Equity Trading

Equity Market in a Glance

An equity market, generally known as stock market or share market, is a market where shares of companies or entities are issued and traded, either through exchanges or through listed dealers or brokers. Stock exchanges list shares of common equity as well as other security types, e.g. corporate bonds and convertible bonds.

Equity market is the aggregation of buyers and sellers of stocks. The equity sale gives a company access to capital and investors a slice of ownership in a company with the potential to realize gains based on the future performance of the company.

The place where stocks in the equity market are traded is the stock exchange. The equity shares in India are traded through two stock exchanges - National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE).

National Stock Exchange of India (NSE)

The National Stock Exchange of India Limited (NSE) was established in 1992 by a group of leading Indian financial institutions at the behest of the government of India to bring transparency to the Indian capital market. It was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system which offered easy trading facility to the investors across the country. The capital market (equities) segment of the NSE commenced operations in November 1994, while operations in the derivatives segment commenced in June 2000. The NSE is the world's 12th-largest stock exchange as of March 2016 with market capitalization of more than US$1.41 trillion.

Bombay Stock Exchange (BSE)

The Bombay Stock Exchange (BSE) is an Indian stock exchange located at Dalal Street, Mumbai. Established in 1875, BSE is considered as the world's fastest stock exchange, with a median trade speed of 6 microseconds. The BSE has an overall market capitalization of $1.83 Trillion as of March, 2017, making it one of the world's 11th-largest stock exchanges.

Equity trading

In the stock market, investors who want to buy the shares of a particular company, offers a certain price, and sellers ask for a specific price. When these two prices match, the sale is executed. To be able to trade in equity market, you will need a stock trading account.

The securities market has been segregated into two interdependent segments, the i.e. Primary market and the secondary market.

First one is a market where securities are offered for the first time for receiving public subscription while the latter is a place where pre-issued securities are dealt between the investors.

Before you actually start investing and trading in stock market, it is good to understand some frequently used terms:

MARKETS: A stock market, equity market or share market is the aggregation of buyers and sellers of stocks/shares for trading of company shares, stock or derivatives. This includes securities listed on a stock exchange as well as those only traded privately. Market is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares, bonds, debentures etc. For example: shares of private companies which are sold to investors through equity crowd funding platforms. Stock exchanges list shares of common equity as well as other security types such as corporate bonds and convertible bonds.

EXCHANGE: A stock exchange, share market is an exchange which provides facilities for stock brokers and traders, to trade company stocks and other securities. In India, The Bombay Stock Exchange Limited, or BSE has a nationwide reach with a presence in 417 cities and towns of India. Its index or market indicator is known as the Sensex. The National Stock Exchange of India, or S&P CNX Nifty, or simply Nifty, is the leading index for large companies in India.

SHARES: A share, also known as equity or stock, is one of a finite number that represents fractional ownership of the corporation in proportion to the total number of shares. In liquidation, the stock represents the residual assets of the company that would be due to stockholders after discharge of all senior claims such as secured and unsecured debt. Equity is a share in the ownership of a company. It represents a claim on the company's assets and earnings.

PAN CARD: Permanent Account Number (PAN) is a unique, 10-character alpha-numeric identifier, issued to all judicial entities identifiable under the Indian Income Tax Act, 1961. It is mandatory for a majority of financial transactions such as opening a bank account, receiving taxable salary or professional fees, investing in shares market or mutual funds, sale or purchase of assets above specified limits etc.

BROKER: Individuals can't directly go the stock exchange and buy or sell stocks/shares. The entity who are authorized to buy and sell in the markets are called brokers. A broker can be an individual or company or even an online agency, registered and licensed by Securities and Exchanges Board of India (SEBI), who regulates the share markets. Firstly to be able to invest in share market, you need to find a broker . Make sure the broker you choose has proper license to trade and deal in securities in the markets. However, one can now do online trading without any help of broker.

DEMAT AND TRADING ACCOUNT: A Demat account holds the stocks or shares in your name and the same reflects in your stock portfolio as you can't hold or store shares in physical form. For buying and selling shares in the securities/stock market you require a Trading account. It's like an intermediary who facilitates the buying and selling.