A share market or trading is basically a place where you can buy or sell a company’s stocks. Breaking it down in a simpler way, let us assume a vegetable market where you go, look out for different vegetables, and buy the best one.

Yes, it is the same thing, there is an exchange platform where all the companies have listed their stocks. Buyers and Sellers come to this exchange and place their bids.

This place where Sellers sell and Buyers buy those shares is referred to as the Exchange, and this Buying and Selling of shares is referred to as the Share Market.

There are over 60 global stock exchanges overall in the world. Among them, the Amsterdam Stock Exchange is said to be the oldest stock exchange. While in India we have two exchanges

  • NSE: National Stock Exchange
  • BSE: Bombay Stock Exchange
  • MCX: Multi Commodity Exchange
  • NCDEX: National Commodity and Derivatives Exchange

Let us get more in-depth details about the Indian Stock Exchanges and their offerings.

What does Stock mean?

A stock simply means a company. If you have a share of a company, means that you have owned a right to be a part of a company’s Profit, which is paid in the form of dividends, as other rights such as being a part of the annual meetings held in the company and gets you a right to vote in the company’s matters.

Types of Companies

  • Public Limited Company
  • Private Limited Company
  • Listed Public Limited Company
  • Proprietorship Firm
  • Partnership Firm

NCDEX: National Commodity and Derivatives Exchange

To facilitate trading in the Agriculture sector, NCDEX provides multiples indices to trade in like as follows:

  • Pulses
  • Spices
  • Grains
  • Groundnuts, and many more.

Types of Trading in Listed Public Limited Company

  • Cash Trading
  • Future Trading
  • Options Trading

Cash Trading

Cash trading also referred to as Spot Trading is usually a long-term investment plan. Traders and investors buy shares of a company with an intention of holding it for a long term, maybe months and years.

Traders don’t get the benefit of any Margin or Leverage. Understanding it with an example, if a person wishes to buy 1000 stocks of a company worth 10Rs each, you need to have 10,000Rs available in your DMAT or Trading Account.

This segment prevents you from borrowing funds which also eliminates the risk of margin calls and interest charges if any.

Advantages of Cash Trading

  • Less losses as compared to other segments as the investors can hold the stock as long as they want. If the stock goes below the buying price, investors can choose to hold for any longer duration until the stock price reaches the desired market price.
  • Good option for beginners as it does not have many complications as compared to other segments.
  • It is considered the most disciplined trading, as the losses are limited, and have no expiry.

Future Trading

Future Trading is same as the Cash trading, but buying stocks just for a limited time at a lower price than Cash. It is basically a Derivative Contract Agreement to acquire Shares or stocks at a specific price at a later time.

Future Trading comes with a validity. Every future of a stock bought has got an expiry. Buyers must sell and Sellers have to buy the stock at the end of the expiry, irrespective of the current market price.

Advantages of Future Trading

  • A contract is valid for one month, and the expiry is on the last Thursday of every month.
  • Investors can buy futures of 2 months in advance excluding the current month’s contract.

For instance: Current Month: January

                       Next Month: February

                       Far Month: March.

  • There is no risk of losing Premium value as in Options trading.

Options Trading

Options Trading is a financial agreement that grants the investor, for a predetermined amount of time to Buy or Sell Stocks, Commodities, and ETF premiums at a specific price. Options consist of Strike Price.

Every Strike Price comprises a Premium value. Traders trade on this premium value. Options contract has a set expiry date, which is often the last Thursday of every month.

Since November 20, 2024, NSE and BSE have decided to have only one benchmark weekly expiry contract such as Nifty50 and Sensex, and the rest of the six derivative indexes will not be available.

Charges

Every broker gives access to trade into options. Charges differ for options as compared to the other two Cash and Future segments.

Usually, a broker charges 20Rs per lot for a single order, and other additional taxes, which gives out a rough total of around 50-60Rs for buying and selling a single lot.

Advantages of Option Trading

  • Options generate higher percentage returns with limited capital.
  • Investors do not have to wait for a longer time to generate profits, quick returns are generated within smaller time frames.
  • Risks related to present holdings can be reduced with the help of Options as a good hedging strategy.
  • High Liquidity for many large-cap stocks and major indices makes it easy to enter and exit positions.

The Stock Market is ultimately a huge Bazaar, where you trade companies’ shares rather than fruits and vegetables. Suppose you are new to the Stock Market and thinking about Indian exchanges like NSE and BSE.

In that case, this blog will definitely simplify everything from Cash trading to Options, helping you to take your first confident step into the exciting world of the Stock Market!

Which 6 IPOs will list the stock market next week?

As many as 6 new IPOs will open for subscription next week.

  1. Mamta Machinery Limited (₹179 crore)
  2. Transrail Lighting Limited (₹400 crore)
  3. Ventive Hospitality Limited (₹1,600 crore)
  4. SME IPO of NACDAC Infrastructure Limited (₹10 crore)
  5. Identical Brains Studios Limited (₹20 crore)
  6. New Malayalam Steel Limited (₹42 crore)