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The National Stock Exchange of India and the Bombay Stock Exchange via brokers, provide an ecosystem to investors to trade in capital markets through various channels- broker offices, investment advisor or screen-based electronic trading system. Stock markets are often referred as equity markets or share markets and buying or selling of stocks is called stock trading. A share is a unit of ownership of a company. Buying shares or stocks of a company means that you are buying a unit of the company which is publicly listed. Selling their own shares gives an opportunity to the company to raise funds for future growth.
- STOCK
- COMMODITY TRADING
- FOREX TRADING
There are two segments that you can trade in the stock markets in India. One is the cash market and other is Futures and Options (F&O) market. The third of course is the IPO market, but, you do not trade here, because you can only buy and cannot sell.
- STOCK CASH MARKET
Cash market is also known as Delivery Based trading. In the stock market, ‘Delivery’ means buying stocks and getting them deposited in your demat account. You become the owner of the stock, till you sell it. To take ‘Delivery’ of shares, you need to have sufficient funds in your account.
- STOCK FUTURES
Stock Future contract is an agreement to buy or sell a specified quantity of underlying equity share for a future date at a price agreed upon between the buyer and seller. The contracts have standardized specifications like market lot, expiry day, unit of price quotation, tick size and method of settlement.
- STOCK OPTIONS: CALL & PUT
Options are contracts that give the bearer the right, but not the obligation, to either buy or sell an amount of some underlying asset at a pre-determined price at or before the contract expires. Options can be purchased like most other asset classes with brokerage investment accounts. Options are powerful because they can enhance an individual’s portfolio. They do this through added income, protection, and even leverage. Depending on the situation, there is usually an option scenario appropriate for an investor’s goal. A popular example would be using options as an effective hedge against a declining stock market to limit downside losses. Options can also be used to generate recurring income. Additionally, they are often used for speculative purposes such as wagering on the direction of a stock.
- UNLISTED STOCKS
An opportunity to invest in solid companies prior to listing on stock exchange. They can be traded officially between parties off market and are strictly held in dematerialized form. Upon listing can be traded on exchange as well.
Like stocks, commodities are traded on exchanges where investors work as a team to purchase or trade products in an attempt to generate profit from the fluctuation of market prices or because they need that particular product.
- Types of commodities traded in India (MCX):
Bullion: Gold, Silver
Base Metals: Aluminium, Brass, Copper, Lead, Nickel, Zinc
Energy: Crude oil, Natural gas
Agri commodities: Black pepper, Cardamom, Castor seed, Cotton, Crude palm oil, Mentha oil, Palmolein, Rubber
- List of commodities traded in India (NCDEX):
Cereals and pulses: Barley, Chana, Maize kharif/south, Maize rabi, Wheat, Moong, Paddy (basmati)
Fibres: Kappa’s, Cotton, Guar seed, Guar gum
Oil and Oil seeds: Castor seed, Cotton seed oil cake, Soybean, Refined soy oil, Mustard seed, Crude palm oil
Soft: Sugar
Spices: Pepper, Turmeric, Jeera, Coriander
Foreign Exchange (forex or FX) is the trading of one currency for another. Foreign exchange transactions can take place on the foreign exchange market, also known as the Forex Market. The forex market is the largest, most liquid market in the world, with trillions of dollars changing hands every day. There is no centralized location, rather the forex market is an electronic network of banks, brokers, institutions, and individual traders.