Basics of Stock Market Syllabus

This syllabus provides a foundational understanding of the stock market, its operations, and basic concepts for individuals looking to start their journey in investing.

Module 1: Introduction to the Stock Market

• What is a Stock?
  • Definition of a stock (also known as equity or share).
  • Representing ownership in a company.
  • Different types of stocks (e.g., common vs. preferred).
• What is a Stock Market?
  • Definition and purpose of a stock market.
  • Facilitating the buying and selling of company shares.
  • Why do stock markets exist? (e.g., capital raising for companies, wealth creation for investors).
• Primary Market vs. Secondary Market
  • Understanding how companies initially issue shares (IPOs) in the primary market.
  • How investors trade already-issued shares among themselves in the secondary market.
• Initial Public Offering (IPO) vs. Follow-on Public Offering (FPO)
  • The process of a private company going public through an IPO.
  • How listed companies can issue additional shares through an FPO.
• Key Players in the Stock Market
  • Issuers (Companies).
  • Investors (Retail, Institutional).
  • Intermediaries (Brokers, Exchanges, Depositories, etc.).
  • Regulators (e.g., SEBI in India).

Module 2: How the Stock Market Works

• Stock Exchanges
  • Introduction to major stock exchanges (e.g., BSE, NSE in India).
  • Their role in providing a platform for trading.
  • Listing of companies on stock exchanges.
• Indices
  • What are stock market indices (e.g., Sensex, Nifty)?
  • How they represent the performance of a basket of stocks.
  • Different types of indices (e.g., broad market, sector-specific).
• Trading Mechanism
  • How buy and sell orders are placed.
  • Order matching process.
  • Concept of bid and ask prices, and the spread.
  • Types of orders (e.g., market order, limit order).
• What Moves Stock Prices?
  • Basic understanding of supply and demand.
  • Company-specific factors (e.g., earnings, news, developments).
  • Economic factors (e.g., GDP growth, inflation, interest rates).
  • Market sentiment and investor psychology.

Module 3: Getting Started with Investing

• Demat Account and Trading Account
  • What is a Demat (Dematerialized) account and its necessity for holding shares electronically.
  • What is a Trading account and its role in buying and selling shares.
  • The process of opening these accounts.
• Choosing a Stockbroker
  • Types of brokers (full-service vs. discount).
  • Factors to consider when selecting a broker (e.g., fees, platform, research).
• Understanding Risk and Return
  • The fundamental relationship between risk and potential return.
  • Different levels of risk associated with different types of stocks.
• Investment vs. Trading
  • Distinguishing between long-term investing and short-term trading.
  • Different approaches and goals for each.
• Basic Investment Strategies
  • Diversification (spreading investments across different stocks or asset classes).
  • Dollar-cost averaging (investing a fixed amount regularly).
  • Understanding fundamental and technical analysis (brief introduction).

Module 4: Key Concepts and Terminology

• Financial Statements (Introduction)
  • Basic overview of Balance Sheet, Income Statement (Profit & Loss), and Cash Flow Statement.
  • Key items in each statement (e.g., revenue, profit, assets, liabilities).
• Basic Financial Ratios (Introduction)
  • Price-to-Earnings (P/E) ratio and its basic interpretation.
  • Dividend Yield and its significance.
• Market Capitalization
  • Understanding the size of a company based on its outstanding shares and market price (Large Cap, Mid Cap, Small Cap).
• Dividends
  • What are dividends and how companies distribute profits to shareholders.
• Bonus Shares and Stock Splits
  • Understanding these corporate actions and their impact on shareholding.
• Important Terms
  • Bull Market, Bear Market, Volatility, Liquidity, Portfolio, Sector, etc.

Module 5: Regulatory Framework (India-Specific)

• Securities and Exchange Board of India (SEBI)
  • Its role in regulating the Indian stock market.
  • Investor protection measures.
• Basic Understanding of Insider Trading and other Malpractices.