What Is Share Market and How Share Market Works?

If you've ever wondered how a small monthly SIP can grow into lakhs over a decade, or why your office colleagues keep checking the Sensex on their phones during lunch, you're really asking one big question: what is the share market and how does the share market actually work?

In simple terms, the share market is an organised, regulated marketplace where investors buy and sell tiny ownership pieces — called shares — of public companies, primarily through two exchanges in India: the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). It's the engine that lets ordinary Indians own a slice of Reliance, HDFC Bank, Infosys or TCS — and it's the same engine that has transformed India into one of the world's largest equity markets with over 21.6 crore demat accounts as of December 2025.

Why this matters: India's stock market crossed $5 trillion in market capitalisation in 2024 — making it one of the five largest equity markets in the world. With monthly SIP inflows now exceeding ₹26,000 crore and a record 4.11 crore new demat accounts added in FY25 alone, the share market is no longer a club for the rich — it's the most accessible wealth-building tool every Indian has.

This guide — written for Clikit's beginner-to-intermediate readers — walks you through everything: definitions, the Indian market structure in 2025–26, the mechanics of trading, who the players are, how to start, the latest tax rules after Budget 2024, common mistakes, expert tips, and 17 detailed FAQs. By the end, you won't just know the share market — you'll be ready to invest in it with confidence.

1. Core Concepts: Share Market, Stock Market & Equity Explained

The terms "share market", "stock market", "equity market" and "capital market" get used interchangeably in everyday conversation — but they aren't identical. Understanding the distinction is your first step toward sounding (and thinking) like an informed investor.

Share Market vs Stock Market vs Equity Market vs Capital Market

• Share market / Stock market: The marketplace where shares (also called stocks or equities) of listed companies are bought and sold. In Indian English, "share market" and "stock market" mean exactly the same thing.

• Equity market: A slightly broader term that includes shares plus equity-linked instruments like equity mutual funds, ETFs and equity derivatives.

• Capital market: The widest umbrella term. It covers the equity market and the debt market (bonds, debentures, government securities). The capital market is where companies and governments raise long-term capital — anything beyond one year.

What Exactly Is a "Share"?

A share is a unit of ownership in a company. If Reliance Industries has issued, say, 1,353 crore shares and you own 100 of them, you own approximately 0.0000074% of one of India's largest businesses. That tiny slice entitles you to:

• A proportionate share of profits, paid as dividends when declared.

• A proportionate vote at shareholder meetings.

• Capital appreciation — if Reliance's share price rises, the value of your 100 shares rises too.

What Are "Securities"?

"Securities" is the legal umbrella term defined under the Securities Contracts (Regulation) Act, 1956. It covers shares, bonds, debentures, derivatives (futures & options), mutual fund units, government securities (G-Secs) and more. So every share is a security, but not every security is a share.

Primary Market vs Secondary Market — The Most Important Distinction

Quick Definition

Primary market = where shares are created for the first time. The company sells new shares to investors and receives the money. (Example: TCS IPO in 2004.)

Secondary market = where already-issued shares are traded between investors. The company doesn't receive a paisa. (Example: you buying TCS shares on the NSE today.)

The primary market is where capital is raised. The secondary market is where liquidity and price discovery happen. Both are essential — without the secondary market, no one would invest in IPOs because they couldn't exit. Without the primary market, there'd be no shares to trade.

How Are Shares Created? The IPO Process

1. A private company decides to "go public" to raise expansion capital or to give early investors and founders a partial exit.

2. It appoints merchant bankers (investment bankers like Kotak, ICICI Securities, Axis Capital) and files a Draft Red Herring Prospectus (DRHP) with SEBI.

3. After SEBI's review, the company sets a price band (e.g., ₹100–₹105) and opens the IPO for 3–5 working days.

4. Retail investors apply through UPI-linked ASBA (Application Supported by Blocked Amount) — the money is blocked in your bank account but not debited until allotment.

5. Shares are allotted via lottery if the issue is oversubscribed, then listed on the NSE/BSE — typically T+3 days after the IPO closes, under SEBI's faster listing norms.

6. From listing day onwards, the shares trade in the secondary market and price is set by demand and supply.

In calendar year 2025, India's mainboard IPO market raised a record ₹1.75 lakh crore across 103 issues — the highest annual fundraising in history — with Tata Capital's ₹15,512 crore offering as the largest.

2. The Indian Share Market Landscape (2025–26 Data)

National Stock Exchange (NSE)

• Founded: 1992; began equity trading in 1994; pioneered electronic, screen-based trading in India.

• Listed companies: 2,867 as of February 2026.

• Flagship indices:

  • Nifty 50 — the 50 largest, most liquid stocks; launched 22 April 1996 with base value 1,000.

  • Nifty Next 50, Nifty Bank, Nifty IT, Nifty Midcap 150, Nifty Smallcap 250, Nifty 500 and various sectoral indices.

• Total market cap: ₹438.9 lakh crore (~US$5.13 trillion) as of 31 December 2024; corrected to roughly ₹400–415 lakh crore range by May 2026 after a ~9% Nifty decline year-to-date.

• Average daily cash-market turnover: ₹1.1 lakh crore in FY25, up 38% year-on-year.

• Derivatives leadership: NSE is the world's largest derivatives exchange by number of contracts traded for the sixth consecutive year (2024).

• Unique registered investors: over 12 crore as of September 2025.

Bombay Stock Exchange (BSE)

• Founded: 9 July 1875, by Premchand Roychand and fellow brokers as "The Native Share & Stock Brokers' Association" — making BSE Asia's oldest stock exchange.

• Listed companies: 5,936 as of 24 February 2026.

