A Beginner's Guide to Investing in the Indian Share Market with Vipin Kats' Book
Indian Share Market for Beginners by Vipin Kats: A Comprehensive Guide
If you are interested in learning how to invest in the Indian share market, you might have come across a book called Indian Share Market for Beginners by Vipin Kats. This book claims to be a complete guide for anyone who wants to start investing in the stock market and make money from it. But is this book worth reading? And how can you get a free PDF copy of it?
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In this article, we will answer these questions and more. We will explain what the Indian share market is, why you should invest in it, who Vipin Kats is and what his book is about, how to start investing in the stock market step by step, and how to download Vipin Kats' book for free. By the end of this article, you will have a clear idea of how to become a successful stock market investor in India.
Introduction
What is the Indian share market?
The Indian share market, also known as the Indian stock market or equity market, is a place where buyers and sellers trade shares of companies that are listed on various stock exchanges. A share, also known as a stock or equity, is a unit of ownership in a company that gives you a right to receive dividends and vote on important decisions. The price of a share depends on the demand and supply of the market, as well as the performance and prospects of the company.
The main stock exchanges in India are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), which together account for more than 90% of the total trading volume. There are also other regional stock exchanges that cater to specific sectors or regions. The Securities and Exchange Board of India (SEBI) is the regulatory body that oversees the functioning and development of the stock market in India.
Why should you invest in the Indian share market?
Investing in the Indian share market can be a rewarding way to grow your wealth over time. Here are some of the benefits of investing in the stock market:
You can earn income from dividends and capital appreciation. Dividends are regular payments made by companies to their shareholders from their profits. Capital appreciation is the increase in the value of your shares over time.
You can diversify your portfolio and reduce your risk. By investing in different types of shares across different sectors and industries, you can spread your risk and benefit from different sources of returns.
You can benefit from the growth potential of the Indian economy. India is one of the fastest-growing economies in the world, with a large and young population, a rising middle class, and a vibrant entrepreneurial culture. Investing in the stock market gives you exposure to the companies that are driving this growth and creating value for their shareholders.
You can take advantage of tax benefits. Under the current tax laws, the long-term capital gains (LTCG) from equity investments are exempt from tax if you hold them for more than one year. The dividends received from equity investments are also tax-free up to a limit of Rs. 10 lakh per year.
Who is Vipin Kats and what is his book about?
Vipin Kats is a renowned stock market expert, trainer, and author. He has more than 15 years of experience in the financial markets and has trained thousands of investors and traders across India. He is also the founder and CEO of Stockadda.com, India's first social network for stock market investors.
Vipin Kats' book, Indian Share Market for Beginners, is a comprehensive guide for anyone who wants to start investing in the stock market and make money from it. The book covers all the basics of stock market investing, such as types of stocks, stock market indices, stock market terminology, how to open a demat and trading account, how to research and analyze stocks, how to develop a trading strategy and plan, and how to manage risk and money. The book also provides practical tips and tricks, case studies, examples, and exercises to help you apply what you learn.
The book is written in a simple and easy-to-understand language, with no jargon or technical terms. It is suitable for beginners as well as intermediate investors who want to improve their knowledge and skills. The book is also updated with the latest information and trends in the stock market.
How to start investing in the Indian share market
Understand the basics of stock market investing
Before you start investing in the stock market, you need to understand some of the basic concepts and terms that are used in the stock market. Here are some of them:
Types of stocks
There are two main types of stocks: common stocks and preferred stocks. Common stocks are the most common type of shares that give you ownership rights and voting rights in a company. Preferred stocks are a special type of shares that give you priority over common shareholders in receiving dividends and assets in case of liquidation. However, preferred shareholders usually do not have voting rights.
There are also different categories of stocks based on their market capitalization, growth potential, dividend yield, risk profile, etc. Some of the common categories are:
Large-cap stocks: These are the stocks of large and well-established companies that have a market capitalization (the total value of all their shares) of more than Rs. 20,000 crore. These stocks are usually stable and reliable, but may not offer high returns.
Mid-cap stocks: These are the stocks of medium-sized companies that have a market capitalization of between Rs. 5,000 crore and Rs. 20,000 crore. These stocks are more volatile than large-cap stocks, but may offer higher growth potential.
Small-cap stocks: These are the stocks of small and emerging companies that have a market capitalization of less than Rs. 5,000 crore. These stocks are very risky and speculative, but may offer very high returns if they succeed.
Blue-chip stocks: These are the stocks of reputed and financially sound companies that have a history of consistent performance and dividend payments. These stocks are considered safe and reliable investments.
Growth stocks: These are the stocks of companies that have high growth potential and earnings potential. These stocks may not pay dividends, but may appreciate significantly in value over time.
