Equity Market

12 Things About Equity Market You Must Know

Every market is a meeting point of buyers and sellers. Markets are all about transactions. Somebody buys, somebody sells. In the equity market, trading keeps on happening at an incredible speed. Investors are able to deal in shares in a fraction of a second. Every day, thousands of crores worth of equities are transacted in the equity market in India. If you are new to markets, you should gain some knowledge before you venture into the equity market. Plus, there are different types of equity market and so you know about them as well. In the following sections, you will know about 12 important things related to Indian equity market. Read on.

First things first, it is important to begin with a good understanding of what is equity market in the Indian context. Equity market, often called as stock market or share market, is a place where shares of companies or entities are traded. The market allows sellers and buyers to deal in equity or shares in the same platform.

In the global context, equities are traded either over the counter or at stock exchanges. There are multiple buyers and sellers of the same equity/share. Hence, you stand a good chance to strike a nice deal at the equity market. If you want to begin online equity trading in India, you have to get a demat account. Open a demat account in simple steps.

Equities are mostly traded on the stock exchanges in India. In the Indian stock market, equities are available for trading at the National Stock Exchange (NSE) , the Bombay Stock Exchange (BSE) and the latest entrant, Metropolitan Stock Exchange of India (MSE). Shares of stock market listed companies are bought/sold.

Equity share trading is roughly in two forms - spot/cash market and futures market. These are the different types of equity market in India. The spot market or cash market is a public financial market in which stocks are traded for immediate delivery. The futures market is a place where the shares' delivery is due at a later date. With the help of an equity trading account, a trustworthy broker like Nirmal Bang and online equity trading systems, investors can utilize the indian equity market..

Shares/stocks traded in the equity market belong to companies that show growth. Investors typically invest in 'growth' stocks, which belong to small companies showing potential for high growth rates. The growth stocks are those where investors are ready to make big bids in the live equity market, be it in India or global equity market. With the help of online equity trading, investors aim to accumulate growth stocks today so that they can them off after incredibly low prices.

The concept behind how the stock market works is simple. Think of an auction house where buyers and sellers negotiate prices and make trades. Now, substitute the auction house and items with equity market and shares. Companies list their shares on an exchange. Investors can buy shares in the primary market i.e. IPOs, and secondary market.

The stock market is regulated by a financial watchdog. The equity market is maintained by stock exchanges, and various stakeholders like brokers, dealers, clearing corporations etc. It is an extended family of institutions and this is the true equity market meaning.

There is no 24 hour stock trading system yet. The normal trading time for equity market is between 9:15 am to 03:30 pm, Monday to Friday. On Saturday and Sunday, trading does not happen unless there are special circumstances.

Apart from weekends and non-business days, trading does not stop. You can check equity trading holidays 2019 on NSE or BSE website.

There is virtually no difference between stock and equity. These two words are commonly used to mean shares. Stock and equity are just synonyms. Equity share trading is done via online equity trading systems.

Equity in NSE refers to stock market. The securities market has two segments, the new issues (primary) market and the stock (secondary) market. Currently more than 1300 securities or stocks are available for trading on the NSE.

The stock exchange's automated screen based trading allows investors across the length and breadth of India to trade and invest. The NSE trading system is called 'National Exchange for Automated Trading' (NEAT). The equity space in NSE comprises of cash/spot trading and also trading in equity derivatives.

To trade in equity share market, you will need to have the proper tools - open a demat and trading account, have funds to buy stocks and a good broker platform to execute the trades. Thanks to technological advancements, you can do online equity trading, at your home, office or even while on the move.

To begin trading, you need to select the right stocks. Follow the live equity market to some worthy stock ideas and do some research. This will help you fine-tune equity market growth & investment strategies.

Today, carrying out online equity trading in India is an easy process. Every user with an online account has a user/customer ID and password. These credentials will help you do equity share trading on the equity market live.

Do always remember that brokers take professional-grade IT security, thus ensuring high quality online equity trading that is completely safe. Here is a step by step process. Don't forget to open a free demat account to begin investing.

  • Login to the online broker platform.
  • Enter the ID and password to access your account.
  • Your customized page opens and thus the opportunity to trade is open. Ensure you access the online platform during market/trading hours.
  • Select the stock to trade and buy/sell them on the stock exchange at your preferred rate. Once the order goes through, your trade is completed.
  • In the evening, you will get an SMS notification of the trade order specifics, along with confirmation of the ledger balance.

The equity share market, be it the equity market in india or asian equity market, is full of traders and investors wanting to make a profitable deal. It can sometimes be a lot of information to process. Also, there are different types of equity market. Hence, it is always good to have some ground rules before you trade in equity.

  • Never go against the sentiment of the equity market today - The trend is your friend. Unless you are 100% sure, do not try to take totally contrarian bets. When you go against the tide, the risk factor increases.
  • Buy low, sell high - You should try to buy stocks that are trading at historically low prices and cheap valuations. When you buy such stocks, you can gain when the equity makes the next up move.
  • Think long term - In the short term, nobody can predict what the equity market live will see next. So, it's important to have a long term view on trades that you do.
  • A Rs 1000 stock is not expensive and a Rs 5 stock is not cheap - Some investors approach equity investing in the same way they buy clothes or vegetables. They seem to think if a stock is priced at Rs 1000 is it costly than a stock that is Rs 100. Use valuations to understand exactly what is cheap and what is expensive.

There are advantages and disadvantages to trading equity market. The outcome of any situation is dependent on the way we behave. Let us look at the benefits first.

Pros of Equity Market
  • Great wealth creation
  • The biggest benefit of the equity market is the opportunity to make huge profit. Many investors have experienced big returns that can never be given by any other financial investment.
  • Enter and exit easily
  • In case of equity market, you can easily enter and exit a stock. This should be compared to when you want to sell a house, where you cannot sell it on your own will always.
  • Lower taxes
  • When an equity is sold for profit after holding for more than 1 year, the profit attracts 10% tax. In case of fixed deposits, the tax rate is as per the individual's tax rate i.e up to 30%.

There are some downsides in equity trading too.

Cons of Equity Market
  • Lack of understanding can be costly
  • If you do not properly do research or invest in bad stocks, your chances of making losses are high in a equity market live type situation. So, be careful.
  • Equity market can be volatile
  • Equity investment return does not move in a straight line. There are upswings and downswings in the live equity market.
  • There is risk of capital erosion
  • Equity share trading involves a chance of capital erosion.