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Almost Everything You need to Know about Stock Market

Almost Everything You Need To Know About Stock Market*
By

Aparna T A
A beginner

*For the Beginners

© Aparna TA

www.aparnata.wordpress.com

"squaring off". what you are really looking for.aparnata. This book is for the Beginners. Fortunately.wordpress. © Aparna TA www.to make great fortune. I am sure there are millions of people who are exactly in the same position as I once was. as a beginner. So here. here is a disclaimer. the contents of this book may be enough for a beginner to understand the overall idea of stock market. Gunjan and a few others who kept my interests on writing this book. often people are scared because of the Myth "It's Risky". For whom is the book written? It's important for the readers to know. then i decided that i would write a book . But. if this book fits their reading. despite my laziness. Acknowledgements Thanks to Venkatraman for introducing me to the concept of stock market and for breaking down big concepts to easy assimilation. and has no idea or NOT sure of what goes on in it. So. is the helping hand reaching out to such kind of People. Thanks to Balaji Veeraghavan for the valuable guidance provided during investing and editing stage. you can straight away go for investing or start next level of reading to quench your thirst for knowledge. even though.the basics. After reading this book. "equity". Thanks to Amit. The purpose of this book is simple. Because.2|Page Almost Everything You need to Know about Stock Market Foreword Stock Market . "Practice makes the man perfect" . that you can REALLY understand the stock Market.com . Thousands of people have written volumes and volumes of pages about it. "SENSEX". one has to really get your hands dirty and invest so.Stock Market is an ocean. But. Let's break it down. there were many sites that could help me through the understanding of the market. In general. So. you can always walk through. i often got misguided by a too much of information. Stock Market is prone to high volatility. Thanks to Srikanth for providing the right inputs on editing this book. "DEMAT". Is it Risky? Yes! But totally depends on how much risk one can take. When I first wanted to know about stock market I did a lot of research on the internet and talked to a few friends. read the BOOK. etc. who is a beginner? The one who has heard the words . One can become rich in a day or one can become a pauper the next.So. Fact is .The word everyone looks up to ."Stock market". if you are PREPARED. "bears". you will be definitely acquainted with basic knowledge of stock market. This means. without much tantrum. I understand. "bulls". Imagine finding out the book out of those thousands that would fit a beginners' requirement would probably not be an easy job. If you fit this criteria ALONE go ahead.a simple one that would probably achieve the aim of introducing stock markets . But.

a Beginner. I am what I am. PROS AND CONS F. This book is not for those who are looking for stocks to invest – No pointers will be given to which stock is the best buy or best sell. And what I am learning for the past 8 months with some a big gamble on the "real" money you will learn for a small amount of money you invested in buying this book. I promise you this book would be the best start you can get. TYPES OF STOCKS C. Table of Contents A. c'mon. I have researched about markets for 6 months before starting to invest .aparnata.reading books. I don't claim it's the best book on Stock market. blogs.wordpress. This book is definitely not for the brokers. And I know exactly what a Beginner needs to know. Credibility of the Author I have been investing in for the past eight months only and has been finding fortunes here and then. attending lectures etc. TIPS 4 5 7 9 10 10 © Aparna TA www.3|Page Having Said that. let's explore. This book is not for those who are looking for higher-level Bidding like futures and Options or For-Ex Trading. you would learn it in a day or two. I don't claim that I know it all. So. easy understanding book for the beginners who are interested in investing in Stock Market. Frankly. But. MARKET INDICATORS D. But what I can claim is it sure will be easy read. What I learnt the till now.com . I am not a professional. STOCK MARKET B. Almost Everything You need to Know about Stock Market This book is not to be followed if you want to get serious with number and figures (though basics will be introduced). BUY OR SELL MODES E.

