Stock market, equity market and share market are all the same. Share is to be part of a company. If you have contributed to the principal investment of the company, it is called equity. Because these are traded, they are called equity markets. These shares are traded and therefore called equity. In every listed company in stock markets, shares are traded. This share is also called stock. In stock market terms, equity is considered as cash. Not just aspiring investors, but everyone who is interested in learning about stock markets should know about them, so that they can own them when the time comes. There is also another market called derivatives, besides equity. You will learn about them later.

Several agencies offer services on behalf of the stock exchange, of buying and selling stocks. These are called brokerage firms. Anyone, including individuals, firms or online agencies, can obtain license, by registering with Securities and Exchange Board of India (SEBI). Those who have obtained licenses from SEBI, can work as sub brokers. If you want to invest in stocks, you must approach these brokers. You will need to open a trading or demat account. The buying and selling of stocks is called trading. Trading account facilitates this. Shares bought like this, cannot be kept with the company. You should take them back. Then where do you hide them? That is why a demat account has to be opened. All the shares that are bought are saved securely in demat account. When they are sold, they go back to the demat account.

Demat accounts are not maintained by the brokerage firms. There are two companies, Central Depository Services Ltd. (CDSL) and National Security Deposit Services (NSDL) that do this. These are called depository services. Depository participants give services to the investors, on their behalf. If those who have accounts with brokerage firms buy stocks, they are immediately credited to their demat accounts. When they sell, they are debited. Brokerage firms make deals with CDSL and NSDL.

Bank account, cheque book, pan number, Aadhar card and passport size photos are necessary. You cannot open an account, even if any of them are missing. Six months of bank account statement, and a cancelled cheque are compulsory. Even if any of these are missing, you have to procure them first and then open an account.

Once the account is opened, you can directly buy or sell shares. If you call the brokerage representative, orders are placed. Alternately, if you have internet connection, smart phone, computer or laptop, you can do it yourself. There are two primary stock exchanges in India, namely, NSE and BSE. There are some 2,000 companies listed in NSE and some 5,200 companies listed in BSE. Any company among these is available for buying or selling. However, some companies are listed in both the stock exchanges, while others are listed in only one of them. Brokerage firms establish trading platforms (software) that are aligned with the stock exchanges. They facilitate buying and selling of shares by investors, by creating apps and web terminals.

In stocks that are listed in NSE and BSE, and are trading, there is a slight difference in the prices. The difference is just 0.50p or Re. 1. That is why, it is important to note the price and buy from the exchange where the price is less and sell in the exchange where the price is more. Also, you must note that the prices change every second. Though there are thousands of companies in stock exchanges, trading does not take place in all. In some trading is rare. Almost all brokerage firms have membership in NSE and BSE. Charges and fees are the same for trading in either of the stock exchanges.

Companies that want their shares to trade in the stock exchange, should take permission there. They should pay a listing fees. Each stock exchange has different fee. SEBI permission is necessary to be listed. Initial Public Offering (IPO) is another way of getting listed. A listed company has the option to separate a part of its shares and list them as another company. There are some regional stock exchanges in the country, whose functioning is limited to that particular state. Already listed companies in these exchanges, can be listed in BSE and NSE, with SEBI and stock exchange permission.

If a company is selling stock for the first time, it has to be done through primary market channel. IPO is part of primary market. Once these shares get listed, stock exchanges become the secondary market.

If any share is bought and sold on the same day, it is called intraday trading. If a share is bought, but is not sold on the same day, it is called delivery. Brokerage charges and taxes are separate for both intraday and delivery. Brokerage firms charge from 0.01 to 0.05 per cent on buying and selling in intraday. In the case of delivery the same is 0.1 to 0.5 per cent. A flat rate of Rs. 10 to Rs. 20 is charged on some trades. Zerodha brokerage firm does not charge anything for delivery. There is difference in the charges, depending on the firms.

Additionally, there are other charges like Stock Exchange charges, SEBI charges, stamp duty charges and service charges. In the case of delivery, 0.1 per cent is charged as security transaction fee. If you have done Rs. 1 lakh transaction, you will have to pay 0.1 per cent as security transaction fee, which will amount to Rs. 100. This fee is credited to the Centre. Turnover tax is 0.0035. For Rs. 1 lakh, Rs. 3.50 is paid as tax. SEBI turnover fee is 0.0015 per cent, Stamp Duty delivery is 0.01 per cent, and Intraday is 0.002 per cent. Also, stock exchange charges, IGST are minimal. Instead of paying according to percentage, flat rates or Rs. 10 to Rs. 20 to brokerage firms reduces expenditure.

