How To Invest In Stock Market In India | How Does Share Market Work?

For some people stock market is a dinner table discussion and on the other side, it is a language of alien for the others. In this article we will try our best to explain you on how to learn about stock market and what should be the minimum level of understanding to start investing in the market.

First of all ‘What is Stock Market’?

It is a place where buying and selling of shares take place and anyone who is interested can trade the same by exchanging the document of ownership. This document indicates the details about the shares and its ownership. When you trade the shares, the ownership rights of such shares get transferred.

When you start doing something new, it is better to know at least the surface level of that thing to be able to understand the concept. We have divided this process into two simple parts which basically consists theory and practical. Today we will discuss about theory part first.

  1. Learn by Reading some of the fundamentals of market such as definitions of index, capital, equity, assets and so on (You can also refer our article on Market Terminologies). It may not necessary to go through but it is good to have idea of several common terms used in the market.
  2. Once you are ready with your concepts, and then try to analyze the market by watching news on daily basis, reading news papers. Slowly you will grow your interest.
  3. Try to follow some celebrated investors or your favorite one for the sole purpose of understanding the market deeply.
  4. You can attend online short term classes or conference and that would be great.
  5. Once you follow all the above steps and find yourself comfortable with jargons, and basic Know-How of the market then you should attempt to do "dummy trading", this is an easy way to do trading of your desired stocks and at the end of the day you would have idea whether you are ready to do actual electronic transaction or not.
  6. Open ‘Demat Account’: In a simple word, it is an account to hold your stocks into electronic form.A demat account can be defined as the electronic form of holding your portfolio including mutual funds, shares and bonds. This account is necessary to perform stock market transaction. It is very simple to open this account. Banks are also offering demat account directly linked to your existing bank account. Simple personal documents would be needed to open the same such as Bank Account Number, PAN Card, Photos and ADHAR Card.
  7. Until now, you were learning by just reading or observing the market but once you have your demat account and you actual start the buying and selling of shares, you will probably learn closely. It will only make you strong believer of fundamentals.
  8. Analyze companies before investing by referring past data, balance sheets, growth plans and internal policies. It will help you to learn more about company and you will get to know whether you should buy that chip or not.
  • Some of the Books to read if you want learn deeply about global Markets.

Sr. No

Name Of Book

Name of Author

-1

One Up On Wall Street 

Peter Lynch

2

The Intelligent Investor

Benjamin Graham

3

The Little Book of Common Sense Investing

Jack Bogle

4

A Random Walk Down Wall Street

Burton G. Malkiel

5

How to Make Money in Stocks

 William J. O’Neil

6

How To Avoid Loss and Earn Consistently

 Prasenjit Paul

7

The Warren Buffett Way

Robert G. Hagstrom

8

Stocks to Riches

Parag Parikh

 

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Final Note: Be the believer of yourself and focus on fundamentals. You would easily understand where to start from.