In Part 1 of this series, we learned that stocks represent ownership in a company and that the value of a stock, also known as the stock price, is determined by supply and demand in the market. Investing in stocks can be a way to potentially grow your wealth over time, however it also carries some risk. We also learned that opening a Demat account is one of the basic requirements to get started in the stock market.
The Part 2 is about the opportunity galore - how big is the playground. We will have a look at the actual companies available for investment whose shares you can buy or sell through your Demat account. We will also view the sector or industry they belong to plus some basic terminologies and other interesting data points about them.
Hopefully you already have a Demat account now. If not, better to apply for one now. Here are the key takeaways from this article:
Let's begin by looking at key stats on number of listed stocks, sectors and the industries they belong to. But first a quick primer on what stocks are and why the sectors or industries they belong to should matter for us.
Stocks, also known as equities or securities, represent ownership in a company. When you buy a stock, you own a small piece of the company and become a shareholder, entitled to a share of the company's profits and assets.
Stocks belong to different sectors such as technology, finance, healthcare, and energy. Each sector represents a group of companies that operate in a specific area of the economy. Industries are the specific areas of business that companies operate in, for example, within the technology sector, companies may operate in the software industry or the semiconductor industry. By investing in different sectors and industries, you can diversify your portfolio and manage risk.
It's important to note that the performance of a particular stock is often closely tied to the performance of the sector and industry it belongs to. For example, if the technology sector is performing well, technology stocks will likely perform well as well. It's also important to research and understand the specific companies and industries you're investing in, as well as the economic and market conditions that may affect their performance. Having understood the implications, now is the time to look at the stats. Here are the total companies along with sectoral and industrial count listed on BSE and NSE, the two primary stock exchanges of India:
Let's delve deeper into them one by one. Here are the details of all the stocks that trade actively on BSE and NSE. These are the stocks which you will ultimately buy or sell. All stocks, except some of them (not listed on both BSE and NSE) can be bought and sold on both the exchanges through your Demat account. Thankfully, this is the only piece of info you need on stock exchanges as a stock market beginner.
Allow me to explain, why this information is important. Stocks listed on the exchanges are grouped into sectors and industries based on their line of business. This grouping makes it easier for investors to identify trends and opportunities within specific areas of the market. By understanding the sector and industry a company operates in, you can gain a better insight on the company's potential growth, competition and the overall health of the industry. It also helps you to diversify your portfolio by investing in different sectors and industries, reducing the risk of a single stock or sector impacting your portfolio. With this knowledge, you can make more informed and strategic investment decisions, maximizing your potential for returns.
So hopefully now you know how big the playground is. I will leave you here and will encourage you to familiarize yourself with above data. Investing in the stock market can be daunting, especially for beginners. However, by using data-driven approach, you can surely increase your chances of success.