People in India like to save money for future expenses. They can invest in the stock market and make money. The stock market is a popular investment option due to the Indian economy’s growth and the Indians’ increasing purchasing power. Only 18 million Indians have invested in equity and only 10 cities contributed to 80%. This number is increasing every day.
The stock market, also known as a share market, is where you can buy or sell shares (equities). Both parties get the revenue and losses. This is risk-taking, but it is also a way to make money. Trading isn’t just for shares, but also financial instruments such as commodities, precious metals and agricultural products. It allows for future trading and cash on delivery. Profits are possible if market prices rise and vice versa.
Cash exchanging is the purchase and sale of financial instruments for immediate delivery. Also known as the Spot market, You can trade in one of two options: equity shares or debt-bonds (Government and mortgage bonds). This deal can be completed in between 2 and 3 business days. It can be exchanged or OTC – Over The Counter. People can mutually purchase and sell securities and other financial instruments on the BSE-Bombay Stock Exchange platform and NSE – National Stock Exchange platform. They share the same trading system, hours, and operating principle. Both exchanges list all major businesses in the country.
Future contracts allow you to buy shares and financial instruments now, but payment and delivery will occur at a later date. Both types of trading come with risk. Intraday trading is risky because you have to pay cash and then there is no way to get it back. Future trading is safer. However, we cannot buy futures in cash and can’t sell futures.
Cash trading refers to trades that are done with money other than trade on margin, where the trader borrowed credit from his broker to trade in the market. Cash allows an investor trader to hold his share/financial instruments for as long as they want and can make profit or lose depending on market conditions. This investment method offers a higher chance of making a profit than other methods. It is impossible in nature. However, there is a high brokerage fee and taxes for delivery trading. However, it has 10x more brokerage than marginal trading. We can reduce this amount by choosing the online share trading portal. Here we offer less brokerage, but still charge more than marginal trading brokerage.
Investors need a Demat account for both types of investments. Financial instruments are held in a Dematerialized account and the investor does not take physical possession of the certificate.