BASICS OF STOCK MARKET: A GUIDE FOR BEGINNERS

1. What is Stock Market?

• The Stock Market is a market where you buy and sell shares of a public listed company.
• When you purchase a public company’s stock, you’re purchasing a small piece of the company.
• You have to purchase the stocks on online only.
• All the shares should buy or sell through stock exchanges

2. What is a Share?

• A share is a small unit of ownership in a company and you will be entitled as a shareholder after purchasing the share of the company.
• Shareholders are eligible to make key decisions about the company’s business growth.
• Shareholders are also eligible for bonus shares, dividends, stock split, and right issues of the company.
• A drawback of a shareholder is that he will lose his total capital if a company files for bankruptcy.

3. Stock Exchange

• The stock exchange is the formal organization that enables companies to list their shares and offer them for sale to the public.
• You have to buy (sell) the shares from (to) only two exchanges in India.
i) National Stock exchange (NSE)
ii) Bombay Stock Exchange (BSE)

4. Stock Market Timings

• Pre-Open Market session from 9:00 AM to 9:15 AM
• The Market opens at 9:15 AM and closes at 3:30 PM.
• The post-closing session from 3:30 PM to 4:00 PM (Brokers Trading session).
• After Market hours starts from 4:00 PM to 9:15 AM. After Market Orders (AMO) will be executed at 9:15 AM (On Next Day).
• Share market is closed on Saturday, Sunday and Public holidays.
• Market timings for commodity market is between 09:00 AM to 11:30 PM.

5. Face value & Book value

• The face value of a share decides by the company when it is listed on stock exchange through Initial Public Offering (IPO).
• Face value will not change even though market crashes.
• It is the nominal value of stock at the time of issuance.

• Book value of a company determines the net value of assets and available on balance sheet.
• Book value (BV) = Total Assets - Total Liabilities

• BOOK VALUE PER SHARE (BVPS) = Book Value/Outstanding shares
• If the BVPS is higher than current market price of stock, then the stock is considered undervalued.

6. Dividend & Dividend Yield

7. Stock Split

8. Bonus Share

9. Volume of Shares

10. Bulk Deal

11. Gap Up and Gap Down Opening

12. Lower and Upper Circuit

13. Promoter, DII and FII

14. Order Types

15. Small, Mid and Large Capitalization

16. Financial Statement

17. Depositories & Depository Participants

18. Demat Account

19. Trading Account

20. Documents Required

21. IPO, FPO & OFS

22. Peer Comparison

23. Types of Trading

24. Stock Screener

25. Conclusion

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