Stock Market Basics - Learn Share Market Basics & Download PDF

Revati Krishna

12 Dec, 24

6 mins

The stock market is often called the equity market or share market; here, stocks are referred to as company shares, which represent the ownership claims of the business. There are several types of stocks: common stocks, growth stocks, income stocks, blue chip stocks, cyclical and non-cyclical stocks, defensive stocks, IPO stocks, penny stocks, ESG stocks, and more. The stock market is an exchange platform that helps investors buy and sell stocks or shares of publicly traded companies. Stock market functions are important for economic health. It is an indicator of economic growth and is a bridge between companies and investors. Stock market basics can be learned in many ways; one can learn stock market basics from downloadable PDF forms on official websites. Here, you can find some basic theories about how the stock market works and how to make investments in the stock market.

What is the Stock Market?

A stock market is a place where companies raise capital by selling their shares and derivatives to investors. It is a network of stock exchanges where people can trade and invest in publicly traded companies. The main aim of the stock market is to facilitate the buying and selling of shares between buyers and investors, which can be done virtually or from a trading floor. Stock market activities are complex in nature; there are laws that protect investors against fraud and other unfair trading practices. The stock market provides both a primary and secondary market. The primary market is where new stocks are issued first through Initial Public Offerings (IPO). Then, after these shares are circulated, they enter the secondary market, where most daily trading occurs. The stock market plays a role in the modern economy. It is regulated by SEBI (Securities and Exchange Board of India).

Key Concepts of the Stock Market

While learning how the share market works, there are several concepts that need to be understood. Without knowing the concepts or knowledge of these, it will be like diving into the ocean without knowing how to survive.

Stocks: Stocks are financial securities that represent ownership in a company and a measurement of equity in a company.

Shares: Share is a unit of ownership measurement in a company. The smallest denomination of a particular company stock is called a share. In simple terms, a unit of stock is called a share. For example, if you have 100 shares in a company that has issued 1 lakh shares, it means you own 0.1% of the company. In other words, shares represent a unit of stock.

Stock Exchange: It is a place where shares and securities of a company are bought and sold. There are 23 stock exchanges in India. Among them, two are national-level stock exchanges, namely, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The rest are regional-level stock exchanges.

Bull Market / Investor: A bull market is a condition in which stock prices rise and the market is optimistic. A bull market occurs when major stock indices such as S&P 500 and Dow rise at least 20% over a period of two months. Bull investors buy securities with the expectation of selling them at a higher price when the market is optimistic.

Bear Market / Investor: A bear market occurs when a stock market is headed to a downward fall in stock value, index by 20% or more from their recent high, followed by a negative investor attitude. It is frequently connected with economic recessions and can linger for months or even years, resulting in substantial losses for investors. The bear investor is someone who takes advantage of the fall in price of a particular security or market and makes a profit out of it.

Market Index: A market index is an indicator of the performance of the stock market. It helps investors analyse the current stock price levels with the past to calculate market performance. The Indian stock market has two popular indexes, namely, Sensex and Nifty.

Sensex is the oldest and most popular market index of 30 companies listed on the Bombay Stock Exchange.

Nifty (National Stock Exchange Fifty) is an index that represents the top 50 companies listed on the NSE. It offers a variety of indexes to suit investors, such as NIFTY 50, NIFTY 500, NIFTY midcap 150 & NIFTY smallcap 250, and more.

Understanding these concepts used in the stock markets is important to have information on the stock, analyse the market trends, and make quick decisions.

Benefits of Learning Stock Market Basics

Learning stock market basics is the primary step before making trading transactions in the stock market. There are several benefits of learning stock market basics, let us know what they are:

Decision-making: Understanding the stock market and trading tactics helps in decision-making regarding how to invest, at what price on which stock to invest, and at what time it is proper to invest.
Risk management: You can learn how to manage money and risk management techniques.
Financial planning: Learning about the stock market helps you understand what type of financial tools help you achieve financial plans in your life.
To succeed: It is essential to have a complete understanding and thorough knowledge of the stock market to succeed in this field.
Successful career: By learning stock market basics, you learn about trading transactions in the stock market, which will lead to a foundation for your career that helps create career opportunities. You can pursue as a financial advisor, stockbroker, finance analyst, portfolio manager, investment manager, etc.
To avoid losses: Without having proper knowledge about the stock market, a lot of people invest in the market and bear big losses or earn less profit.
Technical knowledge: The growing stock exchange attracts millions of people around the world. By learning about the stock market, you will have technical and analytical knowledge of trading, trends, patterns of stock price, etc.

Step-by-Step Guide to Learning Stock Market Basics: Nowadays, learning the stock market is not difficult; there are plenty of offline and online platform that helps in learning stock market basics:

Read books and online guides: Trading in the stock market requires basic knowledge of all aspects that influence share price, market trends, overseas market effects, economic influence, and much more; this can be gathered by reading books regularly. Successful investors are always eager to seek news about the market, and they read as many investment books as possible to update on the rapid movement in the stock exchange. It would help if you also read books on successful investors, their traits, their perception of the market, their investment portfolio procedure, and market analysis techniques. Further, books written by the stock market legends and what they did to become successful will also help to certain extent. Now, books are available offline and online. With the rise of the internet, education can be accessible anytime, anywhere. They are handy and easy to read and access. E-books can be a way to learn about the stock market.
Follow market news and trends: Another method to learn about the stock market is to follow market news trends by reading financial articles, following share market news channels, watching panel discussions on TV shows, following financial news portals to get notifications of new rules and regulations, price fluctuations, index information etc., News articles help how market activities affect your portfolio. By watching panel discussions, you will be able to understand the language of the market and know about the different players and companies.
Use demo trading platforms: A demo trading platform is a virtual environment that creates a real world of trading with conditions and allows users to practice trading with virtual money without losing real money. It is also known as practice accounts. Here, you will learn about the environment of the stock market and how real trading is done. You can test yourself with trading strategies before coming into the real world.
Understand charts and technical indicators: Charts are methods of evaluating statistical data like trends in trading activities, price movements, and volume. Charts also help in technical analysis to decide the exit and entry point and at what price to stop to reduce risk. Technical indicators are used to gain insight into the supply and demand of securities and market psychology. Technical analysis helps measure trading volume, indicating whether the price move will continue. In this way, one can decide to buy or sell securities.

Stock Market Basics PDF – What's inside?

Here are some lists of contents inside if you go through the Stock Market basics PDF:

Introduction to the stock market
How to buy and sell stocks
Understanding risk and reward
Why trading in a stock market
Primary and Secondary market
Types of investors
Needs of investment
When to start investing
Where to invest and investment options
How stock prices are influenced
How to buy and sell stocks
What is index
Glossary of common terms

How to download the Stock Market Basics PDF:

Stock market basics PDF is the best if you want information in a structured and downloadable format. The benefit of using this PDF is that it is easy to read and has an organised format; you can access it anytime and anywhere. Many PDFs are available for free. You can download stock market PDFs in some places; they are as follows:

Financial communities and forums
Project Gutenberg platform
Online library You can download a free PDF if you visit any of the platforms mentioned above. However, it is important to be cautious of copyright issues. Avoid pirated versions to withstand copyright laws.

Conclusion

The stock market is very vast in trading transactions. If you want to invest in securities, you need to master the basics of the share market before proceeding with the trading transactions. Because it helps you understand the market basics, make decisions, and earn a return on your investment. The chances of losing on your investments are very high if you invest without knowledge of the basics. So, learn share market basics and start investing confidently.