Stock trading simply means buying and selling shares of companies in order to make a profit.
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DIMAPUR — Stock trading simply means buying and selling shares of companies in order to make a profit. For students and young people who are new to this topic, understanding stock trading is a valuable step towards financial literacy. This article will explain the basics of stocks and trading, how the stock market works in India, and what the current trends are.
What are stocks?
A stock (also called a share or equity) represents partial ownership in a company. If you buy a share of a company, you become a tiny part-owner of that business, with a claim on its assets and earnings. Companies issue stocks to raise money, and those stocks are then traded on the stock market. For example, if you purchase stock in Tata or Reliance, you own a small part of those huge companies. The value of a stock rises or falls based on how the company performs and how investors feel about its future prospects. If the company does well or is expected to grow, more people may want its stock, driving the price up. If the company has bad results or loses investor confidence, the stock price can fall.
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Owning stock can also give you certain rights, like voting in shareholder meetings and receiving a share of profits as dividends if the company decides to distribute them. However, not all stocks pay dividends – many investors buy stocks mainly hoping the price will rise so they can sell later at a higher price.
What is stock trading?
Stock trading is the act of buying and selling those company shares through the stock market. The basic idea is straightforward: buy stocks at a lower price and try to sell them at a higher price to make a profit. For example, if you buy 10 shares of a company at INR 100 each (total investment INR 1,000) and later sell them at INR 120 each, you earn INR 20 per share in profit (INR 200 total). Of course, prices don’t just go up – they can also go down.
People often use the term “trading” to refer to a more active strategy of frequently buying and selling to profit from short-term price movements. In contrast, investing usually implies a longer-term approach, buying shares to hold for years, believing the company will grow over time.
Stock trading in India happens primarily on two main exchanges: the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). These are marketplaces where buyers and sellers meet (electronically) to exchange shares. When you place an order to buy a stock, the exchange matches you with someone who wants to sell, and vice versa. Price is determined by supply and demand – if more people are buying a stock, the price tends to rise; if more are selling, the price falls. Stock prices can change every second during the trading hours (which in India are typically 9:15 am to 3:30 pm, Monday to Friday).
How does the stock market work?
Just as a local market in Dimapur might have buyers and sellers of vegetables negotiating a price, the stock market has buyers and sellers of stocks doing the same. The difference is that stock trading is all done via computer networks through brokerage platforms – you won’t see the buyers and sellers in person.
In India, companies get listed on stock exchanges through a process called an Initial Public Offering (IPO) – this is when a company sells shares to the public for the first time. Once listed, the shares can be freely traded among investors on the exchange. The BSE Sensex and NSE Nifty 50 are two famous indices that track overall market performance. The Sensex is an index of 30 large, established companies on the BSE, and the Nifty 50 is an index of 50 top companies on the NSE. These indices act as a barometer of the market’s health – if the Sensex and Nifty are rising, it generally means many stocks are doing well and investor confidence is high. In recent years, the Sensex and Nifty have repeatedly reached new highs, reflecting strong growth in India’s stock market. You might have heard people mention how many “points” the Sensex jumped on a given day – this refers to the index movement, which has even become a common topic of conversation over breakfast in many parts of India.
Behind the scenes, India’s stock market is regulated by SEBI (Securities and Exchange Board of India), which is a government regulatory body. SEBI’s job is to protect investors and ensure the markets run smoothly and without fraud. For instance, SEBI has regulations against insider trading (using secret company information to trade) and market manipulation. Knowing that there is a regulator provides some safety for investors, as companies and brokers must follow rules that safeguard investors’ interests.
Becoming a stock trader in India
Getting started with stock trading in India has become quite easy, even if you live in a smaller city or town. You do not need to be in Mumbai or have a lot of money to begin.
You cannot directly go to a stock exchange and buy shares; you need to go through a middleman called a stockbroker. Today, many brokers operate online platforms or smartphone apps. To trade, you will open two linked accounts: a Demat account and a Trading account. A Demat account (short for “dematerialisation account”) is like a digital vault that holds your shares in electronic form (gone are the days of paper share certificates). A Trading account is what you use to place buy or sell orders on the stock market. Often these two are opened together as a package when you sign up with a broker.
Brokers will require you to complete Know Your Customer (KYC) formalities, which include providing identification and address proof. Typically, you’ll need documents like your PAN card (Permanent Account Number, for tax identification), Aadhaar (for identity and address), proof of a bank account, and some personal details. The good news is that this process is usually online now – you can fill out forms, submit documents, and even complete verification through video calls in some cases.
Before you start trading with real money, it’s wise to educate yourself. Familiarise yourself with how to use your broker’s trading app or website, how to read stock prices, and how to place orders. Many brokers offer demo accounts or simulators where you can practice trading with fake money, which is a great way to get comfortable without risking anything.
Once your accounts are set up and you have some basic knowledge, begin with a small amount of money. It could be as little as a few hundred or a few thousand rupees – whatever you can afford to risk.
When placing trades, you will encounter terms like 'market order' and 'limit order'. A market order executes immediately at the current market price, while a limit order lets you set a specific price at which you want your trade to execute. For instance, if a stock is INR 100 now, you could place a limit order to buy at INR 95 – this order will only execute if the price falls to INR 95.
After buying any stock, keep an eye on the company news and stock performance. You don’t need to watch prices every second (especially if you are investing for the long term), but do stay informed.
Why do people trade stocks?
