings, growth potential, assets, debt, management, products, competition and Future business expansion plans. Balance sheet provides data to perfect analysis. Fundamental analysis is the cornerstone of investing in securities wisely, consideration only direct company related data not overall market sentiment.

National Stock Exchange - NSE: "National Stock Exchange" of India (NSE) is India's largest Stock Exchange & World's third largest Stock Exchange in terms of transactions, For both equities and derivatives trading. The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National Stock Exchange Fifty), an index of fifty major stocks weighted by market capitalization. The "National Stock Exchange" of India was promoted by leading Financial institutions at the behest of the Government of India, It was incorporated in November 1992 as a tax-paying company. In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE started operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives (Futures & Options) segment commenced in June 2000. The National Stock Exchange (NSE) located in Bombay.

Bombay Stock Exchange - BSE: The "Bombay Stock Exchange" (BSE) is the first stock exchange in Asia and largest number of listed companies in the world, with above 5000 companies in 2010. The "BSE SENSEX" (SENSitive indEX), also called the "BSE 30", is a widely used market index in India and Asia. The Bombay Stock Exchange developed the BSE Sensex in 1986. The Bombay Stock Exchange switched to an electronic trading system in 1995. This automated, screen-based trading platform called BSE On-line trading (BOLT) currently has a capacity of 80 lakh orders per day. The BSE has also introduced the world's first centralized exchange-based internet trading system. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. It is located at Dalal Street, Mumbai, India.

Nifty : "NSE NIFTY" is the prime indicator of National Stock Exchange(NSE). S&P CNX Nifty is a well diversified 50 stock index accounting for 22 sectors of the economy. S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture of NSE & CRISIL. The base period for the S&P CNX Nifty index is November 3, 1995, after one year of NSE's Capital Market Segment. The base value of the "Nifty" index has been set at 1000, Now trading above 5000.

Sensex : Major indicator of Bombay Stock Exchange(BSE). The BSE "Sensex" or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. The base value of the BSE sensex is 100 on April 1, 1979, base year of "BSE SENSEX" is 1978-79. Sensex Calculation reflects real-time market value, Free float method used to calculate the Sensex.The "Sensex" is regarded as the pulse of the domestic stock markets in India and Asia.

SEBI : The "Securities and Exchange Board of India" ("SEBI") is the stock market regulator in India. SEBI was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI is headquartered in the popular business city of "India" in Mumbai.

Forex : The "Foreign Exchange" market or currency market ("Forex", "FX") is a worldwide decentralized over-the-counter "Financial Market" for the trading of currencies of various world countries. The primary purpose of the foreign exchange market is to assist international trade and investment, by allowing businesses to convert one currency to another currency easily. Financial centers around the world function as anchors of trading between a different types of buyers and sellers around the clock.

Market Capital : The Market Capitalization of a company is determined by multiplying the current "Market price" of its stock by the total number of shares issued by the "Company".

Stock : The stock or capital stock of a business entity represents the original capital paid into or invested in the business by its promoters. The "Stock" of a Business is divided into "Shares".

Share : A part of the company or enterprise issues to public or private to rise Money for various future plans, Holders of shares can sell their holdings to others through Stock exchanges.

Equity : The value of an ownership interest in property or "Business", Generic term for "Equity" securities are called stock.

Market : A place of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, goods and services are exchanged. It is an arrangement that allows buyers and sellers to exchange things or services is called as "Market".

Multibagger : Among the long-term investors "Multibagger" is a popular term. A stock with strong fundamental values to show best performance in future to increase "Investor" wealth.

Investment : "Investment" is the commitment of "Capital" or "Money" to purchase financial instruments / assets to gain profitable returns in the form of income, interest, dividend, or appreciation of the value of the money. In equity terms can yield price appreciation, dividend, Bonus shares, Face value(par value) split, De-mergers or any value increase.

Trade : The exchange of goods, services, or both, In the words of "Finance" a deal between buyer and seller of financial instruments.

Derivatives : Meaning of "Derivatives" is a financial instrument, an agreement between two people or two parties. It is a financial contract with a value linked to the expected future price of the share or a currency, notable kinds of derivatives are "Futures and Options".

"Stockbroker" : A regulated professional broker who buys and sells shares and other financial securities through market makers or Agency Firms on behalf of Investors and Traders. A broker may be works to a brokerage firm. Other words an agent charges a fee or commission for executing buy and sell orders submitted by an investor.

"Economy" : Financial activities related to the production and distribution of goods and services in a country or particular geographic region or entire network of producers, distributors, and consumers of goods and services in a local or national level.

"Intraday" : Complete trade process of Buy and Sell or Sell and Buy within single trading day, It means square off the open positions before market close.

BTST : Meaning to BTST is buy the Stocks Today to Sell Tomorrow, Trader will be able to sell the shares that has purchased even before receives the delivery of the shares from the Stock Exchange, Indian Leading Stock Broking Firm ICICI Direct (Run by ICICI Bank) owns the trademark of "BTST".

STBT : "STBT" is slightly different when compare with BTST, It is possible only if holding shares in account. Shareholders can sell shares today to buy tomorrow or later at lower levels.

Demat Account : In India, refers to a dematerialized account(Demat), For individual Indian citizens to trade in listed stocks.The Securities Exchange Board of India (SEBI) requires the investors to maintain a "Demat" Account. In a demat account shares and securities are held in electronic form instead of paper certificates. A Demat Account is opened by the investor while registering with an investment broker (Stock Broker) or sub broker.

Swing Trading : "Swing Trading" is purely non intraday based at the same time not for long-term, Purely short-term means more than one day to within some weeks and profit-book at Trend reversal. Swing trading is commonly considered as a speculative activity in financial markets including Forex, Stocks, Derivatives, Commodity, etc.

Brokerage : Definition of "Brokerage" gives different meanings, First one is A firm engaged in buying and selling of stocks for clients, The business or Office of a broker. Second one is Fee or Charge or Commission paid to broker. stock brokers charges a fee to act as intermediary between buyer and seller.

Business : "Business" is a legally approved organization designed to provide goods, services, or both to consumers or Customers. Business firms also known as Company, Enterprise or Firm.

"Speculation" : Generally a message expressing an opinion based on incomplete evidence. Purchasing risky investments in stock market without proper knowledge or fundamental news that present the possibility of large profits, but including higher-than-average possibility of capital loss. In Financial terms speculating is the assumption of risk in anticipation of gain but recognizing a higher than average possibility of loss particularly in Stocks, Derivatives and any Financial instrument that can available to Trade.

We happy if this page helps as "Stock Market Guide" for beginners.