Hi everyone, if you search this word about the “What is The Stock Market” on the internet many definitions will be displayed. A few years back I was also searching about the word “Stock Market” but I did not get the significant content on the internet.
But today I let you know what “What is Stock Market” is without any consequences.
Stock Market Definition
The stock market is a platform of all exchanges and companies (which is listed in public trading) to trade (means buy and sell) shares of stocks, which is an aggregation of buyers and sellers online.
stocks are nothing but companies and company will capital divides into shares which we can trade.
Both words "stock market" and "share market" are same tendency.
Companies in Stock Market
Let me start with companies because the “Stock Market '' is defined as a place where all the companies do the trading business with shares of their stocks through exchanges.
When a company or start-up business came to establish all the funds raised by two or more people, so the company shares were divided to them all as each as their amount of investment now, they are called promoters of the company.
Where all the shares held by promoters the company called as “Private Ltd Company”.
Here, when companies need fundraising to expand their business after a few years of establishment they will come to people to collect funds by selling their promoter shares by listing in the stock market now the company converted to “Public Ltd Company”.
How companies come to the Stock Market ?
All the companies enter into the stock market through SEBI.
What is SEBI and its functions ?
Securities and Exchange Board of India (SEBI), what is SEBI? Why is it involved in this process?
SEBI is a Statutory Regulatory Body that is deployed by the Indian Government, in our country all the securities (PAN, DEMAT, TRADING, BONDS, etc.) are regulated by SEBI.
When the company decided to convert as Public Ltd Company will file a Draft Red Herring Prospectus (DRHP) after submitting it to SEBI.
SEBI will process the verification of all Data of the Company that is Account, Audits, Revenues, Profits and Promotor quotas, etc.
If the company is eligible for IPO (Initial Public Offer) SEBI will approve the DRHP to RHP (Red Herring Prospectus) and in soon IPO will be issue to the company.
What is IPO in Stock Market ?
What is an IPO? How can you apply to it? What do you need to apply?
Here you will know about IPO (Initial Public Offer) it is mandatory in a Stock Market career.
Where companies will come to the public they are offered their shares to the public with a fixed price in this as floor price – Top price.
Between these prices public can apply as per Grey Market Premium (GMP) I will not mention GMP because it will be explained in another article with depth analysis.
You Can apply to IPO directly with your DEMAT account, the process will be explained in further articles because you should learn the depth of this.
Now I will let you know "How can you start trading in the Stock Market?"
To do trading in the Stock Market you need four accounts in INDIA.
- PAN Account (for filing your profits and losses and taxes)
- BANK Account (for deposit and withdraw your money)
- DEMAT Account (for save your share bands in electronic form)
- TRADING Account (For trade your shares online)
Permanent Account Number (PAN) if you are an Indian citizen to verify and file the taxes you need to submit the PAN card to get Trading, DEMAT, and Bank Accounts.
If you are not an Indian citizen to trade in India or any other countries you need to submit your passport or any other.
What is DEMAT Account ?
De-Material Combined together formed DEMAT.
Long back in the Stock Market when we purchased shares would be in paper format there are no accounts to hold our shares if we want to trade those we need to exchange those physically.
When was introduce DEMAT every purchased share provided in electronic form and delivered into our DEMAT account and now we can hold those forever.
In a DEMAT account, you can save other than shares like mutual funds, Bonds, Identities, etc.
DEMAT accounts are prepared and given by two organizations NSDL and CDSL both are government organizations in India other countries have their own.
What is Trading Account ?
What is trading?
In DEMAT we can hold our shares only, but to buy and sell shares we need a trading account which is provided by Stock Brokers.
These DEMAT account controls by CDSL and NSDL through gateway of exchanges NSE (Nifty) and BSE (Sensex) markets.
Stock Brokers will charge us some amount called 'brokerage charges' and other taxes and SEB charges etc. per trade.
We will have to pay (Automatically deduct from your Trading Account) to the Stock Broker but he can claim only brokerage charges.
Nowadays everyone has bank accounts in their name but we should have online or internet banking features to our bank accounts to deposit and withdraw money from the trading accounts.
Better to have updated details of PAN account and BANK account which you will provide to them because you can do all transactions from your submitted Bank Account only.
All the processes to open both accounts online only.
To open a DEMAT account and TRADING account in UPSTOX please click on the below image
Upstox is the most famous and low brokerage company (The above-mentioned URL takes you to the Account opening form).
To open a DEMAT account and TRADING account in ZERODHA please click on the below image
Zerodha is also an Indian no.1 Stock Broker (The above-mentioned URL takes you to the Account Opening form).
And many of the Stock Brokers offer low brokerage and High leverage features and all the details I will discuss and mention in the next articles about “Stock Brokers” and brokerages and what is the leverage.
Please keep your scan copies of Identity, Bank Statement (six months), Passport size Photo, and Signature with you while filling the form with you.
After completing and submitting the above opening form you will have to wait for two to four days for your account activation.
Congratulations! Now you have created and are ready to trade in Stock Market.