The Indian stock exchange is one of the world’s largest. As of February 2018, it has 16,993,616 active demat account investors who traded shares. An equity investment entitles the investor to a portion of the company’s capital. The value of the investment increases as the company grows; initially, it begins with the Initial Public Offering (IPO) that the companies will allocate. This will be listed on the stock exchange as a secondary market item. Depending on the percentage of returns, the investor determines whether to retain the stock for a longer or shorter amount of time. The majority of research investigations indicated that the Indian stock market is highly volatile, sensitive, and reacting to news and unexpected shocks.
This has an immediate influence on market trend activity, but it is resilient and rebounds quickly. The investor seeks large returns on investing while taking a considerable risk. Fear of investing in the stock market arises from the market’s unpredictable trajectory and a lack of awareness about the success criteria. In practice, risk and return are directly proportional. However, the investor’s risk-return perceptions may differ. Before investing, the goal of this study is to assess the investor’s level of familiarity with stock trading and technical knowledge in order to overcome risk factors while trading in the live market.
1) Primary market –
Purchase of shares through IPO (Initial Public Offering) allotted by corporations that issue public offers of shares.
2) Secondary market –
Stock trading is done through exchanges where buyers are willing to buy from primary shareholders after listing on exchanges and reselling in the secondary market. Stock trading refers to a person or corporation who trades equity securities on a stock market using a Demat Account. The investor can trade stocks with the assistance of a stock broker/sub-broker, or an agent registered with SEBI, the stock market regulator (12). Agents receive a commission from traders who trade on behalf of investors for each trade of stock or equity.
A stock market (sometimes known as a share or equity market) is a collection of investors who purchase and sell stocks (buyers and sellers). A broker and trader can purchase and sell a stock, bonds, and other assets at agreed-upon prices listed on a public stock market. A mutual fund (SIP), commodities, equity shares, options, futures, initial public offering (IPO), foreign exchange, gold ETF, bonds, post office savings schemes, company fixed deposits, insurance plans, retirement plans, PPF, and other investment modes are available to investors. Retail investment and institutional investment are two different ways for traders to invest; traders must do technical or fundamental analysis to maximixe returns while minimising risk.
Exchanges serve as the central point for each transaction, collecting and delivering shares and guaranteeing payment to the seller of a security. Individual traders are no longer exposed to the risk that the counterparty will renege on the transaction. There are numerous exchanges, with the BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) accounting for the majority of trading shares in India. Stock market trading types include:
Equity trading (no expiry), purchasing shares, and profiting within a day, week, month, or year according to the percentage of returns desired by the investor. Derivatives (expiry on the last Thursday of the month), Derivative trading is a place where the trader can keep or trade the shares by providing a margin amount till a specific period. The lot holdings will expire on the last Thursday of that particular month. It is up to the trader to select the right month of the lot for trading and the amount of investment to hold. If the trader does not close the position by the expiry date, it will be squared off. The trading will be done in lots, which may vary in number depending on the weightage of the equities. The margin will be worth 10% of the total shares and can be held until the end of the month.
Monthly Trade with Futures Delivery – The trader purchases the lot and sells after enjoying the expected profit. Futures Square Off – If the trader fails to cancel the position, the lot is automatically wound up based on the live stock price before the market closes at 3:00 PM. The OPTION function is a decision to predict the value of a stock in a week or month. An investor chooses the stock by analysing the market trend as it increases or decreases in the price of a specific stock. If the forecast comes true, the investor benefits; otherwise, the investor loses.
CALL OPTION and PUT OPTION are the two trading options offered to traders. The premise of a call option is to buy a stock and sell it at a certain price based on the market flow. Put options are a theory that allows you to sell a stock at a specified price and then buy it back at a lower price; this type of trading is most common in a bear market. Weekly choice: Bank This feature is exclusive to the Nifty index (every Thursday of the week it gets expires of that particular holding ) Commodity markets facilitate the trading of commodities such as silver, gold, crude oil, live cattle, rice, wheat, soybean, coffee, cotton, and sugar, etc. which belong into four categories: metal, energy, livestock and meat, and agricultural products.
Trading can take place in either a Spot or a Derivatives market. Commodities are bought and sold for immediate delivery in the Spot market, whilst financial instruments based on commodities are traded in the Derivatives market. Mutual Funds: Mutual funds are sophisticated controlled devices that exchange a lot of money from many people to invest in stocks, bonds, and other securities. An investor obtains mutual fund ‘units’ by investing in a specific scheme. The current net asset value (NAV) of the fund serves as the value of the unit to be purchased by the investor. NAVs fluctuate based on the fund’s holdings of the specific mutual fund product. As a result, each investor chooses to invest based on the proportionate gain or loss of the fund.
Capital market investors can invest in a variety of instruments. Before investing or trading on a certain platform, the trader or investor must thoroughly research the strategies, trends, and tactics available in each instrument. Investors may incur substantial risk even for little profits due to a lack of information.
The majority of research investigations indicated that the Indian stock market is highly volatile, sensitive, and reacting to news and unexpected shocks. The investor seeks large returns on investment and is willing to take a high risk to accomplish it. The market’s path is unexpected, and a lack of awareness about the success elements causes investors to be fearful of participating in the stock market. The study’s goal is to use a survey to investigate investors’ knowledge of trading (technics) technologies prior to investing in the stock market.