Brokerage firms are not charging anything on trading accounts. But charges are made for keeping transactions in some shares that are kept safe in the form of demat accounts. This is because brokerage firms are charged by CDSL and NSDL for maintaining demat accounts. So they keep charging annually for maintaining demat accounts. These are Rs. 100 to Rs. 750, depending on the firm. Some firms are not collecting annual fees. There are no charges for adding shares to demat account. But when they are sold, they have to be debited from the demat account and delivered to the buyers. The charges for every debit transaction is Rs. 15 to Rs. 25. Some charge more than this.

Brokerage firms have opening charges when demat accounts are opened or trading begins. These charges are from Rs. 100 to Rs. 750. Some are giving these services, without any charges. However, some firms charge a fee for opening an account and not using it or for maintaining minimum balance.

Any number of shares can be bought from one share. A balance amounting to the value of the buying share has to be made available in advance. It is very important to know what shares to select, at what price to buy or at what price to sell. These are basic principles to earn good returns. Ignorance in these matters will lead to losses.

Every company has equity capital. For example, the declared equity of HDFC Bank is Rs. 512.51 crores. The declared shares are 257,38,83,317. The value of each share is Rs. 2. Normally, the share value will be between Re. 1 to Rs. 10. Some have other values. If the whole equity is divided by the share value, the number of shares is obtained. The book value is shown in a share, that is company cash in hand and value of assets, after subtracting loans. Book value is taken as an index or standard. Let us say, the book value of a share is Rs. 50 and it is trading at the same price in the market, it is not near about the highest value. It is obtained for face value. It is cheap if it is available for a price that is less than the book value. If the company has chances of progress, even if the price of the share is two or three times more than the book value, markets do not see this as high price. As the value of assets keep increasing, the book value also increases. When debt increases, the book value decreases.

Likewise, a company's selling and net profits are taken in to account for estimating share value. When the net profit is divided by the number of shares, the Earnings Per Share (EPS) is obtained. Shares will be trading at five to 10 times more than EPS. If a company's share price and EPS are compared, the resultant sum is Price Earning Ration (PE Ratio). If the PE ratio is 10, it is considered a balanced price. PE ratio is different for different stocks, depending on the sector. Supposing only one company is monopolising trade, then its PE ratio is very high.

Companies keep giving dividends, which are a part of its profits, to shareholders. Some companies give 40 to 50 per cent as dividends. These shares are quoted as good profit wise.

It is the profit margin in trading of a company. Supposing a company has a turnover of Rs. 10 cr. When the cost of raw material and employees salaries are removed, the remaining profits are shown as operating margin, that is advance for taxes. If the operating margin is increasing by the year, one can say that the company is strengthening.

Management competency, sincerity, and skills are all key factors in a company's progress. Even managers are a part of the company. If they are experts in that particular field, it is even better. Experts say that a bad company that is in the hands of a good manager is better than a good company in the hands of a bad manager.

If the extra funds in the company are being used for business opportunities, it is a good sign of progress. Even if you are buying companies that are trying to progress, by taking loans, along with extra funds, it is good. Many other aspects like other companies, partnerships with foreign companies, joint ventures etc., are also observed while selecting good stocks.

Investing in stock market these days is a very simple method. But investing means, trusting your hard-earned money in another's hand. Not just the gains, but also the principle capital should return. But by buying some random company shares, you might lose even that amount. One small mistake will upset its future. The fate of Vijay Mallya, the chairman of United Breweries, MacDowell (United Spirits) company, that has the highest shares in liquor market in the country, is well known. He established Kingfisher Airlines, by taking heavy loans and is now in the soup with heavy losses. As such, he defaulted on paying back the loans, sold off his shares in the liquor company and is hiding in a foreign country. Deccan Chronicle, the leading South Indian daily too has been delisted after it was unable to repay loans, while other media houses are running well.

Many factors like national and international issues, working of financial institutions and companies, affect investments in stock markets. There is chance of stock markets losing heavily, if the economic regression like 2008 recur. At least half the investments might be lost, when investment is made in these adverse circumstances. That is why stocks should be selected very carefully. If stocks are selected according to the above mentioned methods, quality stocks will definitely rise again, once the markets start gaining. Statistics say that they will give good returns. If the wrong stocks are invested in, you will stand to lose even the investment. Stock markets categorise investments as short term, medium term and long term. short term means investing from three to six months. Midterm means, investing from one year to three years. Long term means three years and above. Therefore those who invest for small and mid terms will face high risk.

If you invest in stock markets for a year and then sell, you need not pay even a single Re as tax, even if you earn profits. If you sell within a year of investing, you will need to pay 15 per cent of profits earned on capital investments, as tax.