Share market trading in India has become a popular way of making quick money. Since last decade the Indian economy has grown substantially, which is attracting more and more people towards investing their money in Indian Share Market. However, it has several risk factors which might result in the loss which can be reduced through share market tips and knowledge with some basic terms. Beginners often swift to make money which can put their all hard earned money in vain. The very first thing they should do is to acquaint with some basic terminologies used in Indian Share Market for a headstart. If you are a beginner or thinking to start Share Market trading then this article will help you understand some basic terminologies used in Indian Share Market.
Share market Trading Basics
1. Exchange: An exchange is a body which governs all the trade and permits you to trade. It is the body which made the law, trading mechanism, settlement processed and all other protocols. It is categorized in Two: i) BSE (Bombay Stock Exchange) ii) NSE (National Stock Exchange).
i) BSE: It is the oldest exchange in Indian Share Market. Sensex comes under the BSE which is a market index for Equities. BSE has 4700 firms listed there, However, only 500 firms constitute more than 90% of its market capitalization.
ii) NSE: Just like BSE, NSE also offers trading and settlements equity and derivatives as well. Derivatives constitute 98% of the NSE. NSE has the market index NIFTY which has 50 companies, which represents about 62% of its market flow capital.
Both exchanges compete for the order flow that leads to reduced costs, efficiency, and innovation. The presence of arbitrageurs keeps the prices on the two stock exchanges within a very tight range.
2. Dematerialized Account: It is commonly termed as ‘demat account’ in which the transactions of your shares, buying or selling information and other trading info is stored. It is slightly different from a normal bank account. It can be opened through a broker. Once you set up your demat account you are ready to trade.
3. Equity: Equity is you buy a small portion of a firm and you trade. It is commonly termed as stock. It is the value of the shares issued by the company.
4. Derivatives: A derivative is a price which depends on the value of one or more underlying asset. It can be said that it is a contract between two or more parties, whose value is determined by the ups and downs in the share market. Derivative trading consists of two types of trading: i)Future. ii)Option
5. Commodity: Trading in the commodity market is dealing with metals like gold, silver, copper etc, agricultural products, natural gas, oils etc. It requires high investments compared to equity and another form of trading. There are a lot of MCX Gold Tips available for newbies, who are willing to trade in the commodity market, especially in metals like gold.
So these are some basic terminologies, every investor should go through before making an entrance in the stock market. This would help him giving him some boost to trade and decision making.