Equity Trading

A stock (or share) represents a small unit of ownership in a company. When you buy a share of a company, you become a part-owner (shareholder) of that business, proportional to how many shares you hold out of the company’s total shares outstanding.

Here’s how it works in practice:

• Companies issue shares to raise capital — either when they first go public via an IPO, or through later fundraising rounds.
• As a shareholder, you’re entitled to a proportional share of the company’s profits (via dividends, if the company chooses to pay them) and, in theory, a vote on major company matters at the shareholder AGM.
• The price of a share moves based on supply and demand on the stock exchange — driven by the company’s earnings, growth prospects, industry trends, broader economic conditions, and investor sentiment.
• You make money either through capital appreciation (selling the stock for more than you paid) or through dividends (a portion of profits the company distributes to shareholders).
• You can also lose money if the share price falls below your buying price — unlike a bank deposit, there’s no guaranteed return, and in the worst case (company insolvency), shareholders can lose their entire investment.
• In India, stocks trade on exchanges like the NSE and BSE, and to buy/sell them you need a Demat account (to hold the shares) and a Trading account (to place the orders), linked to your bank account for payment/settlement.

Delivery trading means buying shares and holding them in your Demat account — settlement happens and the shares are actually yours to keep as long as you want. Intraday means buying and selling the same stock within the same trading day, using leverage — no shares are actually delivered; only the profit/loss is settled.

Indian equity markets follow a T+1 settlement cycle — shares and funds are credited to your account one working day after the trade date. An optional T+0 settlement is also available for a select list of stocks.

NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are India’s two main stock exchanges. Most actively traded stocks are listed on both; NSE typically has higher trading volumes, especially in derivatives, while BSE is India’s oldest exchange. Prices for the same stock are usually near-identical across both due to arbitrage.

These are benchmark indices that track the performance of a basket of top companies — Sensex tracks 30 major BSE-listed companies, and Nifty 50 tracks 50 major NSE-listed companies. They’re used as a broad gauge of overall market direction.

A Market order executes immediately at the best available current price. A Limit order executes only at your specified price or better — it may not fill immediately (or at all) if the market doesn’t reach your price.

An order that automatically triggers a buy/sell once the stock hits a specified price, used to cap potential losses on an open position without needing to watch the market constantly.

Exchanges set daily upper and lower price bands (circuit limits) for individual stocks and for the market as a whole, to curb extreme volatility. If a stock or index hits its circuit limit, trading in it is halted or restricted for a period.

Corporate actions are company-initiated events that affect shareholders — dividends, stock splits, bonus issues, rights issues, buybacks, and mergers, for example. These are usually processed automatically and reflected directly in your Demat account (e.g., a bonus share credit or dividend payout) without any action needed from you, though rights issues and buybacks often require you to actively apply if you want to participate.

Yes — there’s no minimum quantity for equity delivery trades; you can buy a single share, subject to its market price.

Gains on shares held over 1 year are Long-Term Capital Gains (LTCG) — currently taxed at 12.5% above an annual exemption of ₹1.25 lakh. Gains on shares held under 1 year are Short-Term Capital Gains (STCG), taxed at 20%. Dividends are taxed at your income slab rate.