What should I know about Indian share market?
The Indian share market is a place where shares of public companies are listed for trading. Here, trading shares bifurcate to two sub-categories; the primary market and the secondary market. Investors buy shares directly from the companies in the primary market. In the secondary market, investors trade shares amongst themselves.
In recent times, India had always been a leader as per the GDP rate that averaged around 7-7.5%. The world GDP rate languishes at 2.5%. This portrays India as a growing and lucrative market. Worldwide, the USA contributes 23% of the global GDP, Europe does 20%, China provides 9.3%, Japan provides 8.7% and India provides 2.4%.
The Inside Story
As is the case, any person through a broker can purchase or sell stocks pertaining to one or many companies. This exchange takes place at primary stock exchanges in India; the Bombay Stock Exchange (BSE) and the National Stock Exchange(NSE). Both are situated in the financial capital of India, Mumbai. The Bombay Stock Exchange claims to be the world's fastest stock exchange while the National Stock Exchange was the first exchange in India that provided a computer based electronic trading system. As of March 2017, the BSE and NSE rank 11th and 12th worldwide, respectively.
The market opens for trading at 9.30am and shuts down at 3.30pm, with a pre-open trade session from 9.00am-9.15am. Trade in both the exchange processes through the electronic order book, which is like an electronic shopping list for shares, sorted by their prices. These markets follow a T+2 day settlement cycle period, where T is the day a share got traded and T+2 is the day when the order got settled.
More About Trading Shares
Typically, trading has to be done by choosing an appropriate SEBI registered broker. The broker can be an individual, investment firm or a corporate body. An investor must have a Demat(Dematerialized) account, which is required to trade shares. An order can be placed with the order, with instructions specifying details about buying/selling shares such as price range, stop loss etc. After the trade is executed and a contract has been signed, it would take T+2 days to settle the trade.
After the 1990s, India let in foreign companies to invest here. The investment by foreign companies is possible only after it is registered under the Foreign Institutional Investor(FII) or as a sub to an FII registered company. Lately, the government of India's 'Make In India' initiative has increased the FDI rate to 48%.
Summing It Up
It is to be noted that India is a service driven country. And it is only when the value of other currencies rise( specifically dollar) that many Indian IT/Service oriented companies would reap profits. More profit is equal to a greater capability of expansion, which is again equal to more employment. At present, as the rupee strengthens the IT and Pharmaceutical companies are making losses.
With the world making efforts towards shifting to non-renewable energy sources as primary energy source, prices of crude oil is unlikely to shoot up that adversely affects the Indian economy since India is a heavy importer of crude oil. Latest measures by the central government such as Make in India, Startup India, Skill India and Digital India provides a potential investor with optimism. India's fiscal deficit is around 3.2%, which perfectly in par with the international standard fiscal deficit of 3%. The Indian share market does look like it is heading towards creating another golden year.
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