Share market investments, in comparison to other types of assets, have given one of the best returns during inflation. This enables investors to maintain their current lifestyles without cutting costs even when the prices of goods are steadily increasing.

Equity, while being a risky investment, offers higher returns than a savings account or a fixed deposit because the profit that may be earned is virtually unlimited.

It is possible to minimize risks and maximize profits through the use of equity derivatives, specifically by trading in the Options market.

Using sound share market knowledge to invest in equity is the key to building a large corpus for a future financial need, because equity gives high returns in the long run.

Investing in the equity of reputable companies has the added benefit of dividends. Dividends are payments that shareholders receive from the company’s earnings. While giving them out is not compulsory, established businesses do pay dividends to increase their shareholder base.

Primary Market: Every company that proposes to go public must come out with an initial public offering (IPO). During the IPO, the company offers a certain portion of its equity to the public. After the closing of the IPO, the shares are listed on one of the stock exchanges, which are an important component of the stock market. The primary exchanges in India are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Secondary Market: After the listing of the IPO shares, these are traded on the secondary market. This platform offers the initial investors an option to exit their investments. In addition, investors who failed to procure shares during the IPO can purchase these from the secondary market. Trading in the Indian stock market is commonly done through brokers. The brokers act as intermediaries between the stock exchanges and the investors.

Trading: The stock exchanges provide an automated screen-based trading platform that is fully automated and computerized. The platform is an open trade system where buyers and sellers can see all the trades and place their orders to suit their personal requirements.

Clearing and Settlement: The exchanges clear and settle all the trades that are executed during the trading day. These exchanges operate well-defined settlement cycles without any deviations and/or deferments from the procedures. The trades during the trading session are aggregated and positions are netted off with the objective of determining the liabilities of the trading members. These procedures also ensure movements of the funds and shares are completed in the right manner. The settlement cycle adopted by the exchanges operating in the Indian stock market is T+2. This means that all securities and funds movements are completed two days after Day 1 (which is the day on which the trades are executed). Under the T+2 cycle, buyers receive credits of the shares in their demat account, and sellers receive the sale proceeds in the bank accounts that are linked to the trading account within two days.

Risk Management: A widely known stock market basic is that investing in the equity market has several risks. The stock exchanges have developed a comprehensive system for risk management. This system ensures the investors’ interests and prevents fraudulent activities by the companies. The stock exchanges constantly upgrade the risk management system to pre-empt market failures and stay abreast of the changing mechanisms. Some components of the risk management system include margin requirements, pay-ins, and voluntary close-out facilities, and liquid assets.