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How to Make Money in Stock Market in India 2022 ?

How to Make Money in Stock Market in India 2022 ?
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A stock market is a place that we hear quite often and despite knowing that it’s possible to make money with the stock market we are not able to do so, why exactly?

The primary reason is that most people are scared of the stock market because of a lack of proper knowledge. And, some people do not even have the knowledge of it. In any of the cases, we are here to help you with how to make money with the stock market in India or how to start trading in the stock market?

What is Stock Market?

As the name suggests, the stock market is a market where stocks are bought and sold. There are two stock markets in India popularly known as National Stock Exchange and Bombay Stock Exchange.  And, to regulate these markets, there is a statutory body called SEBI or the Securities and Exchange Board of India. Before understanding the word stock market we need to know the meaning of stock as well. Stock, alternatively known as share also is a share of a company.

What do you mean by a stock or share of a company?

When we are saying the word company we mean a public limited company. Basically, there are two types of companies viz. private limited company and public limited company. The companies which are owned by some private people who know each other very well are called private limited companies and they are required to mention the word private limited in their name also. So, all the companies that you see with the name private limited are private companies and are owned by some private people.

This ownership is represented by equity shares of the company. So, let us suppose if there are 4 owners of the company and they are equal owners then each of them has 25% equity shares of the company. These equity shares popularly known as just ‘Shares’ are in small denominations and transferable.

What is IPO?

So, when these shares are transferred to the general public to get more investment in the company, the company becomes a public limited or limited company. This process of getting money from the public is called Initial Public Offer. Through this process of IPO, if completed successfully by following all the required rules as per SEBI, the company becomes a listed public company. It means the shares of the company are listed in the stock market and can be traded.

stock market guide

As these shares are in small denominations and transferable, anybody can buy and sell these shares at any time in NSE or BSE. Not exactly at any time but during the market hours. The market operates between 9.15 a.m. and 3.30 p.m. from Monday to Friday.

How you can start trading in the stock market?

Since now we have some background information about what is the stock market is, it’s important to know the exact process of trading or investing in the stock market.

Only members of the stock exchange can trade in the market. So, you need to be a member, but that’s a complicated process. In order to make it simple, there are already some people having the membership in the market and they can make you a sub-member. And, to do so, you need to open a Trading account with these members. These members are called Brokers as they operate for a commission called Brokerage. So, whenever you buy or sell anything, it has to be done through these brokers.

Let us suppose, you purchased some shares of a particular company, but where would you store them. As the shares are in digital format, there has to be a repository. And, that repository is your Demat Account.

What is a Demat Account and how to open it?

A Demat Account is a place where your shares are stored. It is like a bank account where you store the shares instead of money. This account is opened with one of the two depositories known as CDSL and NSDL. These depositories are created by the Government as there is an involvement of public money. But, how to open a Demat Account?

Well, you don’t need to open a Demat account as this account is connected with your Trading Account. You cannot have just a trading account as you need someplace to store the securities also. So, it becomes your Demat-cum-Trading account.

In order to open it, you need to approach a broker and get your trading account opened which will automatically let your trading account also open either with CDSL or NSDL based on the broker’s agreement with either of the depositories. These stockbrokers are called depository participants also.

How to Start Trading in the stock market?

So, now you need to get your trading account opened with one of the stockbrokers and once it is done you can start trading that is buying and selling of shares. There are thousands of brokers in the market like Zerodha, Angel, Sharekhan Groww, etc.

bombay stock exchange

We recommend going with Zerodha as they offer the best service at zero brokerage but it is totally up to you with which broker you want to go with. To apply, for a trading account, you should be :

  • 18 years of age
  • have a PAN Card
  • a Bank Account

Apart from this, make sure that you have your Adhar card linked with a mobile number so as to make the process easy.

Click here to open Trading Account with Zerodha

Click here top Open Trading Account with Angel Broking

Click here to Open Trading Account with Groww

Click here to Open Trading Account with Upstox

Once your Trading account is opened, you can buy a share and sell it at a price that suits you best. The prices of the shares are based on the economics of demand and supply which keeps on fluctuating every second. So, if you buy a share at a price of 100 rupees and if you sell it 105 there is a profit of 5 rupees per share. And, you can multiply this profit by the number of shares you have traded.

Trading vs Investing

Buying and selling of shares is nothing but trading. This trading can be of two types viz Intraday Trading or Swing Trading. When you are completing a trade within a day, it is called Intraday trading and if you are taking multiple days to complete a trade, it is called Swing trading. The aim is to make money with it.

But when you are buying shares with the intention of holding them for a really long time, it is called Investing. Fundamentally, the market price of a share is based on the financial strength of the company. If the profits of the company are rising, the share prices should also rise eventually. And, you will get a benefit out of it only if you invest for a longer period of time say 4 to 5 years. You never know how much time it will take for your company to go from 100 rupees to 1000 but it will achieve that mark if the fundamentals of the company are strong.

So, if you are planning to invest, you need to identify some good companies and patiently invest in them. But, for trading, you are just taking it as a business of shares where you are buying and selling.

So, what are you waiting for? Get started with your trading or investment process as you will learn only by doing it.