What is Stock Market & How Does It Work? Introduction & Basics of Share Market Malayalam | Ep 1

Introduction

This tutorial provides a comprehensive overview of the stock market, explaining its essential concepts and functionality. Designed for beginners, especially those interested in investing in the stock market, this guide will help you understand the key terminologies and processes involved in trading shares.

Step 1: Understanding the Stock Market

• The stock market is a platform where shares of publicly listed companies are bought and sold.
• It provides a means for companies to raise capital by selling shares to investors.
• Key terms to know:
  • Stock/Share: A unit of ownership in a company.
  • Public Listing: The process of a company offering its shares to the public through an IPO.

Step 2: Participants in the Stock Market

• Various participants are involved in the stock market, including:
  • Investors: Individuals or institutions that buy shares to gain returns.
  • Brokers: Intermediaries who facilitate buying and selling of stocks.
  • Regulatory Bodies: Organizations like SEBI (Securities and Exchange Board of India) that oversee the market's functioning.

Step 3: Types of Investors

• Investors can be categorized into the following types:
  • Retail Investors: Individual investors who buy and sell securities for personal accounts.
  • Institutional Investors: Organizations that invest on behalf of clients (e.g., mutual funds, pension funds).

Step 4: How Stock Prices Are Determined

• Stock prices are influenced by various factors including:
  • Company performance and earnings reports.
  • Market demand and supply dynamics.
  • Economic indicators and overall market sentiment.

Step 5: Understanding Stock Price Fluctuations

• Stock prices fluctuate due to:
  • Changes in investor perception.
  • Market news and events (e.g., economic reports, political changes).
  • Speculation and trading strategies.

Step 6: Analyzing Stocks

• To make informed investment decisions, consider:
  • Fundamental Analysis: Evaluating a company's financial health and performance.
  • Technical Analysis: Analyzing statistical trends from trading activity, such as price movements and volume.

Step 7: How to Invest in Stocks

• Follow these steps to start investing:
  1. Open a Demat and Trading Account: Essential for buying and holding shares.
     • You can open a free Demat account through platforms like Upstox.
  2. Research Stocks: Use analysis techniques to select stocks that align with your investment goals.
  3. Place Orders: Execute buy or sell orders through your trading account.

Step 8: Understanding Demat and Trading Accounts

• Demat Account: Holds your shares in electronic form, making transactions easier.
• Trading Account: Used to buy and sell shares on the stock market.

Step 9: Regulations of the Stock Market

• Regulatory bodies like SEBI ensure fair practices and protect investors from fraud.
• Familiarize yourself with the rules and regulations to ensure compliance.

Step 10: Practical Applications of the Stock Market

• The stock market can be used for:
  • Long-term investment strategies to build wealth.
  • Short-term trading to take advantage of market fluctuations.

Conclusion

The stock market offers numerous opportunities for investors to grow their wealth. By understanding its basic concepts, the types of participants, and how to analyze stocks, you can start your investing journey confidently. Consider taking further steps by opening a Demat and trading account and joining online communities for additional support and learning.