Hi everyone, if you search this word about the “What is Stock Market” on the internet many definitions will be displayed. A few years back I was also searching about this 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.
Picture: NIFTY index
Let us discuss about:
- Definition.
- Company.
- SEBI
- IPO
- PAN Card
- DEMAT
- Trading Account
- Bank Account
Definition
Stock market is a platform to trade shares of company (Public Listed) stocks, which is an aggregation of buyers and sellers online.
Company
Let me start from companies because “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 stock market now the company converted to “Public Ltd Company”.
But how will they come to the “Stock Market”?
SEBI
Securities and Exchange Board of India (SEBI), what is SEBI? Why is it involved in this process?
SEBI is a Statutory Regulatory Body which is deployed by Indian Government, in our country all the securities (PAN, DEMAT, TRADING, BONDS etc.) regulated by SEBI.
When company decided to convert as Public Ltd Company will file a Draft Red Herring Prospectus (DRHP) after submitting to SEBI, they will process the verification of all Data of Company that is Account, Audits, Revenues, Profits and Promotor quotas etc., if the company is eligible for IPO (Initial Public Offer) SEBI will approved the DRHP to RHP (Red Herring Prospectus) and in soon IPO will be issue to company.
IPO
What is an IPO? How can you apply to it? What you need to apply?
Here you will know about IPO (Initial Public Offer) it is mandatory in Stock Market career.
Where companies will come to 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 about 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 depth for 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)
PAN
Permanent Account Number (PAN) if you are an Indian citizen to verify and file your 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.
DEMAT
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 introduced 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 prepared and given by two organizations NSDL and CDSL both are government organizations in India other countries they have their own.
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.
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.
Bank Account
Now a days everyone have bank accounts on their name but we should must have online or internet banking features to our bank accounts to deposit and withdraw money from trading account.
Note:
Better to have updated details 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 process to open both accounts online only.
UPSTOX ACCOUNT
To open 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 Account opening form).
ZERODHA ACCOUNT
To open DEMAT account and TRADING account in ZERODHA please click on the below image
Zerodha is also Indian no.1 Stock Broker (The above mentioned URL takes you to 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 Ready to trade in Stock Market.
I will share you more knowledge about “Stock Market” in my further articles please keep in touch with www.stocktechi.com