You might wonder, why do people invest in stocks at all, especially given the risks? There are several motivations:
• Wealth creation: Historically, stocks have offered higher returns over the long term than many other assets like fixed deposits or gold. By investing in stocks, people aim to grow their money faster than inflation.
• Ownership and dividends: When you own stocks, you effectively own part of a business. This can be rewarding if the business prospers. Some companies also pay out part of their profits as dividends to shareholders, providing a source of income.
• Diversification of investments: People trade stocks as part of a diversified investment strategy. Instead of keeping all their savings in a bank account earning minimal interest, they allocate some portion to stocks for higher growth potential, while perhaps keeping some in safer assets.
It’s worth noting that in India, a cultural shift is happening: younger generations are more open to investing in stocks compared to their parents or grandparents. Traditionally, many Indian households preferred safer investments like bank deposits, gold, or real estate. But with rising awareness and education, more people now realise that allocating some money to stocks and equity mutual funds can potentially yield better returns in the long run.
Understanding the risks
While stock trading can be rewarding, it is not a guaranteed money-maker. Prices of stocks move for many reasons – company performance, economic events, and even global news can send prices up or down. As a result, trading stocks involves risk, and it’s possible to lose money if you’re not careful. Here are some key risks and challenges to be aware of:
• Market volatility: Stock prices can swing widely in short periods. A company might announce a bad quarter of earnings and see its stock price drop 10% in a day. Broader economic factors – like a pandemic or a recession – can cause overall market declines.
• No guaranteed returns: Unlike a fixed deposit that guarantees a fixed interest, stocks have no guaranteed returns. You could make a 20% profit, or you could lose 20% or more. Some companies even go bankrupt, in which case their stock can become nearly worthless.
• Emotional decision-making: One big challenge for any trader or investor is managing emotions. Fear and greed are often cited as the two emotions that drive markets. When prices fall, fear can push you to sell in panic, and when prices rise, greed can entice you to buy more or hold on too long, expecting even higher prices. Making decisions based on emotions rather than rational analysis can lead to mistakes.
• Lack of knowledge: A common deterrent is that the stock market can seem complicated. Indeed, a nationwide survey in India commissioned by SEBI found that a large majority of households prefer not to invest in stocks due to lack of knowledge and fear of losses. In the Northeast region, in particular, financial literacy has been a barrier. Many people simply don’t invest because they find it too complex or risky.
• Scams and speculation: While the stock exchanges are regulated, one should be wary of dubious tips and schemes. You might come across people (even WhatsApp/Facebook groups) claiming to have “surefire” stock tips or get-rich-quick schemes. Be very cautious. If something sounds too good to be true, it probably is.
Stock trading in India today
To put things in perspective, let’s look at the current landscape of stock trading and investing in India, with some statistics:
• Rapid growth of investors: In the past few years, India has seen an explosion in the number of people participating in the stock market. By August 2023, India had around 11.4 crore (114 million) demat accounts. By late 2024, that number had jumped to over 17 crore (170 million) demat accounts. And as of 2025, the total count of demat accounts in India has crossed 20 crore (200 million).
• Youth participation: A significant portion of the new investors are young people. According to data reported by The Economic Times, roughly 75% of new demat accounts in recent times are being opened by individuals under the age of 30. This means the stock market’s newest entrants are mostly students or young professionals.
• Technology and accessibility: One reason behind the growth is the ease of access. With the rise of discount broker apps (like Zerodha, Upstox, Angel One, etc.), opening an account and trading has not only become cheaper (low or zero commissions on trades) but also extremely easy. A prospective investor from a small town can complete the entire sign-up process on a smartphone.
• Geographical spread: An interesting development is that some of the highest growth rates in new investor registrations have been seen in northeastern states. In 2025, a National Stock Exchange report highlighted that states like Mizoram, Arunachal Pradesh, Nagaland, Meghalaya, and Tripura showed the fastest percentage growth in new investors (albeit from a low base). For instance, Mizoram’s investor count jumped by over 30% in that year. Nagaland was among the states with a notable surge as well. This suggests that even in regions where very few people invested before, interest is picking up.
For aspiring stock traders
For students and beginners ready to dip their toes in the stock market, here are some practical tips to keep in mind:
• Educate yourself continually: The learning doesn’t stop after reading one article or opening an account. Continuously seek knowledge – read books, follow reputable financial news and use free courses (for example, NSE’s investor education sections or broker education portals).
• Start small and stay patient: In the beginning, trade or invest with a small amount of money. Consider any early losses as tuition fees for your stock market education. Don’t rush to make big profits overnight.
• Don’t put all your eggs in one basket: This old saying applies perfectly to investing. Diversify your investments across different stocks or even different asset classes. For example, instead of spending all your money on one company’s stock, you could buy a few different companies, preferably in different industries.
• Keep emotions in check: As mentioned earlier, emotions can be an investor’s worst enemy. Try to make decisions based on logic and research, not feelings. If you find yourself panicking or getting overly excited, take a step back.
• Beware of tips and rumours: You might hear tips from friends or see posts on social media claiming a certain stock will double in no time. Be very cautious with such tips. Always verify news from reliable sources or see if the information makes sense.
Final thoughts
Stock trading is a window into the world of finance and business. For young people in Nagaland who may not have had much exposure to the stock market before, it’s a skill worth learning in today’s interconnected world. You don’t need to be an expert right away. Begin with the basics – understand what stocks are and how trading works – then gradually explore and learn by doing on a small scale.