Hello, people !!! I hope you guys are doing well. Today we are going to have a quick introduction to the stock market before we proceed further for some advanced knowledge.
So, let’s dive in.
Introduction to the stock market
I think you might have heard of the term “stock market” before jumping into this article. The stock market, also known as the equity market or share market, is a place to buy and sell shares of various companies through brokers.
The complete group of individuals who buy and sell stocks of listed corporations makes up the stock market. Once you buy stocks of any listed company from the stock market, you are a part of this group.
The global stock market has a market capitalization of approx. $90 trillion as of 2022 and the Indian stock market have a capitalization of $2.7 trillion
The stock market additionally includes a large number of stock exchanges or locations where individuals may gather to deal in stocks.
Though nowadays everything takes place online, there are stock exchanges that handle all the transactions. The NASDAQ, and National Stock Exchange (NSE), are all examples of stock exchanges.
Now you might be wondering, what is NSE?
The NSE (National Stock Exchange) and BSE ( Bombay Stock Exchange) are the two major stock exchanges in India. Both exchanges follow a similar mechanism, i.e., they work similarly and have the same working hours and trading hours.
Besides these two, there are many other stock exchanges like the Bangalore stock exchange and the Madras stock exchange.
We all know how important it is to invest your money to grow and get profitable returns on our invested amount. The stock market helps you to invest in the world’s top companies by buying their shares.
Types of stock market
There are mainly two types of stock markets:
- Primary Market
- Secondary Market
A primary market is where businesses raise money for the first time from the stock market. Initial Public Offerings, or IPOs, are the procedure used to issue shares of a company to the public for the very first time.
After the company is listed in the stock market and its shares are issued from the primary market, they can be traded, in the secondary market with the help of the stock exchange.
Shares or stocks of the company can be now bought and sold from one investor to another.
What is a stock?
Now that you know a lot about the stock market, you might be wondering, what is a stock? And how are they formed?
Don’t worry, we have it all covered.
A stock, usually referred to as a share, is a part of ownership in a company. In simple words, it is part of the equity in the company.
A stockholder or shareholder is anybody who holds the stocks of any listed company. Occasionally, stocks are termed “equities.”
Most investors’ investments are developed on stocks, which are mostly traded in and out on various stock exchanges.
Stock Market Timing
Trading can only be done during the specific stock market timings. Let’s understand each time in detail.
Pre-opening Session
In India, the pre-opening session begins at 9.00 AM and lasts till 9.15 AM. Once more, there are three slots for the pre-opening session.
9.00 AM to 9.07 AM: In these 7 mins, you can make requests to trade shares of stock. Additionally, you will be able to change or cancel any previous orders you may have made.
9.08 to 9.12 AM: During this slot of 4 minutes, no new orders could be placed, you can not change or reject any already-placed orders. The price-matching procedures have to be carried out throughout this period.
9.12 AM to 9.15 AM: The final three minutes of the pre-opening session, serve to link it to regular market hours. You won’t be allowed to place, modify, or reject any purchases throughout these three minutes.
Normal/Standard trading hours
The standard trading hours commonly referred to as the ongoing trading sessions, run between 9.15 AM and 3.30 PM.
When these markets open, you may usually purchase, trade, exchange, or sell stock on the stock exchanges in India.
Additionally, you are free to change or cancel any current purchase or sell orders during these market hours.
Post Trading Hours Session
At 3.30 PM, the normal trading session ends, and the extra session begins. The post-closing session is separated into two slots and lasts for 30 minutes till 4 PM.
3.30 PM to 3.40 PM: Throughout these ten minutes, the total average value of the stocks traded from 3.00 PM to 3.30 PM is used to determine the closing price. The final 30 minutes of regular market hours continue to be quite important for setting the closing price of every stock.
3.40 to 4:00 PM: Transactions can still be made within these 20 minutes. If and only if there are enough buyers and traders on the exchange, the transactions will be verified.
Stock Market Working Days
Now that you know each timing in detail to invest in the stock market, let’s understand when the stock markets are operating. In simple words, let’s understand the concept of stock market working days.
The stock market works from Monday to Friday and is closed on the weekends which are Saturdays and Sundays. There are also some trading holidays when the market remains closed.
The Indian Stock Market work on the T+2 model for clearing transaction. Here the T stands for the trading day and 2 stands for 2 working days.
So for instance, if you bought stocks of some companies on Friday, as Saturday and Sundays are non-working days, your trade will be executed on Monday and Tuesday. Here Monday and Tuesday are the 2 working days of the T+2 model.
FINAL WORDS
The stock market is a long-term game. Don’t come with a money mindset perspective to double your money overnight. Believe in the game of compounding and invest in the fundamentally strong stock, which you feel will be a multi-bagger in the future.
Again, do your research instead of depending on the advice of your friends and families.
I hope you found this article helpful to understand the basics and get an introduction to the stock market. Let us know in the comments below if you have any doubts or feel like we’ve left out something.
KEEP LEARNING & KEEP INVESTING