but with the variety of goods that are traded every day. if I had excess Apples and I don't have Oranges (which I require). the profits may take a dip.you can buy 3 apples or 4 oranges or 5 bananas. If Oranges are in Demand I might have to give more apples to buy it. To what extent depends on how much percentage of stocks of that company you own.4|Page Almost Everything You need to Know about Stock Market A. instead of that Object . And this is how. Now.a steel company or a cotton company can be represented by a chosen amount of shares which is worth a certain amount of money. Again relating it to the typical "Market" . It might seem to be an easy two-step process where I compare oranges to bananas. If a company is sued.e. then owners and investors are not "liable" to pay back the debts as they are pretty much considered as a separate entity from that of a company but sure.a corporation with more than one owner.is when 2-10 people own a company. when it comes to large corporations it becomes unimaginable to get the capital from just a few people. So. again using the concept of money the company which ever may be . Next question is what happens when I don't have apples but I have Bananas but I also want Oranges. Partnership .com . our great ancestral traders traded with "what they had" for "What they didn't". A private limited company thus. it becomes pretty difficult. Public Ltd.A corporation has a single Owner. cycles. Family Owned .A STOCK EXCHANGE is a platform where you exchange .Buy/Sell Stocks for money. This is the basic concept.The word literally means .Partnership.is that where in shares are held privately among the directors. Hope you got the idea . What could the goods be? Anything! Fruits. A public Limited company can choose to give the shares to the Public . Many. Before Getting to know more. let's imagine a typical "market" where goods are bought and sold. Now. there is a need for standardization. Shares. Shares usually belong to a company which is publicly listed or a public limited company. What happens in a stock Market is that. Usually.The identified problem here is Valuation. gold. the amount invested in the company. Many years ago.a place where we exchange goods for money . When a company is formed . For this we have to go to the story of Money. Thus. This is one of the means to raise capital for a company (called Share Capital). The very next question I would ask for is . The above types of corporations are usually small-sized or mid-sized.] So. or Stocks Came into the market. Private Ltd. STOCK MARKET "STOCK Market" .whose answer is dependent on the (you guessed it right!) .it can be of Sole Proprietary . when you buy a stock or a share of a company you actually become an "owner" of the company. A logical Question . I might probably just need one apple to buy two oranges. vegetables.a part of a Company. Now. In simple words. if the apples are in demand. One Gold Coin . Well. I would trade excess Apples for Oranges.This process of letting out the shares to the public is often called as Initial Public Offering (IPO).a corporation which is passed on through generations. Let me explain it clearly. [Limited usually refers to limited Liability i. silver. Again I have to do the above math.it's a virtual but almost real "share" that makes you an Owner . So. etc. what are Stocks? "Stocks" also Known as "shares" is a document given by a Company which entitles you to OWN a part of Company.How many apples equal to how many Oranges. you will find out how! © Aparna TA www.aparnata.A market which Trades Stocks. Partnership .THE DEMAND. But. family owned. So. you know why "shares" came in to the market and what it has got to do with the companies.wordpress. Sole Proprietary . what you see here is the exchange of Money for a "physical" Object. And thus the Money was born. let's explore why "stocks market happened".

if the company is worth 250 per share. TYPES OF STOCKS Now. What can happen during the day is almost dependent on the news related to XYZ. It is said over a billion and more amount of currency is being traded every single day! What really happens during this time? Let’s find out. can you tell it as soon as the news comes out? Definitely not! What you think the effect of the news on the market price of the share might be totally contradictory to the actually HOW the market REACTS to the news! So. The increase/Decrease of share price is based on demandsupply. B. you can directly buy a company’s shares. That’s generally called equity trading or Share trading. Can one stock be listed in more than one Exchange? Yes. Stock Exchange typically is a place where we trade stocks. Hence. If there is a lot of demand. This face value will be reflected in the share document( It’s nothing but a sheet of paper that denotes the number of shares issued by the company for public offering). a company wants to raise a share capital of Rs. here are the two chances – the market might react positively – Resulting in increase in the price of the share – often termed as Bull. For-Ex etc. Futures and options. that this is not the “only” thing with which it works. here is catch. the stock is in to the market [after going through the Initial Public Offering]. and hence the company cannot receive the whole money it quoted for say Rs10. else it decreases. there is a council which decides on the Issue Price. This is the basic means with which the market literally works. You pay for the value of the apple in first shop and sell it for the value of the apple in the second shop. has the maximum number of stocks listed. So. This price is not decided just like that. It gets listed in to the Stock Exchange. it’s not only the local news but also the world news that you will have to watch out for. What Sensex. Face Value of any share of any company is Rs. the markets react vigorously to Quarter Results or some global economic crisis. Delhi Stock Exchange etc.aparnata.mostly to raise capital.200. If you start following the rates.5|Page Almost Everything You need to Know about Stock Market When a company wants to go public . A question might arise. which are regional based. you will see that BSE and NSE typically are in the same range i. A share has two values . the company would list a certain amount of shares for the public. Well. Let’s get to the business. It's like buying apple in one shop and selling it in another. Yes! For this you have to pay close attention to the news! But.10 [in India for any company] and then. Said. but the market worth is only Rs. There are other types of investments one could make in share market like mutual funds. can you buy in NSE and sell in BSE? Yes and why? Simple reason is you are trading the "stock" so. Before going to that let’s look at some of the terms related to it – Sensex 50.000. ETFs.the value at which it enters the market is called Issue Price.wordpress. With the face value of Rs. then obviously not all the shares will be sold as the value is costlier than expected. there is Issue Price. the company can issue maximum of number of 1000. Let us find out the difference. National Stock Exchange however. 000. Consider a company XYZ and its Market share at the starting of the day is 250Rs. said that. Nifty and many © Aparna TA www. if the stock value is 300 in NSE it will be 299-301 in BSE. Sensex 300 etc.10. When. 000. So. Why should Issue Price be determined? Let's say a company is actually worth 240Rs per share. What does this mean? In case.the number of companies listed in the exchange. Often. You can buy stocks in various modes.000. Some of the well-known stock exchanges in India are National Stock Exchange (NSE) and Bombay Stock Exchange.30 AM and closes by 3. Now that. commodities. the company goes to the public for the first time . Face/par value is of a share of any company is just Rs.10.com . What is the main difference between all these stock exchanges? The main difference being .10 per share. Besides these there are many more Stock Exchanges like Madras Stock Exchange.30 PM. Nifty 50. the exchange doesn't matter. the market might react negatively – resulting in decrease in price of the share – often termed as Bear. Firstly. Sensex fell Y number of points. if there is news – It can be good or bad! But. The Indian Stock Market opens at 9. then that will be the initial issue price. That is. with a bit of market research and the performance of the company underwriters [let’s say the experienced fellas .)] decide on the price value.Face Value/Par Value and Issue Price. We often hear this in the news that Nifty fell X number of points.e. that you have an idea about stock markets and how its functions. the value increases.000 shares.

