Home » Share Market for Beginners

Share Market for Beginners

by Amelia

Investing in the share market can seem intimidating for beginners, but it is one of the most effective ways to build wealth over time. With the rise of technology, it’s easier than ever to start trading through a share market app, making it accessible to more people. Whether you’re curious about how the share market works or want to know the difference between stocks and shares, this guide will take you through everything you need to know to start investing in the share market.

What is the Share Market?

The share market, also referred to as the stock market, is a platform where buyers and sellers trade shares of publicly listed companies. When you invest in shares of a company, you are purchasing a small part of that company, which entitles you to a portion of its profits. The value of shares fluctuates based on market conditions, company performance, and other economic factors.

How Share Market Works?

The share market operates through stock exchanges, where companies list their shares, and investors buy or sell them. The two major stock exchanges in India are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Here’s a simplified version of how the share market works:

Companies Go Public

A company issues an Initial Public Offering (IPO) to raise funds from investors.

Investors Buy Shares

Individuals and institutional investors buy shares during the IPO or through stock exchanges afterward.

Trading

After the IPO, shares are traded among investors on the stock exchanges. The price of shares fluctuates based on supply and demand, company performance, and other economic factors.

Dividends and Profit

Investors may earn money through capital appreciation (when the price of shares rises) or through dividends (profits paid by the company to shareholders).

What is Delivery Trading?

Delivery trading is a stock market strategy where investors purchase shares intending to hold them for an extended duration. Unlike intraday trading, which focuses on quick transactions, delivery trading allows investors to benefit from potential price appreciation and dividends, fostering long-term investment growth and stability.

How to Invest in Share Market for Beginners?

If you’re new to the world of share market trading, it’s essential to learn the basics before diving in. Here’s a step-by-step guide on how to start investing in the share market:

Educate Yourself

The first step is to understand how the share market works. You can learn share market concepts by reading books, taking online courses, or following financial blogs. Terms like bull market, bear market, and stock valuation are fundamental.

Open a Trading Account

To invest in the share market, you’ll need two accounts:

Open Demat account online, where your shares are stored electronically.

Open a trading account, which allows you to buy and sell shares.

You can open these accounts with a registered stockbroker or through a share market app. Many brokers now offer online services, which makes share market app download and trading straightforward.

Choose the Right Share Market App

A good share market app is crucial for a beginner because it simplifies the process of investing. Apps like HDFC Sky offer additional features such as real-time data, stock analysis tools, and easy navigation. 

Research Before You Invest

Before you start buying shares, research the companies you’re interested in. Look at their financial reports, business models, and growth potential. It’s essential to understand the fundamentals of the companies you’re investing in. Don’t just follow trends blindly; focus on long-term investment strategies.

Start Small

When you’re just starting, it’s a good idea to invest a small amount of money. This allows you to learn how the share market functions without risking too much capital. Gradually, as you gain experience and knowledge, you can increase your investment amount.

Diversify Your Investments

One of the golden rules of share market investments is to diversify. Don’t put all your money into a single stock or sector. Diversifying reduces your risk, as losses in one stock can be offset by gains in another.

Difference Between Stocks and Shares

The terms stocks and shares are often used interchangeably, but there’s a subtle difference.

Shares refer to ownership in a particular company. For instance, if you own 100 shares of a company, you are a part-owner of that specific company.

Stocks refer to the general ownership of shares in one or multiple companies. For example, if you say you own stocks, it could mean you own shares in several different companies.

How to Trade in Share Market?

Trading in the share market involves buying and selling shares in the short term to capitalize on price fluctuations. Here are a few common trading strategies:

Day Trading

Buying and selling shares within the same day. This requires close monitoring of the market and is considered risky for beginners.

Swing Trading

Holding shares for a few days or weeks to take advantage of expected price changes.

Position Trading

Holding shares for the long term, ranging from months to years, based on long-term price predictions.

If you’re new, consider starting with long-term investment strategies before venturing into trading, as it involves higher risks.

When Does the Share Market Open?

In India, the share market operates on weekdays from 9:15 AM to 3:30 PM. However, pre-market trading occurs between 9:00 AM and 9:15 AM. It’s essential to be aware of the market hours as the prices of stocks fluctuate during these times based on demand and supply.

How to Start Investing in Share Market Through a Share Market App

Thanks to technology, you can easily start investing through a share market app. Here’s a quick guide:

Download the Share Market App

Visit the Google Play Store or Apple App Store to download a trusted share market app.

Sign Up and Complete KYC

You’ll need to verify your identity using documents like PAN card, Aadhaar card, and bank details.

Open a Demat and Trading Account

Once your KYC is complete, the app will help you set up your Demat and trading accounts.

Add Funds

Transfer money from your bank account to the trading account to start investing.

Start Investing

You can now buy and sell shares directly from the app.

How to Learn Share Market?

To become proficient in share market investments, continuous learning is essential. Here are a few ways to learn:

Books on Investing

Classics like “The Intelligent Investor” by Benjamin Graham or “One Up On Wall Street” by Peter Lynch are great starting points.

Online Courses

Platforms like Udemy and Coursera offer courses on investing basics.

Follow Market News

Keep yourself updated on market trends and news that can impact share prices.

Conclusion

Investing in the share market can be a rewarding way to grow your wealth over time, but it requires careful research, patience, and a disciplined approach. For beginners, it’s important to start slow, use a reliable share market app, and focus on long-term strategies. As you gain experience, you can explore more complex strategies like trading. With dedication and continuous learning, you can master the art of share market investments and make your money work for you. A prudent share market app such as HDFC Sky can make your journey smoother with meaningful market insights and tailor-made investment strategies.

Latest Articles

Popular Articles