Value stocks: These are the stocks of companies that are undervalued by the market compared to their intrinsic value (the true worth of the company based on its assets, earnings, cash flow, etc.). These stocks may pay dividends and may offer high returns if the market recognizes their true value.
Dividend stocks: These are the stocks of companies that pay regular and high dividends to their shareholders. These stocks provide income and stability to investors.
Stock market indices
A stock market index is a measure of the performance of a group of selected stocks that represent a particular segment or sector of the market. An index is calculated by taking the weighted average of the prices or returns of the constituent stocks. An index helps investors to track the trends and movements of the market as a whole or a specific part of it.
Stock market terminology
There are some common terms and phrases that are used in the stock market that you need to know. Here are some of them:
Bull market: A bull market is a period of rising stock prices and optimism in the market. Investors expect the prices to go higher and higher.
Bear market: A bear market is a period of falling stock prices and pessimism in the market. Investors expect the prices to go lower and lower.
Market capitalization: Market capitalization, or market cap, is the total value of all the shares of a company or an index. It is calculated by multiplying the number of shares by the current share price.
Volume: Volume is the number of shares that are traded in a given period of time. It indicates the liquidity and activity of the market.
Bid and ask: Bid is the highest price that a buyer is willing to pay for a share. Ask is the lowest price that a seller is willing to accept for a share. The difference between the bid and ask is called the spread.
Limits and stop-loss: Limits and stop-loss are orders that allow you to buy or sell a share at a specified price or better. A limit order ensures that you do not pay more or receive less than your desired price. A stop-loss order protects you from losing more than your desired amount if the price moves against you.
Short selling: Short selling is a technique of selling a share that you do not own, with the expectation that the price will fall and you can buy it back later at a lower price. You borrow the share from a broker and pay interest for it. You make a profit if the price falls and you lose money if the price rises.
Margin trading: Margin trading is a technique of borrowing money from a broker to buy more shares than you can afford with your own funds. You pay interest for the borrowed money and also provide collateral for it. You can amplify your returns or losses with margin trading.
Open a demat and trading account
To start investing in the stock market, you need to open two types of accounts: a demat account and a trading account. These accounts are linked to each other and allow you to buy and sell shares online.
What is a demat account and why do you need it?
A demat account, short for dematerialized account, is an account where your shares are stored in an electronic form. It eliminates the need for physical certificates and reduces the risk of theft, loss, or damage. It also makes it easier and faster to transfer your shares from one account to another.
You need a demat account to hold your shares in the stock market. Without a demat account, you cannot buy or sell shares online. You also need a demat account to receive dividends, bonus shares, split shares, etc.
What is a trading account and how does it work?
A trading account is an account where you execute your buy and sell orders in the stock market. It acts as an intermediary between your demat account and your bank account. It allows you to place orders, monitor prices, view charts, access research reports, etc.
A trading account works like this: When you want to buy shares, you transfer money from your bank account to your trading account. Then you place an order through your trading platform (website or app) and specify the quantity and price of the shares you want to buy. When your order is matched with a seller, the shares are transferred from their demat account to yours and the money is transferred from your trading account to theirs. When you want to sell shares, you reverse this process.
How to choose a broker and open an account online?
A broker is an entity that facilitates your transactions in the stock market. A broker can be an individual, a company, or a bank that has a license from SEBI to offer brokerage services. A broker charges you a fee or commission for each transaction you make through them.
To choose a broker, you need to consider some factors such as:
The type of broker: There are two types of brokers: full-service brokers and discount brokers. Full-service brokers offer a wide range of services such as research, advice, portfolio management, etc., but charge higher fees. Discount brokers offer only basic services such as order execution, but charge lower fees.
The brokerage charges: The brokerage charges are the fees or commissions that you pay to the broker for each transaction. They vary depending on the type of broker, the type of transaction, the value of the transaction, etc. You should compare the brokerage charges of different brokers and choose the one that suits your budget and trading frequency.
The trading platform: The trading platform is the website or app that you use to access the stock market and place your orders. You should choose a broker that offers a user-friendly, secure, and reliable trading platform that has all the features and tools you need.
The customer service: The customer service is the support and assistance that you receive from the broker in case of any queries or issues. You should choose a broker that has a responsive, courteous, and knowledgeable customer service team that is available through multiple channels such as phone, email, chat, etc.
To open an account online, you need to follow these steps:
Visit the website of the broker of your choice and fill up an online application form with your personal and financial details.
Upload scanned copies of your identity proof (such as PAN card), address proof (such as Aadhaar card), income proof (such as bank statement), and a photograph.
Complete the e-KYC (electronic know your customer) process by verifying your details through an OTP (one-time password) or a video call.
