Indian stock market has become a social buzz. Apart from the traditional investors, even the youngsters have started ensuing capital markets. Undoubtedly this is a progressive move. Also, the Government leaves no stones unturned to furnish the Indian stock market.
What makes Indian stock market so appealing is its structure, well-defined rules, and regulations, authoritative control of the regulatory bodies and a well-built forum of laws to safeguard interests of the investors. The stock market has great prospects in times to come. With the technology gaining momentum and Government emphasizing on digital India, the process of stock market transactions are going to take an upturn expeditiously. From physical share certificates to dematerialisation, Indian stock market has seen changes by leaps and bounds.
The growth of Indian stock market is further emphasized by Dr. Shrinivas R. Patil in his “Analysis of investment avenues” published in Global Journal for Research Analysis, reproduced below:
“India is considered as one of the promising economies, which have witnessed significant development in the stock markets. Indian stock market is largely integrated with the world markets. The market has normally given a fair return to its investors for last many years.”
If we consider the ambit of Indian stock market, it is difficult to focus on a particular asset class. With the span of time, the market has been flooded with innumerable types of financial products. Hence, the most common form of financial products/ investment avenues floated in Indian market is:
- Equity – Equity implies investing in stocks of a company. In the case of investment in equity of a company, you get the part ownership rights of that company.
- Mutual Funds – Mutual funds are managed by a fund manager with numerous underlying stocks. The basic purpose of the mutual fund is to derive maximum benefits through diversification. These stocks can be debt or equity.
- Fixed deposit – Fixed investment is a passive investment. Generally, risk-averse investors invest in fixed deposit for a fixed period.
- Post offices – Post office are available in various forms. These can be started with small amounts and generate a fixed portion of return.
- Real Estate – Real estate is a preferable mode of long term investment.
- Insurance – Insurance is basically a retirement planning and requires a fixed portion of premium to be paid regularly.
- Debenture – It is basically debt which is issued by the company in form of bonds debentures etc.
Amongst all the investment avenues mentioned, equity is the most dynamic investment. The volatility of the Equity market makes it highly experimental. For those who are ready to take the risk, Equity as an investment option is the best deal.
Equity as an investment option
Over the period of time, equity portion of markets is galloping. In due course, equity will be considered as a benchmark to measure the status of an economy. As mentioned above, the trends are changing. Investors are keen to take risk for a higher return. Hence, this trend of investors will pour additional funds into the stock market. However, the equity investors should be conscious about “the risk-return trade-off involved in equity investment and the parameters that may affect the same.”(Equity markets in India by Shveta Singh, P. K. Jain and Surendra Singh Yadav)
Equity in Indian stock market possesses favouritism. Though a risky avenue, investors are ready to float there funds for higher Return on Investment (ROI).
Table 1: Risk under various investment avenues; Source: Worldwide Journals
In the above table you will find that equity is the riskiest investment option. However, if you combine with the ROI, then as a source of investment equity will always be preferred.
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If you see the table below, you will find that maximum people are opting for the avenues with higher ROI.
Table 2: Factors considered while choosing investment options. Source: Worldwide Journals
Tools for a stock market beginner
By now you are well aware of the overview of the Indian stock market, presence of equity in the Indian stock market.
While you decide to invest in equity/ Indian stock market, it is very crucial to know the correct approach to investing. In the following part of this article, we will quickly introduce you to the essential tools to help you study stocks.
Both the above websites will give you an overview of the securities listed on respective websites. NSE and BSE are the two major stock exchanges in India.
The benchmark index (to know more about Index: Read Here) for BSE is SENSEX, also known as sensitivity index comprising of top 30 listed companies and for NIFTY, also known as National Fifty is top 50 companies listed on the exchange.
The top listed companies that are selected under the index category are based majorly on their market capitalisation, liquidity and performance.
- Click here to find the link to the live market of NSE to watch the performance of NIFTY 50 companies.
- Click here to find the link to the live market of BSE to watch the performance of SENSEX.
The prices of these underlying stocks determine the price of NIFTY.
In other case, you can simply download the StockEdge application from Google play store. On the extreme left corner, you find the options under which you can click on the “market” tab, as shown below and get a quick market view. This section is further classified under sectors, stocks, indices and investors.
Software’s for viewing charts
You can also access to the following Charting Software’s that will assists you in market study.
Both the above websites are user-friendly. You can enter the name of the company in the search tab and proceed. You can choose the indicator from the options given. Se the period, range and the type of chart pattern you wish to see. After this, you can carry on your analysis.
Or else, you can view all the relevant charts on the face of the Stock Edge application itself in a single click. Open the application, follow the steps and get the quick view of the charts.
For example, if you click on NIFTY in step 1, it will take you to daily updates window and then in Step 3 you can click and see the chart of the respective stock.
Through the following websites, you will be able to get free access to company’s information.
The above website provides you with substantial information about the listed companies. You will also be able to get latest updates on the board meetings, dividend declaration, annual reports, change in company’s board of director and all market-related information here.
Google finance is a dedicated section facilitated for financial markets. With the right keywords, you can get major market details about the companies. For example: Type in NSE: and then selected the respective company from the drop down box to continue.
With technology, data is at our fingertips. All that we need today is a time-saving application that gives us a concise summary of relevant market data. You can always get a quick view of market-related data StockEdge application and follow various websites, mentioned above for detailed information later.
This article is written by Mrs Shruti Gupta- Knowledge Associate at Elearnmarkets.com
We at WealthWisher maintains that investing in Equities is risky and hence investor’s should take help of a Financial Planner before investing directly. Retail investors should prefer investing after Risk Tolerance checked and through proper asset allocation only. They should prefer investing through managed portfolios like mutual funds and other options. The article aims to guide the equity enthusiasts about how to do basic homework before investing in equity and from where to seek knowledge about equities.