Understand How Stock Market Works?
Understand How Stock Market Works? What is Stock Market and its’ Different Types. Beginners Guide to Invest in Stock Market in India.
What is Stock Market?
In very Simple Words, a Stock Market is a Place to Buy and Sell Equity Shares of a Listed Company.
In India, there are several Regional Stock Exchanges and 2 National Exchange namely – NSE and BSE.
Also Read:
- Stock Market Terminology for Beginners
- Stock Market Sectors
- Share Market Crash – What to Do? Buy, Sell, Hold?
Types of Stock Exchange in India
| S. No | Stock Exchange | Type | |
| 1. | Regional Stock Exchange | : | Regional Companies are Listed. Example – Calcutta Stock Exchange |
| 2. | National Stock Exchange (BSE and NSE) | : | National Companies with Large-Cap, Mid-Cap and Small-Cap are Listed. |
| 3. | Multi-Commodity Exchange (MCX) | : | This Exchange is only for Trading in Commodities including Agri and Non-Agri Products like Cotton, Crude Palm Oil, Rubber, Metals, Crude Oil and Natural Gas etc. |
| 4. | National Commodity and Derivatives Exchange (NCDEX) | : | Another Commodity Exchange in India for Trading ONLY in Agri Products like – Cereals and Pulses, Oil and Oil Seeds, Fibers and Spices. |
| 5. | India International Exchange (INX) | : |
India’s first International Exchange in International Financial Services Centre (IFSC) offering Trade in Futures and options, Equity, Currency and Commodity Derivatives, Masala Bonds, Euro Bonds and Green Bonds. |
| 6. | NSE IFSC | : |
Similar to India INX |
| 7. | Indian Commodity Exchange (ICEX) | : |
Commodity Derivatives Exchange in India |
Also Read:
How Stock Market Works in India?
In order to invest in shares of listed companies through stock market, an investor needs to understand how stock market works.
The first thing to understand is “Broker“. Any investor who whats to buy or sell shares in the stock market needs to place orders with a broker. There are many financial institutions and banks that act as broker for small percentage of fee. This fee or brokerage charge can be between .10% to 1.0% of the transaction amount.
When an investor places a BUY or SELL order with his broker, the broker forwards the order to the stock exchange through his system. The order stays in the queue in the system of the stock exchange and gets executed when the order logs on to the system within the specified BUY of SELL limit price.
The shares thus purchased are sent to the purchaser either in physical form or demat format. This is how stock market works.
Also Read:
- What is Demat Account?
- How to Open Demat Account in India?
- Where to Open Demat Account Online in India?
FAQ – Stock Market in India
How Many Stock Market are there in India?
There are 6 Major Stock Market in India. These are:
| S. No | Stock Market | Permissible Securities |
| 1. | BSE Ltd., |
|
| 2. | Calcutta Stock Exchange Ltd., | |
| 3. | Metropolitan Stock Exchange of India Ltd., |
|
| 4. | Multi Commodity Exchange of India Ltd., |
|
| 5. | National Commodity & Derivatives Exchange Ltd., |
|
| 6 | National Stock Exchange of India Ltd., |
|
What is the Main Stock Market in India?
The NSE or National Stock Exchange of India Limited is the main Stock Exchange in India. It is located in Mumbai, Maharashtra.
Which is the Largest Stock Market in India?
NSE in the Largest Stock Market in India.
All Top Companies of India by Market Cap are listed on both BSE and NSE Stock Exchanges. While The BSE is the older stock market in India, NSE is the largest stock market in terms of volume.
Which is better NSE or BSE?
- BSE would be the first and ideal choice for Investors with Long-Term Prospective.
- NSE would be the first and ideal choice for Intraday Share Trading in derivatives, futures, and options. NSE has better software for high-risk online transactions.
What is SENSEX?
SENSEX Stands for Sensitive Index. It is index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE).
What is NIFTY 50?
NIFTY stands for National Stock Exchange Fifty. The NIFTY 50 is a benchmark Indian stock market index. It represents the weighted average of Top 50 largest Indian companies listed on the National Stock Exchange (NSE). Like BSE SENSEX, it is one of the two main stock indices used in India.
Also Read:
- What is Investment?
- Best Investment Options for High Return
- Share Trading Mistakes to Avoid
- Top 10 Companies in India by Market Cap
- What is Equity Investment?
- How to Save Money?
- Top 10 Solar Companies in India Listed in Stock Market
- What is Rolling Settlement Cycle in Stock Market?
- Top 10 Best Textile Stocks to Buy in India
- Badla Financing in Share Trading
- Securities Lending in Share Trading
- Circuit Filters and Trading Bands in Stock Market
- Types of Orders in Stock Market in India
- Fundamental Analysis of a Company
- Stock Market Trends and Signal – How to Understand
- How to invest in Foreign Stock Market
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