5 Common Beginner Questions about the Indian Stock Market Answered

It is very common to have a lot of question when you are new to the stock market. This post will answer 5 of the most common questions to make things easier for new investors and traders.

While the economies of most of the countries are moving at a sluggish pace, India is well on its way to a reforming economy. The long-term growth prospects of India have attracted investors all over the world aiming to benefit from the future growth of the country. This newfound reformation can be easily witnessed in how the Indian stock market has been performing in the last 2-3 years.

The massive potential of the stock market has attracted millions of new Indian investors. But with something as risky as the stock market, it is very common for new investors to have a lot of questions. Continue reading to find answers to 5 of the most common questions about the Indian stock market.

  1. What does Sensex and Nifty Mean?

There are two major exchanges in India- BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). Sensex and Nifty are nothing but main indicators or indexes of both these exchanges. The Sensex is made up of 30 companies from different industrial sectors while Nifty is made up of 50 companies.

So, when the Sensex is in green, it suggests that the price of most of the companies listed on BSE have moved up. The same is true for Nifty too.

  1. How Can I Start Investing/Trading in Sensex or Nifty?

To start trading/investing, you’ll need three things- a savings bank account, a trading account, and a demat account. The bank account is for sending and receiving money from your trading account. Only the money that you’ll have in your trading can be used for investing/trading.

The demat account is where the shares you purchase are stored in a digital format. You can select any reputed broker to open a trading/demat account.

  1. What are the Trading Hours? Is the Market Open Throughout the Week?

The market is only open from Monday to Friday between 9.15AM and 3.30PM. It remains closed on weekends and public holidays.

However, there are a few stockbrokers that offer after-hours trading. But settlement for such after-hours trades is also done during the working hours of the market.

  1. How is the Trading Done?

The exchanges use what is known as an online limit order book. The exchanges follow a matching order mechanism for executing trades.

For instance, if you want to sell one share of a company at Rs. 100 and have placed the order; the order will only be executed when there is another party that is interested in buying that stock at Rs. 100. Both the parties remain anonymous ad the trades are placed through brokers.

  1. What are the Costs Associated with Trading in the Indian Stock Market?

There are a few charges involved in trading. These include the brokerage, statutory costs like Securities Transaction Tax, GST, etc., and exchange costs.

Apart from the brokerage, the other charges are generally nominal but can significantly vary significantly based on your trading volume.

It is essential to find answers to all your queries before you start trading in the stock market. While some of the most common ones have been answered above, find answers to your remaining questions to begin your investing/trading journey in the best way possible.