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Introduction to trading - Zerodha Versity
This "Module 1: Introduction to Stock Markets" by Zerodha, offers a detailed and accessible guide to the Indian stock market, tailored for beginners. The module systematically breaks down complex financial concepts into understandable sections, aiming to equip new market participants with essential knowledge.
The book begins by highlighting
The Need to Invest, illustrating the impact of inflation on savings and demonstrating how investing can help in wealth creation and meeting financial aspirations. It introduces various asset classes, including fixed income instruments, equity, real estate, and commodities (bullion), discussing their risk-return characteristics and historical performance. The module emphasizes that equities, over the long term, have historically generated attractive returns, often beating inflation.
Regulators are introduced as crucial entities that ensure fair play and protect investors in the stock market. SEBI (Securities and Exchange Board of India) is identified as the primary regulator in India, responsible for promoting stock exchange development, protecting retail investors, and regulating market participants and financial intermediaries. The text explains the roles of various regulated entities such as Credit Rating Agencies, Debenture Trustees, Depositories (NSDL and CDSL), Depository Participants (DPs), Foreign Institutional Investors, Merchant Bankers, Asset Management Companies (AMCs), Portfolio Managers, and Stock Brokers.
The role of
Financial Intermediaries is detailed, explaining how entities like stock brokers, depositories, and banks work together to create a seamless ecosystem for transactions. A stock broker serves as the gateway to stock exchanges, providing trading accounts and facilitating transactions. Depositories (like NSDL and CDSL) and Depository Participants manage DEMAT accounts, which hold shares in electronic form. Banks primarily facilitate fund transfers between bank and trading accounts. Clearing corporations (NSCCL and ICCL) ensure guaranteed settlement of trades.
The module dedicates two chapters to
The IPO Markets, tracing the journey of a company from its inception and early-stage funding (seed funding by angel investors, Series A/B/C funding by Venture Capitalists and Private Equity firms) to its decision to launch an Initial Public Offer (IPO). It elaborates on why companies go public, including raising capital for expansion (Capex), providing exit opportunities for early investors, rewarding employees through ESOPs, and improving public visibility. The intricate process of an IPO, the role of merchant bankers (Book Running Lead Managers), and key terms like 'price band', 'book building', 'under subscription', and 'over subscription' are thoroughly explained.
In
The Stock Markets chapter, the book explains that the stock market is an electronic marketplace where buyers and sellers trade based on differing opinions. It elucidates how news, events (company-specific, industry-wide, or economic), and demand-supply dynamics drive stock price movements. The process of placing a buy order through a trading account and the subsequent electronic credit to a DEMAT account are detailed. The chapter also defines "holding period" and explains how to calculate investment returns using "Absolute Return" for short durations and "Compounded Annual Growth Rate (CAGR)" for multi-year periods. It categorizes market participants into "traders" (Day Trader, Scalper, Swing Trader) and "investors" (Growth Investors, Value Investors), distinguishing them by their risk appetite and holding periods.
The book begins by highlighting
The Need to Invest, illustrating the impact of inflation on savings and demonstrating how investing can help in wealth creation and meeting financial aspirations. It introduces various asset classes, including fixed income instruments, equity, real estate, and commodities (bullion), discussing their risk-return characteristics and historical performance. The module emphasizes that equities, over the long term, have historically generated attractive returns, often beating inflation.
Regulators are introduced as crucial entities that ensure fair play and protect investors in the stock market. SEBI (Securities and Exchange Board of India) is identified as the primary regulator in India, responsible for promoting stock exchange development, protecting retail investors, and regulating market participants and financial intermediaries. The text explains the roles of various regulated entities such as Credit Rating Agencies, Debenture Trustees, Depositories (NSDL and CDSL), Depository Participants (DPs), Foreign Institutional Investors, Merchant Bankers, Asset Management Companies (AMCs), Portfolio Managers, and Stock Brokers.
The role of
Financial Intermediaries is detailed, explaining how entities like stock brokers, depositories, and banks work together to create a seamless ecosystem for transactions. A stock broker serves as the gateway to stock exchanges, providing trading accounts and facilitating transactions. Depositories (like NSDL and CDSL) and Depository Participants manage DEMAT accounts, which hold shares in electronic form. Banks primarily facilitate fund transfers between bank and trading accounts. Clearing corporations (NSCCL and ICCL) ensure guaranteed settlement of trades.
