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Investment Guide

Do the words SENSEX, BSE, NSE and Nifty confuse you? If yes, then read on to know how the Indian Share Market works. Investments are what we all do to secure our finances, and ultimately, our future. However, in times of sudden inflations and depressions, going for the older investment methods is not the safest practice. This is where Share Markets come into the picture. They give an investor the opportunity for the purchase and sale from a wide array of securities, such as stocks and options. Destimoney is an ideal comrade to every investor who is eager to begin their journey in the financial world. We not only train investors in stock market basics and the types of financial instruments they can use, but also in trading strategies that are designed to provide better returns, thereby making you more than just a regular investor in the market. One can trade in the Indian Share Market mainly through the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Accounts

To venture into the world of trading, one needs to have three types of accounts. Firstly, a trading account is meant for the buying and selling of financial products. Secondly, a demat account is a requirement when it comes to holding the investments electronically. Finally, a bank account is needed to transfer and receive funds. Trading Account: An investor can open an online or offline trading account with broking firms which are registered with the respective Stock Exchange. This account enables the investor to purchase and sell financial products which are available on the share market.

Demat Account:

Investments like bonds, mutual funds and shares have been dematerialized since 1996. This means that they are present electronically, making it mandatory for investors to hold demat accounts through which they can buy or sell the products that have come through the trading account.

Bank Account:

One can link their bank account and trading account, making it an easier, smoother process to transfer funds which have come through successfully executed trades in the trading account.

Participants

Stock Exchange:

Stock exchanges are large platforms where an array of financial products like bonds, derivatives, equities and mutual funds are traded. To participate, one has to be registered with the exchange, as well as with the Stock Exchange Board Of India (SEBI).

Brokers:

Brokers are service providers, who play the role of mediators between the investors and stock exchanges. They have to be registered with the stock exchanges as brokers before they offer their services.

Traders And Investors:

Traders and investors are either individuals or institutions, who buy and sell financial products. Their main skill is to buy and sell different instruments efficiently, to make profits for themselves. They could be investing for profits both in the short term and long term. Traders and investors are advised to understand the basics of share markets properly before investing, in order to avoid risks and maximize profits.

SEBI:

Since stock investment is a risky area, it is necessary for regulations to be present for the well-being of everyone involved in trading. Thus, SEBI is the holder of this responsibility, and drafts new rules and regulations both for the development of the stock exchanges and the investors’ interests.

Order Process

  • Traders and investors first place their orders through trading accounts
  • The brokers then direct these orders to the stock exchanges
  • The exchange then searches for a match for the given order
  • The exchange confirms the order to both the buyers and sellers

Once the above is done, the settlement procedure (T+2) takes place, where buyers receive their shares and sellers receive their money after two working days of the trade.