Sign the account opening form electronically using your Aadhaar-based e-signature or a digital signature.
Pay the account opening fee online using your debit card, credit card, net banking, UPI, etc.
Receive your account details such as user ID, password, client ID, etc. via email or SMS.
Learn how to research and analyze stocks
Once you have opened your demat and trading account, you need to learn how to research and analyze stocks before investing in them. Researching and analyzing stocks helps you to identify the best stocks to buy or sell based on their quality, value, growth potential, risk profile, etc. There are two main methods of stock analysis: fundamental analysis and technical analysis.
Fundamental analysis
Fundamental analysis is a method of evaluating a stock based on its intrinsic value. It involves studying the financial statements, business model, competitive advantage, industry outlook, growth prospects, management quality, etc. of a company. It also involves calculating various ratios and indicators such as earnings per share (EPS), price-to-earnings ratio (PE), return on equity (ROE), dividend yield, etc. to measure the profitability, efficiency, valuation, and performance of a company.
The goal of fundamental analysis is to find undervalued or overvalued stocks that have a strong or weak future potential. Undervalued stocks are those that are trading below their intrinsic value and offer a margin of safety. Overvalued stocks are those that are trading above their intrinsic value and pose a risk of correction. Fundamental analysis helps you to invest for the long term and benefit from the compounding effect of returns.
Technical analysis
Technical analysis is a method of evaluating a stock based on its price movements and patterns. It involves studying the historical and current data of price, volume, momentum, trend, support, resistance, etc. of a stock using various charts, tools, indicators, and techniques. It also involves identifying various patterns and signals such as candlesticks, trend lines, moving averages, oscillators, etc. to predict the future direction and behavior of price.
The goal of technical analysis is to find entry and exit points for trading based on price action and market sentiment. Entry points are those where you buy or sell a stock based on a bullish or bearish signal. Exit points are those where you close your position based on a profit target or a stop-loss. Technical analysis helps you to trade for the short term and benefit from the volatility of price.
Sources of information and tools for stock research
, you need to use various sources of information and tools that are available online. Some of the common sources of information and tools are:
Company websites: Company websites are the primary source of information about a company's history, vision, mission, products, services, customers, competitors, etc. They also provide access to the annual reports, quarterly results, investor presentations, corporate announcements, etc. of a company.
Stock exchanges: Stock exchanges are the platforms where the shares of companies are listed and traded. They provide information about the price, volume, market capitalization, indices, etc. of the stocks. They also provide access to the corporate actions, financial results, shareholding patterns, etc. of the companies.
Regulatory bodies: Regulatory bodies are the authorities that regulate and monitor the functioning and development of the stock market and its participants. They provide information about the rules, regulations, guidelines, circulars, notifications, etc. that affect the stock market. They also provide access to the filings, disclosures, complaints, etc. of the companies and brokers.
News websites: News websites are the sources of information about the current events and developments that affect the stock market and the economy. They provide news articles, analysis, opinions, interviews, etc. from various experts and sources.
Research websites: Research websites are the sources of information that provide in-depth research and analysis on various stocks and sectors. They provide reports, ratings, recommendations, forecasts, etc. from various analysts and agencies.
Trading platforms: Trading platforms are the websites or apps that you use to access the stock market and place your orders. They provide various features and tools such as charts, indicators, scanners, screeners, watchlists, alerts, etc. to help you research and analyze stocks.
Develop a trading strategy and plan
After you have learned how to research and analyze stocks, you need to develop a trading strategy and plan that suits your goals, risk appetite, and style. A trading strategy and plan is a set of rules and guidelines that define how you will trade in the stock market. It helps you to make consistent and rational decisions and avoid emotional and impulsive mistakes.
Trading styles and time frames
A trading style is a way of trading that reflects your personality, preferences, and objectives. A trading style determines how often you trade, how long you hold your positions, how much risk you take, how much profit you aim for, etc. There are four main types of trading styles:
Intraday trading: Intraday trading is a style of trading where you buy and sell stocks within the same day. You do not carry any positions overnight and close all your trades before the market closes. You aim for small but frequent profits from short-term price movements.
Swing trading: Swing trading is a style of trading where you buy and sell stocks over a period of days or weeks. You hold your positions overnight or longer and close them when you reach your target or stop-loss. You aim for medium-sized profits from medium-term price trends.
Positional trading: Positional trading is a style of trading where you buy and sell stocks over a period of months or years. You hold your positions for long periods of time and close them when you achieve your long-term goals or exit criteria. You aim for large profits from long-term price patterns.
Scalping: Scalping is a style of trading where you buy and sell stocks within minutes or seconds. You do not hold any positions for long and close them as soon as you make a small profit or loss. You aim for very small but numerous profits from very short-term price fluctuations.