Stock Market Basics: How It Works in India

What is Stock Market?

Stock market is a place where people buy and sell shares of different companies from all over across the world. These companies are publicly listed companies and individuals can buy shares only of theses companies that are listed. It allows companies to raise funds and while giving opportunities to investors to earn.

Participants of the Indian Stock Market

Institutional Investors – These are those investors who are holding large amount of funds. (for eg. Hedge Funds, FII’s, DII’s)
Retail Investors – These are those investors who are having less or limited or small amont of capital. (for eg. individuals)
Stock Brokers – These are those institutions who executes buy/sell trades of all the people. (for eg. Zerodha, Dhan)
Market regulatories – These are those who regulates all the stock market. In india we have 1 regulatory i.e SEBI (Securities and Exchange Board Of India)

Major Stock Exchanges Of India

Exchange	Founded	Description
NSE (National Stock Exchange)	1992	India’s largest stock exchange, home to the NIFTY 50 index.
BSE (Bombay Stock Exchange)	1875	Asia’s oldest stock exchange, known for the SENSEX index.

These both exchanges runs trading in stocks, derivatives, commodities and currencies.

How does the Indian Stock Market Works?

In older time or recent years all the work of the stock market is done manually. Stocks were buy and sell on paper. individuals gives the money to brokers and in return the brokers gives them them the certificates of the shares. But now the scenario has changed totally today all the work of the stock market happens in electronic format. Here is the step by process :

Step 1: Open a trading and Demat Account

To invest, you need:

A Bank Account (for fund transfer)
A Trading Account (to buy and sell shares)
A Demat Account (to store shares electronically)

Brokers like Dhan, Zerodha, Upstox provide easy account opening services.

Open Now

Step 2: Place a trade

Select a stock and place a order through you broker
Then the broker send the order to the stock exchange
From there the order will match with a Buyer/Seller.

Step 3: Execution of Trade and Settlement

Once matched, the trade will get executed

In India settlement follows T+1 system (Trade/Transaction day +1 business day)

Types Of Investment in Stock Market

Today there are various types of assets in which investors can invest their money. Some of them are :

Equity Shares – Buying company shares for ownership.
Mutual Funds – Pooled investment managed by professionals.
Exchange-Traded Funds (ETFs) – A mix of stocks that trade like a stock.
Bonds & Debentures – Fixed-income securities issued by companies or the government.
IPOs (Initial Public Offerings) – Investing in newly listed companies.

Types of Trading

There are different styles of trading based on duration and strategy

1. Intraday Trading

Buying and Selling of Stocks happens on the same day. You have to enter and exit from a stock on same day.

Involves High Risk

Requires a huge amount of technical analysis and quick decision making.

2. Swing Trading

Holding a stock for few days to few weeks for profit.

Ideal for those individuals who cannot give whole day to market.

3. Long-term Investing

Buying Stocks with the intentions of holding them for decades or years.

Best for Wealth Creation because compounding works properly.

4. Futures and Options Trading (f&o)

Futures: Contract to buy and sell stocks at a fixed price in future.

Options: Gives the right, but not the obligation, to buy/sell at a specific price.

Important Stock Market Indices in India

Stock indices represent the overall performance of a segment of the market. There are many indices in our Indian stock market but the main ones are as follow :

NIFTY 50 – In this index,there are Top 50 companies that are listed on NSE.
SENSEX – In this,Top 30 companies listed on BSE.
BANK NIFTY – It inckudes all the bank stocks and tracks the performance of leading banking stock

These indices help investors gauge market trends.

How to Get Started as a Beginner?

If you’re new to investing, follow these steps:

Learn the Basics – Understand how the stock market works.
Select a Reliable Broker – Choose a low-cost, SEBI-registered broker.
Start with Blue-Chip Stocks – Invest in well-established companies.
Use Fundamental & Technical Analysis – Analyze company financials and price trends.
Invest for the Long Term – Avoid emotional decisions based on short-term fluctuations.

Common Myths About the Stock Market

❌ “Stock Market is Gambling” – (Investing is based on research, unlike gambling.) While gambling you are just dpending upon luck and are taking risk but in stock market you donot depend on luck will take calculated risk.
❌ “You Need a Lot of Money to Start” – This is just a mytrh you don’t need a lot of money. You can start with as little as ₹100.
❌ “Only Experts Can Make Money” – Anyone can invest with the right knowledge.

Conclusion

The Indian stock market provides great investment opportunities for both beginners and experienced traders. You just have to capture those opportunities and use them in your favour. How you can use them. Understanding its fundamentals—how stock exchanges work, different trading strategies, and risk management—is crucial for long-term success.

Personal Advice

If you’re a beginner, start with small investments, focus on learning, and avoid emotional trading. Over time, with patience and the right strategy, you can build wealth through the stock market

You can also read about Mariner Finance: What is it?