Tag: bse

Stock market highlights. Will it crash?

Benchmark equity indices BSE Sensex and NSE Nifty extended their losses for the second straight session on 27th January amid heavy selling in index heavyweights including Reliance Industries, Adani Enterprises and Adani Ports among others. The 30-share index Sensex traded over 1,800 points down at 59,108  against the 60,978.75 mark on January 24, 2023. Likewise, the 50-share NSE Nifty index retreated more than 550 points to 17,566 from 18,118 during the same period.

Selloff in Adani Group companies’ stocks, that was triggered by the Hindenburg Research report, which disclosed that the company was short on Adani Group companies could be factor behind the market crash. Sentiments came under pressure after the United Nations on 25th January cut down India’s growth forecast by 20 basis points to 5.8 per cent for the ongoing calendar year due to higher interest rates and risks of recession in the developed world weighing on investment and exports.

If you wish to learn more about stock market, then explore wiki-360.com

What is options trading?

Photo by Ivan Babydov on Pexels.com

An investor’s portfolio consists of various financial instruments like stocks, exchange traded funds (ETFs), mutual funds and bonds. However, the Options are altogether different. Options are used in different ways depending upon investors’ goals and how they plan to use them. Investors often use options to reduce the risk associated with the stock they have in their portfolio. Similarly, others may use options to earn additional income. Most importantly, options provide an opportunity to traders or investors to benefit from the price movement without paying the full price of a security or taking delivery.

In India, the National Stock Exchange (NSE) launched index options on 4 June 2001, and stock options were launched on 4 July 2001. In the year 2020, NSE also surpassed America’s Chicago Mercantile Exchange to become the world’s largest derivatives market exchange by volume.

What are options?

Options are defined as derivatives instruments that enable the buyer (holder or owner) of the instrument to buy or sell the underlying asset. The right to buy or sell is without any obligation. The seller of the option is, however, obligated to buy or sell, should the buyer exercise his or her right. 

Simply put, option trading includes: 

  • A right to buy or sell, but not an obligation
  • Buy or sell at predetermined price
  • Buy or sell on or before predetermined date

Types of options

There are two types of options: Call and Put. A call option gives the buyer the right to “buy” the underlying security but not the obligation to do so at a predetermined price and date. A put option gives the buyer the right to “sell” the underlying security but not the obligation to do so at a predetermined price and date.

How does options trading work?

Before we come to the options trading guide, a beginner must understand the two essential derivativesconcepts — long and short. When a trader goes long on an index or a stock, it means he or she believes that the price of the underlying will increase. On the contrary, if the trader goes short on any index or a stock, it means he or she believes that the price of the underlying will fall.

INVESTMENT IN THE STOCK MARKET FOR BEGINNERS

The stock market refers to public markets that exist for issuing, buying, and selling stocks that trade on a stock exchange or over-the-counter.  In simple terms, if A wants to sell shares of Reliance Industries, the stock market will help him to meet the seller who is willing to buy Reliance Industries.  A person can trade in the stock market only through a registered intermediary known as a stock broker. The buying and selling of shares take place through electronic medium.

There are two main stock exchanges in India where majority of the trades take place – Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Apart from these two exchanges, there are some other regional stock exchanges like Bangalore Stock Exchange, Madras Stock Exchange etc but these exchanges do not play a meaningful role anymore.

NSE is the leading stock exchange in India where one can buy or sell shares of publicly listed companies. It was established in the year 1992 and is located in Mumbai. NSE has a flagship index named as NIFTY50. The index comprises of the top 50 companies based on its trading volume and market capitalisation.  BSE is Asia’s first as well as the oldest stock exchange in India. It was established in 1875 and is located in Mumbai. BSE Sensex is the flagship index of BSE.

Securities Exchange Board of India (SEBI) is the regulatory body of the Indian Stock Markets. The main objective of SEBI is to safeguard the interest of retail investors, promote the development of stock exchanges, and regulate the activities of financial intermediaries and investors in the market. A stock broker also known as a dealer is a professional individual who buys/sells shares on behalf of its clients. In the stock market, stock broker is registered as a trading member with the stock exchange and holds a stock broking license. They operate under the guidelines prescribed by SEBI.

 ADVANTAGES OF INVESTING IN STOCK MARKET:

  •  the stock market can make great money in a short time of period.
  •  Unlike other investments, such as real estate and CDs, investors can easily access money in the stock market.
  • Investing in the stock market can help in our entire financial portfolio.

DISADVANTAGES IN INVESTING IN STOCK MARKET:

  • Investors can expect daily volatility in the stock market, but large failures in the system are less common.
  • In the stock market, there are winners and losers. Winners can make much money, but those who lose can see all of their investment disappear.
  • Every time an investor decides to buy or sell shares, he or she will have to shell out a certain proportion as brokerage fees to the broker.