Frequently Asked Questions(FAQs) related to Share Market Basics

What is a primary market and a secondary market?

When a company comes up with an Initial Public Offering (IPO) it is referred to as the primary market. After the stock gets listed on the NSE and the BSE, it is ready to be traded by investors in the secondary market. The shares are issued in the primary market, whereas the shares are listed in the secondary market.

Why do organizations opt for listing?

• To raise funds
• The creditworthiness increases as the liquidity of the company receives a boost
• Selling equities generates stable financial conditions and price transparency.Are the equities market and the derivatives market exactly the same thing?

Well, both the derivatives and equity markets are part of the stock market.

A derivative market deals with the purchase and sale of futures and options (F&O), whereas an equity market deals with stocks and shares. The distinction lies in the products traded.

What is online trading and offline trading?

Online trading refers to the buying and selling of shares by logging into your trading account on a laptop, mobile device, or PC. One can trade online while sitting in the comfort of one’s home or by traveling. Offline trading is conducted by visiting your broker’s office or by calling him.

What is the difference between fundamental and technical analysis?

A fundamental analyst focuses on the financial health of the company. It assesses the company’s intrinsic worth based on the firm’s growth potential, market performance, and future prospects. This method is mainly used by investors.

A technical analyst evaluates charts, patterns, and other statistical data produced by the movement in the share prices. It observes past trends to predict future movements. Traders are more likely to use technical analysis.

Can anyone buy and sell stocks in the stock market?

Any person who’s eligible after presenting the appropriate documentation can trade (buy and sell stocks) in the stock market by opening a demat and a trading account.

Can I trade after the market hours?

No, trading isn’t possible after 3:30 p.m. Everybody is bound to follow the market timings, i.e., 9:15 a.m.–3:30 p.m.

Can I have multiple demat and trading accounts?

Yes, you may have multiple accounts. However, you cannot have several trading and demat accounts with the same broker.

How many different market sectors are there in the stock market?

There are 11 sectors in the stock market for investing.

What is Sensex and Nifty 50?

Sensex is the collection of the top 30 companies listed by BSE, according to market capitalization. Nifty 50 lists the top 50 companies selected by NSE, according to market capitalization.

What is a portfolio?

The collection of assets owned by the investors, ranging from stocks, bonds, derivatives, and funds to gold, cash equivalent, and property.

What do ask-price and bid-price mean in the stock market?

Bid-price is the highest price that a buyer will pay to purchase financial securities. On the other hand, the ask price is the lowest price at which a seller might want to sell his/her securities.

If you want to get a more detailed idea about the terms used in the stock market, you may refer to this blog post.

Driven by robust technological advancement and an energetic population, the Indian stock market might offer enticing investment opportunities to its investors in the foreseeable future.

Hence, investors must adopt a well-researched approach to avoid risks and

maximize returns.