Debt. you can consider this also while investing. and No.e. With SIP you can invest a constant amount of money in fund(s) every month. credit card. And how are mutual funds rated. etc. One good thing about mutual fund is that you can do is opt for SIP (Systematic investment Process) – this is like your RD (recurring deposit). these indexes consider the list of major companies present in the exchange. If you take a close look. © Aparna TA www. so you really have to look in to each portfolio and view their past performance to really buy. you don’t have the trouble of picking up which stocks are performing well etc. Growth fund etc. Just like how you use the bank facilities like locker.com . In that case the best way to asses it would be to measure its total asset. Sensex reflects only a few major companies. you have something called De-mat account for accessing the stock market. most of the mutual funds can be used for tax exemption. but other stocks are showing a reverse indication. asked question do Mutual funds give better return than FD (which is currently around 7. It has little bit of everything. it’s like the Cadbury – Celebrations. which is similar to fixed deposit. Sensex it has a different term. But. Like a bank account which is unique to each and every customer. in the sense there is not one mutual fund but there are many. And that net asset is directly proportional to their portfolio management i. Often. you invest once for a certain amount of money for a certain period of time. Mutual fund is a collection of equities under one name. So. steel. Lately. Simply put. That’s how you represent yourself to the stock exchange. so they are can give you 30% a year or -10% a year! Your discretion and research would help you ebb out of market volatility to some extent. Debt funds usually deals with debt money. Exchange traded fund is a hybrid of commodities and Stocks. Other way you can buy stock is by investing in mutual funds. The found house say has given some money to a company as debt. This is same as buying the stock. Most important thing however. The values of ETFs will be stock exchange dependent and it need not reflect the value of ABC in the Physical/Commodity Market. Just like Nifty. is that Mutual funds are also risky but. it might be tricky. Mutual funds and equities depend on the market. most popular among Mutual fund is primarily Equity Growth funds (which take in companies which show a growth in stock price) and equity diversified funds. Mutual funds also offer another way of investing called lump sum.aparnata. In financial terms any asset to a company is that which brings in money. Equity – Diversified. it’s managed as funds than as a stock. online trading. the industrial performance follows the rise or fall of the major companies. As much as ETF represents stocks. if the say a major bank is losing.25% pa) or RD? Yes. But. Please note that. Other than directly investing in stock market and mutual funds. So. the return of that debt will be shared by the investors of that particular fund. energy. You would actually the commodities “Physically” but yes you will own the quantity though! The current trend however. at the companies affecting the share market you will know why.6|Page Almost Everything You need to Know about Stock Market other indexes tells you are how the market has moved. For a good approximation. the sectors here are Auto. Oil and petrol. how do you get in to the Stock Market? De-Mat account. It’s quite simple. FD and RD whose rate is constant for the year. both equities and some mutual funds are taxable depending on duration you hold them. Mostly little bit of those stocks that’s doing well in market. Funds houses are a sort-of-company as it literally buys stocks of other company. indexes are used to indicate the performance of the market. It is called NAV – Net Asset Value. they are more likely to follow the lead sooner or later. Apart from this there are sectors. These are basically where or what kind of stocks the mutual funds houses (a body which design the mutual fund portfolio) have invested in. you could also buy commodities like Metals. in ETFs you will buy same ABC for N NAV(not Kgs) for M Rs . the number of companies and the number of stocks of each of those companies they have invested in. not as risky as equity. cements. And remember. So. if you look at it. here is a thing you can watch out for.wordpress. While in commodities you will still be buying X kgs of ABC for Y Rs. has been ETFs (or Exchange Traded Funds). Just like in any business. there has been an increasing interest among the investors in Top 100/200 types of funds which basically just takes in companies that are top the market charts in terms of performance. Unlike. Thus. Sensex and Nifty are an index that’s why they are denoted by “Points” and not by rupees. software industry. So. grains. However. Even in mutual funds there are many types. FMCG etc… Even here. Sensex is indexed for BSE stocks and Nifty for NSE.

