We make a significant investment in shares in order to produce returns that outperform inflation. How do we actually invest in stocks? Clearly, it is crucial to comprehend the environment in which stocks work before we delve further into this subject. Similar to how we visit the grocery store to buy our daily necessities, we visit the stock market to buy and sell equity assets. Anyone looking to buy or sell shares goes to the stock market. To transact is to purchase and sell, to put it simply. Practically speaking, trading on the stock markets is the only way to buy or sell shares of a publicly traded firm like Tesla. The stock market’s principal goal is to make your transactions easier for you. Thus, the stock market facilitates the meeting of buyers and sellers of shares. The stock market does not exist in a physical location like a hyper market, though. It is accessible electronically. You use your computer to access the market electronically and proceed to complete your trades (buying and selling of shares). It’s also crucial to remember that you can access the stock market through a licensed middleman known as a stockbroker. Later, we’ll go into greater detail regarding the stockbrokers. The stock markets in India are composed of the two main stock exchanges. They are the National Stock Exchange and the Bombay Stock Exchange, respectively (NSE). In addition to these two markets, there are a number of minor regional stock exchanges, such as the Bangalore Stock Exchange and the Madras Stock Exchange, that are essentially being phased out and no longer serve any significant function. YOU MAY LIKE: – WHY IS RISK MANAGEMENT IMPORTANT IN TRADING? The need for regulation of stock market participants The stock market draws companies and people from all walks of life. A market participant is a person who engages in stock market trading. The market participant can be divided into a number of groups. Following are a few of the different types of market participants: Domestic Retail Participants – These are people like you and me transacting in markets NRI’s and OCI – These are people of Indian origin but based outside India Domestic Institutions – These are large corporate entities based in India. Classic example would be the LIC of India. Domestic Asset Management Companies (AMC) – Typical participants in this category would be the mutual fund companies such as SBI Mutual Fund, DSP Black Rock, Fidelity Investments, HDFC AMC etc. Foreign Institutional Investors – Non-Indian corporate entities. These could be foreign asset management companies, hedge funds and other investors Now, everyone’s goal is to conduct profitable transactions, regardless of the kind of market participant. To put it more simply: to make money.

1. WHAT IS THE STOCK MARKET? HOW
DOES STOCK MARKET WORKS?
What is the purpose of the stock market?
We make a significant investment in shares in order to produce returns that outperform inflation.
How do we actually invest in stocks? Clearly, it is crucial to comprehend the environment in
which stocks work before we delve further into this subject.
Similar to how we visit the grocery store to buy our daily necessities, we visit the stock market to
buy and sell equity assets.

2. Anyone looking to buy or sell shares goes to the stock market. To transact is to purchase and sell,
to put it simply. Practically speaking, trading on the stock markets is the only way to buy or sell
shares of a publicly traded firm like Tesla. The stock market’s principal goal is to make your
transactions easier for you. Thus, the stock market facilitates the meeting of buyers and sellers of
shares. The stock market does not exist in a physical location like a hypermarket, though. It is
accessible electronically. You use your computer to access the market electronically and proceed
to complete your trades (buying and selling of shares).
It’s also crucial to remember that you can access the stock market through a licensed middleman
known as a stockbroker. Later, we’ll go into greater detail regarding the stockbrokers. The stock
markets in India are composed of the two main stock exchanges. They are the National Stock
Exchange and the Bombay Stock Exchange, respectively (NSE). In addition to these two
markets, there are a number of minor regional stock exchanges, such as the Bangalore Stock
Exchange and the Madras Stock Exchange, that are essentially being phased out and no longer
serve any significant function.

3. YOU MAY LIKE: – WHY IS RISK MANAGEMENT IMPORTANT IN TRADING?
The need for regulation of stock market participants
The stock market draws companies and people from all walks of life. A market participant is a
person who engages in stock market trading. The market participant can be divided into a
number of groups. Following are a few of the different types of market participants:
Domestic Retail Participants – These are people like you and me transacting in markets
NRI and OCI – These are people of Indian origin but based outside India
Domestic Institutions – These are large corporate entities based in India. Classic example
would be the LIC of India.
Domestic Asset Management Companies (AMC) – Typical participants in this
category would be the mutual fund companies such as SBI Mutual Fund, DSP Black Rock,
Fidelity Investments, HDFC AMC etc.

