Have we ever realized why there is a change of either rise or fall in the stock market every day, which are reported in the news daily? Before looking into that aspect, the simple question is, what exactly do we mean by the stock market? This article will give you a brief idea of what the stock market is and whether stocks and shares are one or not. Following this, the article will also give an understanding of how should we start investing in the stock market.

Overview of the stock market:

Let us first understand what stock and what a stock market is. Stocks are nothing but financial securities that contain the value in them and form part of a company’s ownership or more than one company. There are, of course, monetary benefits associated with it, which is why it is said to contain the value. However, the question that arises is why is such value is associated with a company. This is because every company shall require extra money to run their business, and to that extent, they offer the public to buy their part of ownership equivalent to the money they pay to the company. These are stocks in general. Some instruments are part of stocks and the stock market, and these instruments include shares, Initial Public Offerings, and mutual funds. All these securities are bought and sold in the stock market. And it is also reported that there is no limit at all in possessing or buying these stocks in the market by an individual. The benefit that a person reaps out of this stock market lies in the fact that, once the value of the company rises, such person has the chance of selling the stocks at a higher price than the price he bought.

In India, the exchange of these stocks of the companies occurs at two leading stock exchanges. They are the National Stock exchange (popularly known as NSE) and Bombay Stock Exchange (BSE). Both these exchanges form a catalyst in India’s growth over time and help investors by creating good investment opportunities and empowering the stockholders across the country.

So, what is the difference between the share market and the stock market? As mentioned earlier, shares form part of one of the securities/stocks of only one company sold in the stock market. It is a smaller unit of the company and gives the shareholders a minor part of ownership. This is the key difference between a stock and a share. A share is from one company, and a stock contains securities of one or more companies in a stock market. Similar to the stock certificate, when a person buys some shares in the company, he or she will be provided with a share certificate that authorizes that that person is a shareholder. Shareholders will receive a profit in the name of dividends as per the ratio of shares they hold with them.

How to start investing in the stock market:

Having understood what the stock market is and how it functions, let us focus on the practical application of how to be part of this investment process and functioning as an investor. In that matter, we should first know whether a company has listed its stocks or shares in the stock market or not. Companies should list themselves in the stock market in order to get recognized as a listed company under the definition of the listed company under the companies act of 2013. When the securities of one company are listed or are intended to be listed, then it becomes a listed company as per SEBI guidelines.

Let us look into important requirements for a person to become part of the stock market. The following are ingredients to become part of the stock exchange. These are mandated by any person whom you will consult as a stockbroker while initiating the process of investing in the stock market.

1. There should be a PAN Card,
2. If an investment is in India, Aadhaar card should also be there,
3. The name of the person in a cheque from his active bank account,
4. Any residential proof that are accepted for this matter,
5. Details relating to your incomes and other earnings,
6. A passport-size photo. 

Apart from these document requisites, an investor shall also be required to open a Demat account or a trading account linked with the bank account. If you ask what the Demat account is, it is nothing but an account created for the purpose of storing your securities and facilitating the exchanges that happen between you and other traders or companies. You will see the performance of selling, buying and holding of stocks within that Demat account. On the other hand, the trading account stands similar to the Demat account in its functioning. Trade exchanges happen on that account. It is reported that there are many banks that provide all these facilities if you specify that you are an investor in any company or involved in the stock exchange. You may also be allowed to consult any stockbroker or sub stockbrokers who are appointed or qualified as per SEBI regulations, 1992. In this way, it becomes more effortless for any person to invest in the stock market. 

A person is free to invest in both primary and secondary share markets. Investment in the Primary market is made through IPOs and mostly happens when buying shares alone. It is done online and will allow the investor to hold electronic shares in online mode once the Demat account is created and linked. Based on the market’s response, the person will be allotted to his slots. On the other hand, secondary share market investment is the one which is called a Stock market, where trading occurs between buyers and sellers of stocks. 

How young people can invest in the stock market: 

There are a few important things that any person who intends to invest in the stock market should remember. It requires a clear understanding of how the stock market performs, when to invest and how to invest. There should be informed decisions made by the investor at any time of the stock exchange. Consult a person with a sound understanding of this field before investing. Once the way of this business is understood, any person can invest and benefit from it.