Basics of Stock Market

Business needs the funds for carrying out day to day business activities. Funds can be raised from many sources which are –

  1. Angel investors
  2. Debt financing
  3. Equity
  4. Owners Capital

Now it is important for all of you to understand about the term stock market. Stock Market is a place where the shares of listed companies are traded. The term stock market is similar to the share market. The key difference is that in the stock market you can trade the financial instruments like Bonds, Mutual funds, derivatives as well as a share of Companies where as in share market you can only do the trading of shares. In India, there are so many stock exchanges like Delhi stock exchanges, Ahmedabad stock exchange,  Multi-stock exchange, etc for but two major stock exchanges are Bombay stock exchange and National stock exchange. The details of major stock exchanges are given below individually –

  • Bombay stock exchange

Bombay stock exchange was established in 1875. BSE is one of the world fastest stock exchanges in the world with a median trade speed of 6 microseconds.BSE has Sensex as its index. More than 5500+ companies have registered their name in BSE. Under Sensex top 30 well established companies of India have registered their name. If Sensex is increasing than it means that market is in good condition and if Sensex is decreasing than market is not in good condition.If you want to obtain the more information about BSE than you can go their website .

  • National stock exchange

The national stock exchange was established in 1992. NSE has nifty as its index. More than 1600+ companies are registered under NSE. It is the 12th largest stock exchange. The National Stock Exchange (NSE) is India’s leading stock exchange covering various cities and towns across the country NSE was set up by leading institutions to provide a modern, fully automated screen-based trading system with national reach. Under nifty top 50 well established Companies of India have registered their name. If nifty is increasing than market is in good condition and if nifty is decreasing than market is in bad condition. If you want to obtain more information about NSE than you can go to their website .


The timings of the Indian stock market is divided into three parts-

  1. Normal Session

The timing of the stock market is started from 9 AM to 3:30 PM from Monday to Friday.

  1. Pre-opening session

The opening price of the normal session is calculated using multilateral order matching system. Earlier, the bilateral matching system was used which caused a lot of volatility when the market opened. Later, this was changed to a multilateral order matching system to reduce the volatility in the market. Pre-opening the session is always started between 9 AM to 9: 15 AM.

  1. Post – Closing session

The duration of the Post-closing session is between 3:40 PM to 4:00 PM . You can place orders to buy or sell stocks in the post-closing session at the closing price. If buyers/sellers are available then your trade will be confirmed at the closing price.

Things needed to start trading in the stock Market

When you are trading in a stock market than two accounts are usually open-

  1. Trading Account –

A trading account can be any investment account containing securities, cash or other holdings. Most commonly, trading account refers to a day trader’s primary account. These investors tend to buy and sell assets frequently, often within the same trading session, and their accounts are subject to special regulation as a result. The assets held in a trading account are separated from others that may be part of a long-term buy and hold strategy.

  1. Demat AC –

Demat accounts are usually like savings account only. In Demat account your shares will be stored in dematerialized form . While trading you have to ensure that all your shares will get stored under Demat account. If all your shares are stored in Demat account than all your money is safe. The following 5 proofs have to be submitted by investors-

  • Brokerage firm
  • Address form
  • 2 Passport size photos
  • Cancel check to link trading and profit & loss account



  • Get in touch with a registered depository.In order to open a demat account, you’ll have to first get in touch with a registered depository participant (DP). For a list of registered DPs, visit the NSDL (National Securities Depository Limited) or CDSL (Central Depository Services Limited) websites.
  • Download the forms.Download or collect the account opening forms from the respective DP’s office or website. Fill up the requested details in the account opening form and provide the necessary signatures. Affix photographs and submit a copy of PAN Card, proof of address, bank statement or other documents as required by the company.
  • Open an online demat account.With Aadhar number, you can open a demat account online.
  • Select the right broker.The broker who Open Demat Account With Aadhar number.
  • Fill in basic details.Your Name, Mobile Number and Email id.
  • Set password.Set a unique password and don’t share with anyone. With help of password, you can continue your online application.
  • Enter Pan Card details.Broker fetch your details from a government authorized site, whether you are KRA register or not.
  • Pay account opening charges.Pay account opening charges to your broker by net-banking or credit card.
  • Create DigiLocker.The government approved Digilocker allows you to upload your personal documents. with help of you can share securely your data with your broker .
  • Fill KYC Details.Fill out your personal information including name, mother’s name, bank account number, and trading experience.
  • Upload your documents.Please upload your financial documents securely, including a canceled cheque, bank statement, income proof, signature copy, PAN card copy.
  • E-Sign with Aadhar.You will receive OTP (One Time Password) on your mobile number and Email id. Enter both OTP on Aadhar card website for eSign with Aadhar.
  • Wait the turn-around time.It usually takes about a week or two for the welcome kit to reach you, depending on different company policies. A demat account can be opened with zero balance in your account. There is no compulsion to maintain a minimum balance either.
  • Nominate your nominee.It is important that you add a nominee while applying for a demat account. Check and double check the nominee details for accuracy. This will enable the nominee to receive the benefits of your securities in the event of exigencies.
  • After opening an account, the DP will assign you a beneficial owner identification number that will be needed for all future transactions. When you wish to sell your shares, you need to coordinate with your broker and give a ‘Delivery Instruction’ to your DP. Your account will then be debited with the number of shares sold by your DP. You will receive the payment from your broker.
  • Trade Similarly, when you want to buy shares, inform your broker. The shares that you bought will be credited into your account by the DP. You can also use the trading account linked to your demat account to buy and sell shares online. The DP will provide periodic statements of your transactions.


List of famous brokers

  • Wisdom Capital
  • Sharekhan
  • ICICI direct
  • HDFC securities
  • Angel broking
  • Motilal oswal