So. World has become flat. it directly indicates the “earnings per share” which is the very reason a person invests in a company. fortunately if you are looking at mutual funds alone. Because. I just want to introduce you to a few jargons so that when you are going for further reading (newspapers. De-Mat is basically dematerialized account. Dividends: It is the way of a company chooses to share the profit with the shareholders. I will define few more terms so that you get an idea about them. Please note that. now that online and mobile trading are catching up! So. You can opt for futures and options if you like to take a big leap of faith determining the value of stock say Y days from now and buy a contract to buy the stock on Yth day! In options you have an option to opt out before the contract term closes. It’s average outstanding share because. using a bank account. etc.7|Page Almost Everything You need to Know about Stock Market etc. For-Ex is another interesting part of stock market. you don’t require de-mat account. So. Hope you get the idea. Earnings Per Share = Net Income – Dividends on Preferred Stock / Average Outstanding Shares Please remember that dividends on Preferred Stock (those held by the company) is given before the general public dividend. it might help you then! Outstanding Shares: They are basically total number of shares available. Hanging on the concept called nothing is physical well. But. because you can look at the charts whenever you want. That means. © Aparna TA www. trust me as a beginner this knowledge should be enough to leverage you to the next step. the number of shares can vary in a given period of time. But. you definitely have to get a de-mat account before you could trade in the share market. MARKET INDICATORS Here are some of the things that will help you understand where the stock stands and will it be worthy investment (mostly for a long term basis). the company doesn’t HAVE to give dividends and not all the profits will be shared with the investors (for obvious reasons that some of the money has to be pooled back for business expansion). using De-mat account you will be able to buy stocks. It included the number of shares listed in the stock exchange and also the restricted shares held by the company (generally. the value of USD increases. Since the purpose of this book is only for the beginners.com . that’s how it got its name De-Mat – De-Materialized account. called preferred stock). So. is there anything else you can do in the stock market? Yes! There are loads and loads of stuff you can do. it’s preferable that you have it. but the returns are flaunting! C. In futures you cannot cancel the deal. It is usually paid to keep the trust of the shareholders that their investment is worthy and the company is having great future prospects. buy commodities and other array of things that the market supports. If you gamble against the rapid fluctuation of the various currencies that’s for-ex (Foreign Exchange)! For-Ex trading is also a boomer as the risk is high. it’s not necessary that you have to know them and understand them all. that’s the electronic proof to your possession of certificates that indicated you buying/selling a particular stock. the yesterday’s 100 Rs is not equivalent to today’s 100 Rs due to the change in economy every single day.aparnata. and the value of rupee against USD increases. Futures and options they are nothing but those types where in you are simply bidding the future. invest in mutual funds. Earnings Per Share (EPS): This is by far the most important parameter in valuation of the stock price.). Nonetheless. So. so everything is interconnected to everything else. But. And there rise in Oil price affects America.wordpress. dividends do lure investments as it’s not that risky. But.

