Most Indians still invest in traditional investments such as fixed deposits without realizing that their investments are not even growing at the inflation rate after considering the tax component. This is a big issue because money needs to grow faster than inflation to build a large corpus for specific financial goals. In this case, traditional investing does not suit the most ambitious Indians.
However, the Indian stock market lives up to this perfectly and is known to deliver inflation-beating returns. But it is not as easy as it looks, and given the kind of financial literacy Indians have, it is crucial for you first to learn how to invest in the stock market.
In this stock market for beginners blog, we will tell you how you can start trading in the stock market and buy stocks through the best trading platform on the Indian stock market app. By the end of the blog, you will be able to learn about investing in the stock market, how to trade for beginners, what to look for while investing in stocks, and how to start investing. So let’s get started.
Meaning of Stock Market
The stock market is a financial marketplace where shares of companies are bought and sold. It enables investors to purchase ownership stakes, or “shares,” in publicly listed companies and become shareholders. By buying shares, investors participate in the company’s growth story and generate returns through price appreciation and dividends.
The stock market operates through the stock exchange, which acts as an intermediary between buyers and sellers. India has two primary stock exchanges: the National Stock Exchange and the Bombay Stock Exchange.
In the 1990s, investors in the Indian stock market bought stocks in physical form; however, with the rise of digital platforms, investors now trade stocks using Stocks appThe purchased shares are credited to the investors’ online demat account within T+1 days.
How To Start Investing
- Start with Basics: As a beginner, you should not jump straight into stock trading because buying stocks is more challenging. There are over 4,000 listed companies on the BSE, many of which are worthless, many are of average quality, and many are of good quality. Hence, you must familiarise yourself with key concepts like price-to-equity ratio, market capitalization, chart analysis, etc., to evaluate which stocks to invest in. Doing so will minimize the risk of losing your hard-earned money in trading stocks.
- Open a Trading and Demat Account: To start stock trading, you must have a trading and Demat account with an online stock broker and a depository, respectively. You can trade in your trading account, and the shares bought are stored digitally in your Demat account. You don’t need to open both separately; just open a trading account, and you are ready to begin.
- Selecting a Trading Account: A reasonable number of companies offer this facility regarding trading applications. Therefore, you must choose the best trading platform with an intuitive and user-friendly platform, reliable customer support, margin trading facility, charting tools, etc.
What To Look For While Investing in Stocks
- Check Company Fundaments: A critical factor in learning share market trading is evaluating a company’s fundamentals. Fundamental analysis includes analyzing earnings growth, valuation compared to competitors, leverage ratios, debt, cash flows, etc. A financially strong company gives stable returns in the long term and is also less risky.
- Macroeconomic Analysis: Global stock markets are interconnected, and hence, stocks are affected by domestic and global events. This makes it essential to evaluate industry trends, geopolitical conditions, domestic inflation, economic growth, etc., before investing in and buying a stock, which can help you make entry and exit decisions.
- Holding Duration: First, deciding what type of investor you are is essential. Do you want to buy stocks for intraday trading or short-term, or hold them for over a year? Remember, long-term is safe to get returns, but short-term and intraday are risky. Your investment goals will ultimately dictate which stocks to buy and for how long.
How to Learn Share Market
- Educate Yourself: One of the fundamental questions people ask in stock market trading advice is how to start trading as a beginner. Well, the best investment you can do as a beginner is to educate yourself about the stock market. Start reading books, read company calls and quarterly results, use Google and YouTube to learn financial concepts, and follow experienced market experts for investment insights.
- Diversification: Don’t invest all your money at once; start investing in small portions. Diversify your portfolio across asset classes like equity, bonds, gold, etc. This will help you save money if your performance is different initially. As you gain confidence, increase your investment amount and stay invested for the long term.
- Review Your Portfolio: But you can’t just buy and forget. It is essential to monitor your portfolio regularly to see if it is performing as per your investment goals. If it is, leave it as it is; otherwise, adjust your portfolio accordingly. Also, if the asset allocation deviates from the initial allocation, you must rebalance to reduce risk.
Conclusion
Investing in the stock market allows everyone to grow their wealth. However, you must first learn stock market trading to know what to look for while investing in stocks. Only then can you become an expert in stock trading on the Indian share market app.
Also, share market trading advice is available everywhere on social media, where you get information about stocks to buy as frist stock. However, taking online advice on which stocks to invest in will not help. Instead, if you’re looking to master the basics of trading as a beginner, your first step should be understanding how the stock market works.
So, if you want to buy stocks to make wealth in the long term, open demat account on any online Indian stock market app to start your investing journey.