The module dedicates two chapters to
The IPO Markets, tracing the journey of a company from its inception and early-stage funding (seed funding by angel investors, Series A/B/C funding by Venture Capitalists and Private Equity firms) to its decision to launch an Initial Public Offer (IPO). It elaborates on why companies go public, including raising capital for expansion (Capex), providing exit opportunities for early investors, rewarding employees through ESOPs, and improving public visibility. The intricate process of an IPO, the role of merchant bankers (Book Running Lead Managers), and key terms like 'price band', 'book building', 'under subscription', and 'over subscription' are thoroughly explained.
In
The Stock Markets chapter, the book explains that the stock market is an electronic marketplace where buyers and sellers trade based on differing opinions. It elucidates how news, events (company-specific, industry-wide, or economic), and demand-supply dynamics drive stock price movements. The process of placing a buy order through a trading account and the subsequent electronic credit to a DEMAT account are detailed. The chapter also defines "holding period" and explains how to calculate investment returns using "Absolute Return" for short durations and "Compounded Annual Growth Rate (CAGR)" for multi-year periods. It categorizes market participants into "traders" (Day Trader, Scalper, Swing Trader) and "investors" (Growth Investors, Value Investors), distinguishing them by their risk appetite and holding periods.
- GenresFinanceNonfiction
150 pages, ebook
33 people are currently reading
306 people want to read
About the author
Zerodha Varsity
15 books19 followersVarsity is an extensive and in-depth collection of stock market and financial lessons created by Karthik Rangappa at Zerodha. It is openly accessible to everyone and is one of the largest financial education resources on the web.
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Displaying 1 - 10 of 10 reviews
September 8, 2021
A crystal clear no-nonsense introduction of stock markets covering all the requisite basics to get you started with trading !
November 26, 2020
Useful, chunk size chapters. The basics are worked out for noobs with examples. Worth a read. Only crib: they could've published as an ebook instead of pdf. You really have to squint on an e-reader without reflowing text. Worth printing a copy and reading too. It's not that chunky.
(free download off the Zerodha academy site)
(free download off the Zerodha academy site)
February 27, 2023
articulate, clear, simple language. examples and graphs and analogies make it easy for a beginner to understand everything!! its extensive but not exhaustive. an excellent guide for a rookie.
January 17, 2020
This was the first book I read on Stock market.
After going through the chapters and winning my first trade of +16K in F&O segment I experienced first hand, how knowledge can translate itself into money.
In the initial month when I started trading, I played with the charts trying to understand how it works, referred to various sites to understand the underlying concepts. But still I had hundreds of questions and doubts regarding trading for which I could not find a satisfactory answer.
Here came the Zerodha Varsity to rescue. It has 9 chapters which beautifully makes your concept crystal clear regarding the concept and rationale of how stock market works.
It gives a broad view step by step and various segments of trading in cash market, F&O etc.
It has been such a wonderful learning experience learning different dimensions of the stock market. It gives a nice and brief basic understanding of stock market. A must read for trading enthusiast.
After going through the chapters and winning my first trade of +16K in F&O segment I experienced first hand, how knowledge can translate itself into money.
In the initial month when I started trading, I played with the charts trying to understand how it works, referred to various sites to understand the underlying concepts. But still I had hundreds of questions and doubts regarding trading for which I could not find a satisfactory answer.
Here came the Zerodha Varsity to rescue. It has 9 chapters which beautifully makes your concept crystal clear regarding the concept and rationale of how stock market works.
It gives a broad view step by step and various segments of trading in cash market, F&O etc.
It has been such a wonderful learning experience learning different dimensions of the stock market. It gives a nice and brief basic understanding of stock market. A must read for trading enthusiast.
July 30, 2020
Very good for beginners.
September 4, 2022
Quite an interesting intro but I got bored partly because I am, currently, not interested in stock market stuff.🙄
September 12, 2021
Awesome book for Basic Understanding of Stock Markets
May 24, 2020
A good read for beginners.
September 25, 2020
Can't be any clearer and easier to understand.
Displaying 1 - 10 of 10 reviews