EPS. it simple math number growing up or down. those who are already holding a closed fund shares can buy and sell. the price of it will be determined by its NAV. profit. Again. the value of NAV is SET only once a day. Again. Always remember. you cannot use stock price so they use Net Asset Value. leave alone in a month! Please note here. you buy a share in a day and sell it on the same day! That’s called Day trading.3= (100 M – 20 M)/(. let’s see in what ways can you buy or sell a stock or a fund. the market reacts as much to these results as the global financial meltdown. but not always in fact. on an average. EPS depends on profits and number of shares alike. So. EPS would be 5. for cumulative current and previous financial year quarter and previous financial year numbers. Day Trading: As the name suggests. what would quarterly results tell you? Net Expenses. This would probably enough for you to gauge where the company is headed next few months. In the same way. NAV: Net Asset Value is similar to stock price. then such a type of fund is called closed fund. it’s a lot less risky than day trading. D. Short term investment: What is called a short term investment is that wherein you buy a share and sell it within one year. a guy puts in some money doubles it in just one day! And we think. Usually. there will be no change in the number of shares issued. etc. October. Closed Funds: When the fund house decides to freeze the number of shares may be because it’s getting too large. That is. Close – End Funds: The number of stocks under it is constant. BUY OR SELL MODES Now. for the current and previous financial year quarter. Jargons related to mutual funds are NAV – Net Asset Value and AUM – Asset under Management among others. And say there are 10 Million stocks for 6 months and 20 million the next six months.com . God I also want such kind of easy money! May be that’s what brought your attention to stock market. But. Many of us have and impression these charts are for CA’s. Open – End funds: Open ended funds are basically those mutual funds which are ready to issue any number of shares of the funds depending on the demand. most of the fund © Aparna TA www. not many stocks show a great hike/dip in the value in just a day! And some of such hikes are more a play of big investors than a real market movement! By the way.aparnata. net income. you can earn good money. Said that. Every publicly listed company has to post their quarterly results in the national newspaper and a regional one. are the profits taxable? Not only the profits but the capital is also taxable. that just like in division 10/20 is same as 40/80. So the profits don’t have to be same if the EPS of two companies are same.8|Page Almost Everything You need to Know about Stock Market So supposing Net income is 100 Million and Dividends on preferred stock(company owned stocks) is 20 Million. Since it’s a Fund. same as day trading. So in case you are buying any mutual fund plan then. Then. unlike stock market where the value of the stock price changes every minute. Can you also create such kind of wealth? Yes. So. do not fear the numbers. Fact is. that for mutual funds. It has happened to all of us. we can only hope a good future. Entry load is a concept where you pay to the fund house a certain amount of money for buying their funds. no – one can really say how will market be in a week now. exit load is for selling their funds. very rarely! If you have observed the market you would know.December and January to March. no new investor can invest in it. July – September. In such a case. There are four quarters in a year April – June. if you start observing.5*10 M + . AUM: Asset Under Management – It’s basically the market value of the stocks the asset management companies (fund houses) are investing in on behalf of their investors. here also tax is applicable. But.5*20 M). Quarterly Results: One of the biggest indications of the future prospects of the company is their quarterly results. that you have a DeMat account and you have decided on what company to invest in. there is something called entry load and exit load.wordpress. No.

