vol. 02 · tier 01 // ch. 01 of 09 · beginner course
Market Basics
What is a stock?
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- ~3 min
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- 521 words
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- 01 of 09
1. Market Basics
What is a stock?
A stock (or share or equity) is a unit of ownership in a company. Buy 1 share of Reliance → you own a tiny slice of Reliance Industries. If the company grows, your slice becomes more valuable. If it tanks, so does your money.
Where do stocks trade?
In India, two main exchanges:
- NSE — National Stock Exchange (more liquid, ~90% of equity volume)
- BSE — Bombay Stock Exchange (older, home of the Sensex)
You don’t trade on the exchange directly — you go through a broker (Zerodha, Upstox, Angel One, Groww, etc.) who routes your order to the exchange.
The key indices
An index tracks a basket of stocks to represent the market as a whole.
| Index | What it tracks |
|---|---|
| Nifty 50 | Top 50 large-cap NSE stocks |
| Sensex | Top 30 BSE stocks |
| Bank Nifty | 12 largest banks on NSE |
| Nifty Next 50 | The next 50 after Nifty 50 (mid-large caps) |
| Nifty Midcap 100 | 100 mid-cap stocks |
When people say “the market is up 1%” they usually mean Nifty 50 or Sensex.
Market timings (India)
| Session | Time (IST) | What happens |
|---|---|---|
| Pre-open | 09:00 – 09:15 | Order collection, equilibrium price discovery |
| Normal trading | 09:15 – 15:30 | Live continuous trading |
| Post-close | 15:40 – 16:00 | Limited orders for next day |
Markets are closed on weekends and NSE holidays (Republic Day, Diwali Muhurat is a special evening session, etc.).
Who’s in the market? (Participants)
- Retail — you and me. Small individual traders.
- HNI — High Net-worth Individuals. Bigger retail.
- DII — Domestic Institutional Investors (mutual funds, LIC, banks).
- FII / FPI — Foreign Institutional / Portfolio Investors. Big money from abroad. Their daily buy/sell numbers move markets.
- Prop desks — Brokerage’s own trading desks.
- Market makers / HFTs — Provide liquidity, profit from microscopic spreads.
Why this matters: Price moves because of these flows. When FIIs sell heavily, even great stocks fall. Always check FII/DII data (published daily on NSE site).
Trading vs Investing
| Investing | Trading | |
|---|---|---|
| Horizon | Years | Minutes to weeks |
| Based on | Fundamentals (earnings, business) | Price action, technicals |
| Goal | Wealth compounding | Capturing price moves |
| Tools | Annual reports, P/E, ROE | Charts, indicators |
| Stop loss | Optional | Mandatory |
Most beginners blur these and end up “investing” in a bad trade because they’re down 30% and “don’t want to book the loss.” Don’t be that person.
Cash vs Derivatives
- Cash / Equity segment — You buy actual shares. Own them as long as you want.
- F&O (Futures & Options) — Contracts that derive value from an underlying stock or index. Leveraged, time-bound, can lose more than you invest. Stay away as a beginner.
- Commodity / Currency — Separate segments (MCX, CDS).