Basics of the stock market in Tamil

This session is the continuation of the basics of the stock market in Tamil. A common question that arises in everyone’s mind is why the stock market? Though there are more ups and downs the stock markets perform well with good returns. As of August 10, Sensex is 54554 and nifty is 16280. Even though there are a lot of crises like a pandemic, demonetization, GST, etc the performance of the nifty and Sensex are good. Sensex and nifty are the index of stock exchange like BSE and NSE which is the reference. In a list of 4500 companies in the stock exchange, you can see the performance of the top 50 companies in Sensex to know the performance of the stock market. To analyze the performance of the NSE stock exchange you can use nifty as a reference. Nifty 50 is the combination of sectors. The top 50 stocks are said to be nifty. As we cannot go through all the stocks, we can see the nifty to know about the rise and fall of the market. These operations of the stock market are regulated by the Stock Exchange Board of India (SEBI). This is mainly for investor protection. There are a lot of scams in the stock market. At those times, SEBI makes some regulations to protect the investors. There is no exposure in the peak margin update. From September onwards, you can trade only with your available amount. This is the condition. In earlier days, you can trade up to 20 times with exposures. In recent times, you do not have such trading exposures and this is an investor protection factor formulated by SEBI.

We are trading with the Indian companies on the stock exchange list. The timings of the stock market are 9.15 am to 3.30 am. You can make live transactions from Monday to Friday. You can place the orders of stocks in the premarket timings which are 15 minutes before 9.15 am.  You can also use post-market timing i.e, after 3.30 to fix the sell rate of stocks. If the buyer and seller are available, your shares trading takes place.

Also, If you want to take commodity trading training in Tamil, you can contact us @ +91 99407 50690

Types are segments
There are two types of segments in the stock market. One is the cash segment and the other is the derivative segment. The cash segment is the equity market or share market and the derivative segment is in the future and options market.

Types of trading
There are two types of trading such as intraday trading and carry forward trading. When you complete the trade within that particular day then it is said to be intraday trading. When the trade moves to the next day through the Demat account then it is said to be carried forward or delivery trading. The share will be settled within two days of time. The shares purchased on Monday will be in your Demat account on Wednesday. 

Trading style
You can both buy and sell the shares or sell and buy the shares. As a beginner investor, you might have certain confusion in selling and buying the shares. This is said to be a short sell. There is a possibility in the market for the short sell. You might not be an owner but you may have power like the power of attorney. There might be some other owner and you ould be given the power to sell through which you can make transactions but cannot own the shares. The brokers would give you the power to sell through which you can short sell but with a condition that the trading must be within intraday. You have to transfer the funds from the bank account to the broker account. You can trust the trading account as you trust the bank account. If you are buying a share you can only do it with a broker. You can directly buy the shares from NSE or BSE. you can approach a service broker or a discount broker. If you are a beginner without any basic idea about the stock market, you can trade through a service broker. This is because you might have many queries in the beginning. If you have some experience in trading you can choose a discount broker. If you are purchasing the shares for 1 lakh then your shares will be stored in the Demat account. The broker might have a tie-up with CDSL or NSDL. the Demat account is the safest account you can even hold your mutual fund in the Demat account. It is similar to a bank locker. You can trust the Demat account as you trust the bank locker. It is important to know whether your mail address is registered in CDSL or NSDL. You can maintain safety through the mail address without sharing them. You must make sure that your mail address is registered in CDSL. privacy is very much important in the stock market. Maintain the OTPs you receive in your mobile number or mail address safely without sharing them with anyone.  

Types of benefits
There are two types of benefits such as cash benefits and share benefits. The cash benefit is about the dividends. If you are holding stock, then you will receive the dividend as cash from the profit of the company to your bank account or to your broker account. The share benefits are in the form of a bonus. There won’t be any change in the capital. If you possess 10 quantity of share that cost Rs.1000. This 1000 would be reduced to 500 but your quantity will be increased as 20 shares. The profit will be declared as a bonus to your account. There won’t be any change in the face value.  There will be a split that happens for the liquidity process. There would be shares of Rs.10,000 or Rs.5000 but as retail investors, we cannot actively participate in the trade. Hence the shares would be split for liquidation. The Rs.10,000 shares ould be split into Rs.1000 thus you would have 10 shares in the place of one share. There won’t be any change in your capital. But the face value changes from 10 to 1. The face value does not change in bonus but changes in a split. 

Buyback
If the performance of the shares of the company is good, they would buy back their shares by requesting through mails. This is because they do not want to dilute their profit. Thus maintaining more shares in a company is a benefit to them.

Right issue
Initial Public Offer is the first time selling of shares. The company would offer the right issue to sell the shares a second time for the expansion of the company. They would offer some discounts of Rs.5 or 10 to the existing customers than the market price.

According to corporate action, it is important to know about the buyback, split, bonus, dividend, and right issue. 

Tax
There are short-term capital tax and long-term capital tax. If you are selling shares of up to 1 lakh after one year then you won’t get any tax. For example, if your investment is 1 lakh for a period of 1 and half years with a profit of 80,000 then you do not need to pay the tax. If your investment is one lakh and your profit is 2 lakhs then you have to pay a long-term capital tax of 10% from the one lakh investment. Intraday players consider the speculation business. If you are investing 1 lakh and gain 1 lakh through intraday trading then you must pay a tax of about Rs.15,000.

Thus whatever you earn you must pay the tax in the short-term irrespective of your annual income or else you will receive a notice from the income tax department. You can contact us for any doubts and clarifications.