The Indian stock market is an excellent way to capitalize on emerging markets. Investing in the Indian stock exchange can a great choice for those, who are looking to diversify their portfolio. India is the seventh-largest economy in the world, and since the late 1990s, it is attracting a large number of foreign investments. So if you are searching in Google regarding how to gain knowledge about share market then this article is for you. we will help you know how to invest in stock market safely.
Additionally, it will also help you to know how to buy stocks and shares for beginners.
Invest in Stock Market Safely
In the 1990s, Foreign direct investment of FDI was allowed, which eventually permitted foreigners to invest in the Indian stock market through two major categories: including FDI and FPI.
Now confused what is FDI and what is FPI? FDIs are basically active investments, where you can get involved in a company’s management. On the other hand, FPI is a passive investment, which is often made by foreigners, who opt to buy Indian equities.
Before investing in the stock market, one thing you must know, the stock market in India is mainly dominated by two of India’s largest stock exchanges, first one is the Bombay Stock Exchange (BSE) and the second one is National Stock Exchange (NSE). Also, please note any stock market in India is bound to submit to oversight by the SEBI.
Another popular way to invest in Indian stock market is buying American depositary receipts (ADR) or global depository receipts (GDR). Alternatively, investors can also acquire shares in mutual funds and ETF based on Indian stocks.
Invest in ETF and Mutual Funds
If your question is how to make money in the stock market with little money then ETF can be an excellent way to invest in stock market. ETF often combines various qualities of mutual funds while keeping the flexibility of stock trading. The best part of ETF is it can be purchased throughout the day just like any other stock, whereas Mutual Funds have to be purchased from a fund company, and it is priced at the end of the day.
ETF tracks a benchmark index rather than investing in one or two stocks, which leads to diversification of your investments.
Invest in GDRs and ADRs
If you want to invest in stock market, ADRs and GDRs can also be considered. Few large Indian companies that are publicly held have listed their shares on the U.K. and U.S. exchanges through ADRs and GDRs.
Alternatively, you can also buy stocks directly from an Indian stock exchange, by paying the extra commission and currency conversation costs.
Start an account with an Indian Stockbroker
In order to invest in stock market, one can also open an account with any of the SEBI regulated brokers in India. Depending on the amount of money you are planning to invest in stock market, you may have to register with SEBI.
You’ll also have to have a PAN card, through which the Indian Tax Authorities can track your tax liabilities and investments. You’ll also need to open a bank account in India to transfer funds. It’s always a good idea to start an account with a full-service broker, who can provide you the much-needed guidance on which stocks to buy or which stocks to sell in the Indian stock market.
Now, if you are an Indian, who currently lives in the country and want to know how to invest in the stock market, in order to invest some of your surplus money in the Indian stock exchange then the next few points are for you,
Only Invest Your Surplus Funds
If you are interested to know how do I get started investing in stocks, then read along.
This is one of the biggest points one should remember while investing in Indian stock market. What most of the newbie investor does, is to invest so much money in first go that they can not afford to lose. Like any other investment, investing in the stock market is always a risk, which eventually means you can even lose everything. Before investing in Indian stock exchange, you should decide your own risk tolerance, including your age, how much is your financial strength, what is your retirement goal, etc, and then only you can decide how much risk you can afford to take.
Keep Your Expectations Realistic
When your question is how to earn through stock market? Then you need to keep your expectation realistic.
This is the second point of how to invest in the stock market. You might have several stocks, which have already generated returns of more than 100 percent, but that doesn’t mean that you can always expect the same return from the stock market. It’s always a good idea to monitor your investment periodically. As some financial events related to the Indian stock exchange can impact your stocks.
Don’t Follow others ‘Blindly’
While investing in the stock market, you should avoid following others blindly. Don’t let your actions be influenced by your friends, relatives, and neighbors without even evaluating the stock you are intending to buy. In case you are failing to understand the stock, never step in in the first place. It’s of utmost importance that, you know about the business model of the company before investing in it. Always try to invest in a company, not in the stock.
It’s Not a Money-Making Tool
If you are new in the stock market and want to how to invest in stock market, then you must remember that stock market is not a money-making machine. If you have invested in the Indian stock exchange just because it is a fad, then you’ve entered the wrong area. You must invest in the stock market only after gaining some basic knowledge about it.
So, here we have mentioned a few of the pointers to keep in mind before investing in Indian stock market. Also, try to monitor and review your portfolio regularly, if you can’t do that then it’s better to look for some other investment options.