The stock market set a new record on January 21. The BSE Sensex crossed the historic figure of 50,000 on Thursday. In just a few minutes, investors from the stock market earned Rs 1.40 lakh crore. The total market cap of BSE-listed companies on Thursday stood at Rs 1,99,06,124.57 crore, up by Rs 1,35,552 crore on Wednesday. In fact, the month of January has been very good for the investments. BSE’s total market cap has increased by Rs 11 lakh crore in January itself.
So here is how you can start to invest in the market.
First, decide a strategy
Before any investment, you need to know why you want to invest. Knowing how to achieve your financial goals is one of the most important things you can do for yourself. And, you don’t have to be an expert to do that. All you need to know are some basics, make a plan, and be disciplined enough to follow it.
Why you want to invest
Ask yourself what you want and list your most important financial goals on what goals you want to invest in this market. You have to decide whether you are investing for marriage, your child’s college fund, retirement, or anything else. The most important thing for you to know is when to enter and when to get out.
Open Demat and Trading Accounts in 3 easy steps
Step 1: Choose a stockbroker where Demat and trading accounts can be opened
Step 2: Complete KYC rules.
Step 3: You are registered to monetize the market as soon as the KYC verification process is complete.
Set a budget for investment
Fixing a budget is an important part of the investment. You need to find out how much money you need to start investing in stocks. Also, analyze whether investing an annual lump sum will be favorable for you or whether it will be more attractive on a monthly basis. This budget ultimately targets your investment goals and how they can be achieved.
Investing in Nifty:
When you find out, you’re ready for indices(index) like Nifty. There are several ways to do this:
Spot Trading and Derivatives Trading
The simplest way to invest in nifty is to buy a company’s stocks. When you buy a company’s stock, you can take advantage of capital gains when they price them. Derivatives are one-way financial contracts, these can be stocks, commodities, currencies, etc. With this method, parties agree to settle the contract at a future date and make a profit by betting on the future value of the underlying asset. For trading in nifty indexes, you have two derivative instruments:
The Futures Contract is an agreement between the buyer and the seller for trading the nifty lot at a future date. During the contract period, if the price increases, you can sell the stock and earn the yield. If the price goes down, you can wait until the settlement date to reduce the price.
An option contract is one that is determined to trade the nifty lot between the buyer and the seller at a future date at a specific price. The buyer of the option contract acquires legal rights by paying the premium. However, if the price is giving profit in the future then they are not responsible to buy/sell nifty in the future.
It is a type of mutual fund with a portfolio (stocks, bonds, indices, currencies, etc.) designed to match or track components of a market index (stock and price fluctuations), which provides wide market performance. These funds invest in various indices including nifty.
The massive growth in nifty indices and stock markets in recent years has attracted retail investors, institutional investors, and foreign investors who put their money in the index directly or through index funds. While investing, you can make good profits without even having to take into account the above points.