trading mode. but here you would be directly communicating with them. you end up having a profit any way! Brokerage: It is to be noted that. what’s the difference between stock market investment and other investments such as LIC insurance. Said that. you can reap more money than you could imagine. Sharekhan. what could determine the stop loss? Simply put. while buying it you keep the stop loss at 80 then. stock market carries a huge volatility in its tail. you can very well keep the stop loss at 110 also! And. stop loss value is not constant. While there is very less risk in other investments such as insurance etc. ditching your emotions aside. while doing online transactions you are not aware of the broker in the middle. Where are in stock market. you can increase the stop loss to 130. like the person has to be a sub-broker first. [I am not recommending any of these brokerage houses.. And also. it’s just FYI] E. you choose what you want to do!  So. the investment totally depends on the amount of risk you are ready to take.wordpress.9|Page Almost Everything You need to Know about Stock Market houses charge 0% entry load and exit load is 1% for a short term investment which is less than 6months! There are. if the stock goes below 80. so that way. one thing about stock market is. you have bought a stock at 120. in stock market you can definitely hope for a short term gain. like in any other investments. there is a certain amount of money you will have to pay every time you make a transaction. Fixed deposit. if the value of the stock rises from 120 to 140. there is a middle man (called as broker) between you and the stock exchange. recurring deposit or ULIP etc. capital + profit are taxed for short © Aparna TA www. know its not an easy job! Brokerage houses: Ok! All said. Taxes – that’s the big word every person in this world has nightmare about! Well. then you can definitely register with brokerage houses. PROS AND CONS So. investments such as postal. if you are thinking of saving money by becoming a broker. Say. Some of the few brokerage houses are IIFL. whenever the stock reaches 240. what’s the joy of being in the comfort zone? Other investments are usually long term and the short term investments aren’t that candid whereas. so well. So. Angel Broking etc. and that you are willing to buy the stock if its 240. if you are not ready to do all the work. that is called limit order. where they will assign you a broker who will be doing all the transactions on behalf of you and sometimes even guide you through the HOT PICKS of the day! Even though this is what actually happens. That. it automatically squares off (sells) the transaction by considering the latest price for the day. So. If you have been reading up works of Warren Buffet or his Guru Benjamin Graham’s books you would know how much they give importance to long term investments! Not only these people but. where in if you have 20. so it’s very much risky! So. not everyone can become a broker. another important thing is.000 . however. HDFC give an option called Margin trading. no exit loads for long term investments! Long term Investment: If you are holding a stock or equity for more than a year it’s called long term investment. you limit the value of the stock you are going to buy. it basically takes 10+ years of becoming bald to become a broker. the amount of money you are willing to lose. insurances are mostly exempted. should have handled certain huge amount of money and should have cleared exams. So.com . ULIPs are also tax exempted. So. there are quite stringent rules to become one. a stock is at 250. you can invest in twice or thrice the amount but you have to sell it in the same day! If you don’t. Other investments usually promise a small amount of interest on the money invested. For one. that you could get your money back.aparnata. then you place a Limit order of 240 for that stock. Stop Loss: Stop Loss is a very important concept that would help you save from losing a lot of money! Say. may other giants in stock market also recommend this kind of investment! Simple. only then the transaction will be processed. the stock will be sold if the stop loss is kept at 80. But. if you invest intelligently. then automatically. Limit Order: Limit – Order. amount however is quite meager. there is no guarantee in stock market. reason is a chance if you take could give you unimaginable projects! That’s how those people grew! Margin Trading: Most of the asset management companies like ICICI direct. Margin trading happens in a Day. you can always change the value. Stockezy.

