Getting Started with Stock Market.

what is Stock Market?


Share and Share Market:-
Why does a company issue stock?

DeDebt vs. Equity:
Why does a company issue stock? Why would the founders share the profits with thousands of people when they could keep profits to themselves? The reason is that at some point every company needs to raise money. To do this, companies can either borrow it from somebody or raise it by selling part of the company, which is known as issuing stock.

A company can borrow by taking a loan from a bank or by issuing bonds. Both methods fit under the umbrella of debt financing.

On the other hand, issuing stock is called equity financing. Issuing stock is advantageous for the company because it does not require the company to pay back the money or make interest payments along the way. All that the shareholders get in return for their money is the hope that the shares will someday be worth more than what they paid for them. The first sale of a stock, which is issued by the private company itself, is called the initial public offering (IPO).

Share:-Share is nothing but the ownership of the company divided into small parts and each part is called as share or stock



Dividends:-

->A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

->Company will declare in it's reports, the amount of dividends per share.

Important Dates of a Dividend:-

There are four major dates in the process of a company paying dividends:

-->Declaration date - This is the date on which the board of directors announces to shareholders and the market as a whole that the company will pay a dividend. 

-->Ex-date or Ex-dividend date - On (or after) this date the security trades without its dividend. If you buy a dividend paying stock one day before the ex-dividend you will still get the dividend, but if you buy on the ex-dividend date, you won't get the dividend. Conversely, if you want to sell a stock and still receive a dividend that has been declared you need to sell on (or after) the ex-dividend day. The ex-date is the second business day before the date of record. 

-->Date of record - This is the date on which the company looks at its records to see who the shareholders of the company are. An investor must be listed as a holder of record to ensure the right of a dividend payout. 

-->Date of payment (payable date) - This is the date the company mails out the dividend to the holder of record. This date is generally a week or more after the date of record so that the company has sufficient time to ensure that it accurately pays all those who are entitled.

And the most important; Stock exchange like Sensex & Nifty are closed on Saturday and Sunday. 

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Getting Started with Stock Market:-

First let us understand the working of a stock Market:-

To learn about how you can earn on the stock market, one has to understand how it work. When a person want to buy/sell shares in the stock market then he has to first place the order with a broker or can do themselves using online trading systems(this will discuss later). When you place the buy order, the message is transfered to the exchange(either NSE or BSE) and the order stays in the queue of exchanges other orders and gets executed if the price of that stock come to that value. Once you get the confirmation of this transaction, the stock purchased , will be sent to your demat account. The shares will be stored in demat account in electronic format.

Rolling Settlement cycle: (RSC)

RSC mean when you will get your stocks in your demat account.
In a rolling settlement, each trading day(T) is considered as as a trading period and trades executed during the trading day(T) are settled on T+2 basis i.e trading day plus two working days. So the conclusion is on forth working day you will get the shares in your demat account.

What is Demat account and why it is required?

Securities and Exchanges Board of India (SEBI) is  a board of india appointed by the government of India in 1992 with it's head office at mumbai.
Its one of the function is the business in stock exchange and in other security market. In another word it is the regulator for stock exchange. It monitors and regulates both stock exchange in India.

a) Demat( short form of Dematerialization) is the process by which an investor can get stocks converted into electronic form maintained in an account with the Depository Participant (DP).

b) DP could be organization involved in the business of providing financial services like banks, brokers, financial institutions etc. DP's are like agents of Depository.


c) Depositary is an  organization responsibility to maintain investor's security( Securities can be stocks or any other form of investments) in the electronic form.



d) Investor's wishing to open demat account gas to go DP and open account.



e) Opening a demat account is simple as opening a bank account. As you need bank account to save money, deposit cheques etc, likewise you need to have a demat account to buy and sell stock in share.

Demat account is MUST:-

YES. Demat account is must. The market regulator, the Securities and Exchange Board of India(SEBI), has made it compulsory to open demat account if you want to buy and sell shares in Indian share market.

How to open a Demat account?

You have to approach a Depositary Participant (DP) to open a Demat account.
Most bank are DP Participant so you can approach them Directly.
To have latest list of registered DP please visit www.nsdl.co.in and www.cdslindia.com.
A broker and a DP are two different people.
A broker is a member of the stock exchange, who buys and sells shares on his behalf and also on behalf of his customers.
A broker can be a DP.

Following are the documents required to open Demat account
When you approach any DP, you will be guided through the formalities for opening a demat account.
DP will ask you to provide some documents as proof your identity and address.
Below is a list of documents out of which you have to submit one or two.
PAN card, Voter's ID, Passport, Ration card, Driver's license, Photo credit card Employee ID card, It returns, Electricity/ Landline phone bill etc.

Do you need any shares to open a Demat account?
NO. you need not have to have any shares to open a demat account.
A demat account can be opened with no balance of shares.
And also there is no restriction to maintain any minimum shares. You can have a Zero balance(shares) in your account.

How much cost to open a Demat account?
The charge for DP opening varies from broker to broker of from DP to DP.
Generally some broker charge one time account opening fees but currently due to high competition they are offering free accounts.


To have latest charges please visit www.nsdl.co.in and www.cdslindia.com or else you need to contact the specific broker.


Finally
after successfully opening the demat account you are now ready to do buying and selling of shares in share market exchanges like BSE & NSE.


There are various brokers and DP and few are listed below:-
1> www.sharekhan.com<-----------> I would recommend you register here, they have less charges and they DO NOT CHARGE demat account opening fees. I myself use sharekhan.
2> www.5paise.com
3> www.icicdirect.com
4> www.motilaloswal.com
5> www.hdfcsec.com