Stock market investment India has always been a lucrative temptation. It has both a good and bad reputation. Learning how invest in stock market and then making an informed decision can help you generate money. However, you must have in-depth knowledge about stock market investment if you do not want to lose every penny in the share market.
Here’s a quick guide on “stock market investment for beginners India” so that you can learn and earn from investment into stock market.
When you are a beginner, share market investment may seem complex and risky. But if you have an interest to learn stock analysis and the risk appetite, you can earn money from this source.
Table of Contents
What is Stock Market?
The stock market refers to the marketplace where shares of NSE and BSE listed companies are traded. When you buy a share, you own a micro fraction of the company. In simple terms, if the company makes a profit, you fetch the returns. It is the same for loss as well. The profit or loss in the share market depends on the share value of the stocks. Several factors determine whether the share value will rise or fall.
For instance, you have bought 10 shares of company X today at Rs.10 per share. After 1 year, the share value rises to Rs.100. Here your investment was Rs.100 and at this point if you sell all your shares, you will Rs.1000. So, you have got a return of Rs.900.
But you have to pay the brokerage charge while buying and at the time of selling. Let us assume, the brokerage charge per transaction is Rs.10. So now, if you calculate your net return, it is Rs.880. This example of trading gives you a rough sketch of how the stock investment works.
Why invest in stock market?
1. Investment in shares has the potential of producing the highest ROI than other investment options.
2. The compound effect can help you generate huge wealth after investing for years. Warren Buffet had earned his maximum returns after investing for 20 years.
3. Stock investment is a great investment option for beating inflation.
4. Intraday trading can help you earn quick money. However, you must expertise in the stock analysis if you want to earn through intraday trading.
5. You can look at the share market as a means of diversifying your investment.
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Stock Exchanges in India
You can trade stocks on the following two platforms in India:
1. Bombay Stock Exchange (BSE): It was established in the year 1875. BSE is the oldest stock exchange in Asia.
2. National Stock Exchange (NSE): NSE is the largest stock exchange in India.
How to invest in stock market for beginners?
Share market is not a gamble and should not be treated so. When you are a beginner, ask the following questions to yourself before starting your venture in the share market.
1. How much can you invest in the share market regularly? (A monthly budget)
2. How long do you wish to stay invested?
3. What are your expected returns?
4. How much money can you afford to lose without losing your peace of mind?
Once you have these answers handy, you are ready to learn about investing in shares. To gain in-depth knowledge about this market, you can use the following means.
1. Invest in some stock market investment courses.
2. Learn from books such as Rich Dad Poor Dad, Beating The Street, One up on Wall Street.
3. Read share market-related blogs regularly.
4. Follow the newspaper about business news.
5. Watch videos on stock investment.
6. Follow technical analysis sites such as MoneyControl etc.
In short, develop your knowledge about stocks before investing. If you start investing depending on stock market investment tips, there is a high chance you will lose all your money instead of earning returns. While theoretical knowledge can provide you back up, you must earn experience through trading. Once you start trading, you will learn every day. Experience is the best teacher for stock market investment India.
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How invest in stock market with little money?
You do not need lakhs when you start to invest in the stock market as beginners. Even Rs.1000 is enough to start your investing journey. There is no minimum invest in stock market. But surely, it must be more than the brokerage charges. When you open a Demat and trading account and trade, you have to pay the brokerage charges.
You can opt for SIP in shares to invest regularly. Alternatively, you can opt for intraday trading (1 day), swing trading (3-10 days), positional trading (1-6 months), or long-term trading (more than 6 months). There are several strategies for every kind of trading.
Determine the trading time horizon and research further on investment strategy in that type of investment. The risk of long-term investment is lower than positional trading. Similarly, positional trading and swing trading are less risky than intraday trading. Therefore, choose your time horizon according to your risk tolerance ability.
When starting with little money, you can invest in penny stocks. But it is recommended that you study the stock analysis thoroughly before investing in any penny stock. Penny stocks are shares of some small companies having share value usually under Rs.10. It can either become 10-fold in 10 years or become zero in just 3 months.
If you have little money and do not want to risk it, you can start SIP on a trusted and reputed company that is not to fall soon. Usually, the share prices are high for such companies. You can buy one share every month for 10 years to fetch good returns. Some of the examples are Britannia, Hindustan Unilever, Bajaj Finance, Colgate, ITC, etc.
When to invest in stock market?
This is one of the most important questions a beginner must ask. The simple answer to it is when you are ready. How to assess your readiness? You are ready when
1. You have learned the basics of the share market.
2. Studied the market movement of some stocks.
3. You know how much to invest and have calculated the risk involved in it.
4. You understand stop loss and target price and have learned how to set them to prevent loss.
5. Studied about entry and exit and found a stock matching your requirement.
If you have fulfilled all these five points, you are ready to invest.
Process: How to invest in stock market for beginners India?
To invest in share market, you have to open a Demat and trading account with a broker. You cannot invest in share market without a broker. You may approach a physical broker or opt for online brokers.
Some of the well-known brokers are Angel Broking, Motilal Oswal, ShareKhan, etc. There are several discount brokers, i.e, brokers levying minimum or near to zero brokerage charges for trading. These are Zerodha, Upstox, 5paisa, etc.
To invest in share market online India, follow these steps.
1. Download a reliable stock market investment app India.
2. Open a Demat and trading account.
3. You have to upload your Aadhar card, PAN card, and e-signature.
4. Once the account is approved.
5. You have to input funds for trading. A yearly brokerage charge will be debited from the fund.
6. You can now watch the available fund in your account and start trading.
7. This is “How to invest in stock market online India?”
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Where to invest in the share market?
You can invest in reputed companies for the starter. It is essential to learn invest in stock market and do your technical analysis to judge the stocks.
Stock selection plays a significant role in your share market investment in India. Therefore, always undertake fundamental and technical analysis of the stock before investing.
There are several technical indicators like 44 moving average, 200 moving average, lower circuit, upper circuit, etc. Relying on tips to invest in stocks can be the worst decision of your life. It is better to research for yourself rather than relying on tips blindly.
If you are a beginner, you can select your stock according to your perception of the company. For instance, you have used Colgate for years in your family. There is a certain trust associated with that brand. So, you can start your investment journey by investing in their stocks. Note: This is just an example. We are not recommending any specific stock.
This way of stock selection works well for a long-term plan. For short-term plans, there is no shortcut. You have to understand and do your analysis for stock selection. Learn to invest in stock market India before you invest money in stock market.
Frequently Asked Questions
1. Who can invest in stock market?
Anyone having a Demat and trading account with a broker can invest in the share market.
2. How to invest in Indian stock market?
You can invest in all the listed Indian stocks through a broker. You can use a trading app or a physical broker to invest in Indian stock market.
3. Is it good to invest in stock market now?
Anytime is good for starting to invest in the share market. The earlier you start, the more profit you fetch.
4. Where to invest in stock market today?
Do not rely on tips for investing in shares. Invest in stocks that have great management and show a rising moving average.
Final Thoughts
I hope now you know “how to invest in Indian stock market. The share market is no doubt risky. But once you learn how to invest to stock market, there is no looking back. This article has been designed to make you aware of all the pros and cons. Hope our guide on “how to invest in stock market India?” will serve as a guiding light.
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