wait for it to go further down. 1. 5. you can always sell when think you should. what they are eying for in the future. what kind of news is impacting what kind of sectors. Do not diversify: Most of the newbies usually try to invest in a lot of stocks! Just so that you can understand the market. what kind of profits have they shown before. at least experienced fellas would do the job of protecting your money. you should try investing little amount and see. if you invest in two stocks say one for 250 each stock and other for 500 Rs each stock (let’s assume for the same amount 5000). Always invest a certain amount of money every month that way you can insure your future. that of the sector it belongs to. how are the stock prices in the last 3-5 years. And do not blindly take the suggestions given in the newspapers and TV channels. you are planning to invest in X bank if the stock value of X bank is increasing but the in general banking sector is decreasing. it will also give you an edge if you would like to invest in commodities and for-exs. I will share some of the things I learnt while investing in the stocks. etc. Stop Loss: Always have a stop loss. how is their track record. but do not gamble! And if you have reached your financial target. That’s the overall picture I can draw for you. Mutual funds – SIP (Systematic Investment Planning) is a good idea that way. dedicated TV channels. slowly and slowly you can become good at deriving things. do not only watch out for the track record of that company but also. and then in to the articles. concentrating on a few numbers of stocks is good. Stock 1: 250 each for 5000 ie 20 Stocks Stock 2: 500 each for 5000 ie 10 Stocks If Stock 1 raises for 50 Rs(20% rise) say and stock 2 loses 100 Rs(same 20% fall) then 600(profit from first)1000 (loss from second leaves you with a loss of 400. but it will not help you gain wealth! 11. Do not be over enthusiastic: What’s important is don’t be over enthusiastic. learn more. Say. They give you clear idea of what’s happening in the business world. say you have 10. its value is 1250 now and it’s track is declining. yes. Be careful WHEN you buy: Say you are investing in stock X. TIPS Here are some of the things I learnt during these few months of investing. instead of gaining 2000(50*40) by investing in just stock 1. and then sell it! Because. the bottom line is.wordpress. Long term: Always invest in long term. if you are looking for evading tax. there is newspaper. Not only that. no matter that you are ready to wait for the price to rise after 6 months. Go talk to the brokers. even though he might be investing for years and has made good profit. 9. do your Homework! Luckily. wait for it to go 25% above it. if you have eye on the long term you can be safer and also. they are experts and they have done some research. profits are taxed. you are losing 400 Rs. finding out. Some tips can really save you a lot of money if followed! F. and then buy if you see the future in it and that this decline period is just a small hiccup. Timing is not everything: “Timing is everything” is a popular myth! Timing is not everything. just so many resources! Don’t just invest. our generation is not devoid of sources. thing is you can always invest in a stock get back the money or get profit only thing is it might take time some time a week some time a year sometimes 20 years! But. it can do the work for you! 4. 2. Short term can look spicy and promising but.com . then it’s more likely that X bank will also decrease in some time. And always ask the question why is it declining or rising! That will again help you save a few extra bucks and put money in your pocket! 8. you better invest it intelligently so that. try mutual funds if you want to stick with stock market. or those people who are already in to investing! It’s your hard earned money! So. would it be the best time to buy or would you rather sell it. Yes. But. stock market is not a child’s play! At least in the beginning till you get used to it! So.aparnata. So. Sector Performance: If you are investing in any company. 3. it’s really easy to get greedy. invest in mutual funds. what’s your financial goal? What are you ready to invest and how much would you like in return in a given period? Be very clear with these two. Research research and research: Well. © Aparna TA www. 10. 20 – 30 % loss will definitely take more than a year generally to give you profit on the same stock. but it’s your money not theirs! 6. This will help you avoid confusions and apprehensions! 7. websites. Handling your finances: Handling your finances is really important. If you would like to know more. I hope you got the idea.000 Rs to invest. So. what their current projects are. know the company you are investing in. some are really good. media.10 | P a g e Almost Everything You need to Know about Stock Market term and for long term. forums. Do not blindly invest: Never invest in a stock because your friend said so. Newspapers and magazines: There are many financial newspapers. That’s where your money is going to be some day! Start reading headlines first. So. do not diversify! If you still wish to diversify. you usually end up losing more than you should! Let me explain how. The next session. Magazine like Dalal Street is definitely a good place to start with.

wordpress.com © Aparna TA www. Buffetology by Mary Buffett Feedbacks and comments are welcome! Help me be a better author! Write in to aparnata+books@gmail. Gene Marcial’s 7 commandments of stock investing by Mario Gabelli 5. The Intelligent Investor by Benjamin Graham 6.com .wordpress.com 3.com 4.aparnata. www.com 2. that imitate the markets and provide you a heads up to what’s happening and gear you up for real rat race! Sanity is Saintly! All the very best for your first investment! References 1. but not least.rediff. www.aparnata.investopedia. try out some online applications.com Visit My Blog: www. before you actually trade. www.moneycontrol.11 | P a g e Almost Everything You need to Know about Stock Market Last.