4. Foreign Institutional Investors – Non-Indian corporate entities. These could be foreign
asset management companies, hedge funds and other investors
Now, everyone’s goal is to conduct profitable transactions, regardless of the kind of market
participant. To put it more simply: to make money.
Greed and fear are common human emotions when money is involved. These feelings are easily
exploited, and unethical behavior can result. Due to the activities of people like Harshad Mehta
and others, India has its fair share of such perverse behaviors. Given this, the stock markets
require a person who can establish the game’s rules (often referred to as regulation and
compliance) and make sure that players abide by them, creating a level playing field for all
participants.
The Regulator
The Securities and Exchange Board of India, or SEBI, is the organization in charge of regulating
the stock market in India. The mission of SEBI is to safeguard the interests of small investors,
advance the growth of stock exchanges, and control the activities of market participants and
financial intermediaries. SEBI generally works to ensure:
The BSE and NSE stock exchanges operate ethically.

5. Stockbrokers and sub brokers operate ethically
Participants abstain from unjust behavior.
Businesses do not unfairly gain from the markets.
The interests of small retail investors are safeguarded.
Powerful investors shouldn’t manipulate the markets despite having a lot of wealth.
Markets’ overall development.
Given the aforementioned goals, it is essential that SEBI regulate the following entities. All the
organizations listed below have a direct stake in the stock markets. A mistake made by any of the
following organizations can sour India’s otherwise peaceful market.
Each of these entities is subject to a set of rules and regulations that SEBI has mandated. The
organization must conduct its business within the SEBI-mandated legal parameters. On their

6. website, SEBI makes the exact regulations that apply to a particular organization available. They
are available on their website under the “Legal Framework” section.
Credit Rating Agency (CRA)
They rate the creditworthiness of corporate and governments. If a corporate or Govt entity wants
to avail loan, CRA checks if the entity is worthy of
giving a loan. Example: – CRISIL, ICRA, CARE
Debenture Trustees

7. Act as a trustee to corporate debenture. When companies want to raise a loan, they can issue
debentures against which they promise to pay an interest. These debentures can be subscribed by
the public. A Debenture Trustee ensures that the debenture obligation is honored. Example: –
Almost all banks in India.
Depositories
Safekeeping, reporting and settlement of client’s securities. Acts like a vault for the shares that
you buy. The depositories hold your shares and
facilitate exchange of your securities. When you buy shares, these shares sit in your Depositary
account usually referred to as the DEMAT account. This is maintained electronically by only two
companies in India. Example: – CDSL, NSDL
Depository Participant (DP)
Act as an agent to the two depositories. You cannot directly interact with NSDL or CDSL. You
need to liaison with a DP to open and maintain your DEMAT account. Example: – Most of the
banks and few stockbrokers.

8. Foreign Institutional Investors
Make investments in India. These are foreign entities with an interest to invest in India. They
usually transact in large amounts of money, and hence their activity in the markets have an
impact in terms of market sentiment. Example: – Foreign corporate, funds and individuals.
Merchant Bankers
Help companies raise money in the primary markets. If a company plans to raise money by
floating an IPO, then merchant bankers are the ones who help companies with the IPO process.
Example: – Karvy, Axis Bank, Edelweiss Capital.
Asset Management Companies(AMC)
Offer Mutual Fund Schemes. An AMC collects money from the public, puts that money in a
single account and then invests that money in markets with an objective of making the
investments grow and thereby generate wealth to its investors. Example: – HDFC AMC,
Reliance Capital, SBI Capital.
Portfolio Managers/Portfolio Management System (PMS)

9. Offer PMS schemes. They work similar to a mutual fund except in a PMS you have to invest a
minimum of Rs. 25,00,000 however there is no such cap in a mutual fund. Example: – Religare
Wealth Management, Parag Parikh PMS.
Stock Brokers and Sub Brokers
Act as an intermediary between an investor and the stock exchange Whenever you want to buy
or sell shares from the stock exchange you have to do so through registered stockbrokers. A sub
broker is like an agent to a stockbroker. Example: – Zerodha, Sharekhan, ICICI Direct.
YOU MAY LIKE: – HOW MUCH MONEY DO I NEED TO START TRADING?

10. ● WHY INVESTING IS IMPORTANT?
● WHAT IS A MUTUAL FUND AND HOW DOES IT WORKS?