What is Share Market
Share Market also known as Equity markets or Stock markets refers to the market where shares or stocks of a company are bought and sold in an exchange.
What is Exchange?
A marketplace where buyers and sellers meet to purchase and sell shares of the company which are listed under them. There are two major equity exchanges in India, National Stock Exchange (NSE) and Bombay Stock Exchange Limited (BSE), where there is a Benchmark Index for both exchanges.
What is Index ?
An average value produced by combining several stocks together and expressing their total values. Market indexes are intended to represent an entire stock market and thus track the market's movement over time.
There are two major indexes in India:
Nifty which is a composition of 50 stocks traded in NSE.
Sensex which is a composition of 30 stocks traded in BSE .
What are Stocks?
These are a category of assets which are bought and sold over exchanges.
Who are the Market Participants ?
FII - The term is used most commonly in India to refer to outside companies investing in the financial markets of India. FIIs are the big players in the market.
Proprietary - The term ‘Proprietary’, indicates firms, who trade on their own account like brokers etc.
DII - Domestic Institutional Investors’ are those which undertake investment in securities and other financial assets of their domestic country such as LIC, UTI and GIC.
Clients - Retail Investors- individuals.
Why are FIIs important?
FIIs have huge financial power, hence, has the power to change the direction of a stock market.
Entering and exiting of FIIs from market heavily influences the trend of the market.
What are the Type of trading and accounts ?
There are 2 ways to trade in markets:-
Intraday : When a stock is bought and sold on the same trading day and vice versa.
Positional Trading :when a stock is bought and is not sold on the same trading day.
The following are the accounts which are mandatory for trading in share market:
Demat Account is like a bank account where shares are held in electronic form.
Trading Account: It is an account which is opened with an exchange registered broker for buying and selling of shares.
Delivery & Settlement
Delivery: When a buyer buys a stock and hold it for more than a day, he receives the share in his Demat account. This is called Delivery.
Settlement Period:The process of the buyer getting his shares and the seller getting his money is the Settlement. This process is completed in T (Trade) + 2 days or Trade + 2nd business day.
Example: If you Buy a share on Monday you will be getting the share in your account on Wednesday.
Flow of Trading
A group of companies in the same line of business selling a homogeneous product or service and sharing common characteristics make a sector. Example: Bank, Pharma, IT etc.
Importance of Sector
It gives a snapshot of the performance of an economy. An overview of the sectors’ performance tells us the strongest and weakest performing sectors. This helps in making investment decisions.
For Ex: in 2013, CNX IT sector gave return of 37.8% outperforming Nifty which at the same time gave a return of 11.4% with all the shares in this sectors giving extraordinary returns.
Bull Market and Bear Market
What is a Bull Market?
A financial market of a group of securities in which prices are rising or are expected to rise. Bull markets are characterized by optimism, investor confidence and expectations that market will continue to rise. It is a market where buyers outnumbers the sellers.
What is a Bear Market?
A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining. It is a market where sellers outnumbers buyers.
Why do Share Price Fluctuate?
When buyers outnumber sellers for a stock, the price of the share tends to rise and vice-versa.
In order to get a fair idea refer to the link below which I have come across where any stock can be searched and selected and the desired levels with other fundamental and technical data is shown (I have taken SBIN as an example)