ULIPs are also tax exempted. there is newspaper. websites. would it be the best time to buy or would you rather sell it.000 Rs to invest. Some tips can really save you a lot of money if followed! F. learn more. know the company you are investing in. investments such as postal. TIPS Here are some of the things I learnt during these few months of investing. in stock market you can definitely hope for a short term gain. profits are taxed. Do not diversify: Most of the newbies usually try to invest in a lot of stocks! Just so that you can understand the market. They give you clear idea of what’s happening in the business world. say you have 10. insurances are mostly exempted.aparnata. you usually end up losing more than you should! Let me explain how. dedicated TV channels. what their current projects are.12 | P a g e Stock Market Almost Everything You need to Know about intelligently. media. Newspapers and magazines: There are many financial newspapers. ditching your emotions aside.wordpress. If you would like to know more.. So. the investment totally depends on the amount of risk you are ready to take. Said that. stock market carries a huge volatility in its tail. you are losing 400 Rs. it can do the work for you! 4. Long term: Always invest in long term. stock market is not a child’s play! At least in the beginning till you get used to it! So. you should try investing little amount and see. just so many resources! Don’t just invest. Go talk to the brokers. So. © Aparna TA www. I hope you got the idea. instead of gaining 2000(50*40) by investing in just stock 1. 3. if you invest in two stocks say one for 250 each stock and other for 500 Rs each stock (let’s assume for the same amount 5000). if you have eye on the long term you can be safer and also. That’s where your money is going to be some day! Start reading headlines first. Stock 1: 250 each for 5000 ie 20 Stocks Stock 2: 500 each for 5000 ie 10 Stocks If Stock 1 raises for 50 Rs(20% rise) say and stock 2 loses 100 Rs(same 20% fall) then 600(profit from first)-1000 (loss from second leaves you with a loss of 400. 1. so it’s very much risky! So. Where are in stock market. or those people who are already in to investing! It’s your hard earned money! So. do not diversify! If you still wish to diversify. Short term can look spicy and promising but. do your Homework! Luckily. you can always sell when think you should. invest in mutual funds. I will share some of the things I learnt while investing in the stocks. if you are looking for evading tax. our generation is not devoid of sources. what’s the joy of being in the comfort zone? Other investments are usually long term and the short term investments aren’t that candid whereas. capital + profit are taxed for short term and for long term. So. you can reap more money than you could imagine. That’s the overall picture I can draw for you. Research research and research: Well. While there is very less risk in other investments such as insurance etc. Taxes – that’s the big word every person in this world has nightmare about! Well.com . some are really good. But. at least experienced fellas would do the job of protecting your money. how are the stock prices in the last 3-5 years. what they are eying for in the future. you better invest it intelligently so that. 2. what kind of profits have they shown before. how is their track record. try mutual funds if you want to stick with stock market. The next session. forums.

Sector Performance: If you are investing in any company. it will also give you an edge if you would like to invest in commodities and for-exs. but not least. 5. wait for it to go further down. 20 – 30 % loss will definitely take more than a year generally to give you profit on the same stock.aparnata. the bottom line is. Be careful WHEN you buy: Say you are investing in stock X. you are planning to invest in X bank if the stock value of X bank is increasing but the in general banking sector is decreasing. they are experts and they have done some research. Always invest a certain amount of money every month that way you can insure your future. www. no matter that you are ready to wait for the price to rise after 6 months. Mutual funds – SIP (Systematic Investment Planning) is a good idea that way. And always ask the question why is it declining or rising! That will again help you save a few extra bucks and put money in your pocket! 8. concentrating on a few numbers of stocks is good. www. what’s your financial goal? What are you ready to invest and how much would you like in return in a given period? Be very clear with these two. thing is you can always invest in a stock get back the money or get profit only thing is it might take time some time a week some time a year sometimes 20 years! But. then it’s more likely that X bank will also decrease in some time. Timing is not everything: “Timing is everything” is a popular myth! Timing is not everything. finding out.investopedia.moneycontrol. its value is 1250 now and it’s track is declining. Yes. This will help you avoid confusions and apprehensions! 7. and then sell it! Because.com 2. yes. but it will not help you gain wealth! 11. The Intelligent Investor by Benjamin Graham 6. Not only that.Do not be over enthusiastic: What’s important is don’t be over enthusiastic.wordpress. that of the sector it belongs to. before you actually trade. www. but it’s your money not theirs! 6. 10. try out some online applications. Stop Loss: Always have a stop loss.13 | P a g e Stock Market Almost Everything You need to Know about and then in to the articles. And do not blindly take the suggestions given in the newspapers and TV channels. Last. 9. and then buy if you see the future in it and that this decline period is just a small hiccup.com 3.com .rediff. etc. Handling your finances: Handling your finances is really important. but do not gamble! And if you have reached your financial target. do not only watch out for the track record of that company but also. what kind of news is impacting what kind of sectors. it’s really easy to get greedy. Say. slowly and slowly you can become good at deriving things. Do not blindly invest: Never invest in a stock because your friend said so. Buffetology by Mary Buffett © Aparna TA www. Magazine like Dalal Street is definitely a good place to start with. wait for it to go 2-5% above it. Gene Marcial’s 7 commandments of stock investing by Mario Gabelli 5. that imitate the markets and provide you a heads up to what’s happening and gear you up for real rat race! Sanity is Saintly! All the very best for your first investment! References 1.com 4. even though he might be investing for years and has made good profit.

com Visit My Blog: www.14 | P a g e Stock Market Almost Everything You need to Know about Feedbacks and comments are welcome! Help me be a better author! Write in to aparnata+books@gmail.com .wordpress.com © Aparna TA www.aparnata.wordpress.aparnata.

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