• Flagship index: S&P BSE Sensex (BSE 30) — 30 large, financially sound, free-float-weighted companies; launched in 1986 with base year 1978–79 (base = 100).

• Other indices: BSE 100, BSE 500, BSE Midcap, BSE Smallcap, BSE Bankex.

SEBI — The Watchdog That Protects Your Money

The Securities and Exchange Board of India (SEBI) was established in 1988 (non-statutory) and given statutory powers under the SEBI Act, 1992 in the wake of the Harshad Mehta scam. SEBI is India's apex capital-markets regulator and possesses quasi-legislative, quasi-executive and quasi-judicial powers — it drafts rules, conducts investigations and passes orders.

What SEBI Does for You

• Protects investor interests in securities.

• Regulates stock exchanges, registers and supervises brokers, mutual funds, FPIs and depositories.

• Prohibits insider trading and fraudulent/unfair trade practices.

• Promotes investor education and market development.

Major SEBI Reforms (2024–26)

• Tightened F&O rules (October 2024 circular): only one weekly index expiry per exchange, contract sizes raised from ₹5–10 lakh to ₹15–20 lakh, upfront option premium collection from February 2025, intraday position-limit monitoring from April 2025.

• Phased optional T+0 settlement rolled out for top 500 stocks from January 2025.

• Chhoti SIP of ₹250/month enabled for low-income investors.

• LTCG simplified to a uniform 12.5% with a ₹1.25 lakh equity exemption (Finance Act, 2024).

India's Position in the Global Pecking Order

India became the 4th-largest equity market in January 2024 when it overtook Hong Kong. By June 2025, India had slipped to 5th with roughly 4% share of global market cap. As of May 2026, Taiwan ($4.5T) and South Korea ($4.1T) — driven by the AI semiconductor boom — were closing in on India's ~$4.77 trillion market cap.

The Retail Revolution: Demat Accounts & Investor Demographics

• Total demat accounts: 21.6 crore (216 million) as of December 2025 — roughly 167.7 million with CDSL, 42.3 million with NSDL.

• Unique investors: crossed 12 crore in September 2025; nearly 25% are women.

• FY25 alone added a record 4.11 crore new demat accounts — the highest-ever annual addition.

• Five states — Maharashtra, Uttar Pradesh, Gujarat, Karnataka, Delhi — account for nearly 50% of all demat accounts.

Recent Index Performance

• Sensex all-time high: 86,026 intraday on 27 November 2025.

• Nifty 50 all-time high: 26,373.20 on 5 January 2026.

• Current levels (mid-May 2026): Sensex ~75,415; Nifty 50 ~23,659.

• 2026 YTD performance: Sensex down ~10.8%, Nifty down ~9.5% — the steepest correction in nearly 15 years, with India's total market cap losing roughly $533 billion, driven by record FPI outflows of ₹1.92 lakh crore in just four months, US tariff uncertainty and a rupee that slipped from ~85 to ~95 against the dollar.

• RBI repo rate: held at 5.25% in February 2026 MPC (after a 25-bps cut in December 2025), with SDF at 5.00% and MSF/Bank Rate at 5.50%, neutral stance — generally favourable for equity multiples.

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3. How the Share Market Actually Works: The Mechanics

The Full Lifecycle of a Share — From Boardroom to Your Demat

1. Company needs capital → files DRHP with SEBI → IPO → listed on NSE/BSE.

2. Listed shares trade continuously in the secondary market during market hours.

3. When you place a "buy" order, the exchange's electronic order-matching engine pairs it with a corresponding "sell" order at the best matching price (price-time priority).

4. The trade is sent to a clearing corporation — NSE Clearing Limited (NCL) for NSE trades, Indian Clearing Corporation Ltd (ICCL) for BSE — which guarantees settlement.

5. Shares are credited to your demat account at NSDL or CDSL on T+1 (one business day after trade); funds are debited from your bank account.

6. Optional T+0 same-day settlement is live for the top 500 stocks since 2025.

The Role of Each Player in the Ecosystem

• Stock exchanges (NSE, BSE): Match buyers and sellers via electronic order books; disseminate live prices; regulate listed companies.

• Brokers (stockbrokers): Your interface to the exchange. They take your orders and route them to the exchange in milliseconds.

  • Discount brokers: Zerodha, Groww, Angel One, Upstox, 5paisa, Dhan, Fyers — flat ₹20-per-trade model, app-first, no advisory.

  • Full-service brokers: ICICI Direct, HDFC Securities, Kotak Securities, Motilal Oswal, Axis Direct — research, advisory, 3-in-1 accounts, higher charges.

  • As of early 2026, Groww leads with ~1.21 crore active NSE clients, followed by Zerodha (~68.5 lakh) and Angel One (~67.6 lakh).

• Depositories: NSDL (since 1996, NSE-promoted) and CDSL (since 1999, BSE-promoted) hold your shares in electronic form. CDSL serves roughly 80% of retail demat accounts.

• Depository Participants (DPs): Your broker or bank acts as the intermediary between you and the depository.

• Clearing corporations: Guarantee that every trade settles even if one counterparty defaults.

• Registrar and Transfer Agents (RTAs): KFintech and CAMS maintain shareholder records for companies and mutual funds.

T+1 and T+0 Settlement — India Leads the World

India was the first major market to fully shift to T+1 settlement in January 2023. SEBI's circular dated 10 December 2024 expanded optional T+0 to the top 500 stocks in a phased rollout (bottom 100 from 31 January 2025, adding 100 stocks per month). The deadline for Qualified Stock Brokers (QSBs) to enable T+0 systems was first extended to 1 November 2025 and then further postponed pending broker readiness.

Trading Hours (NSE & BSE — Indian Standard Time)

From 8 December 2025, NSE also runs a pre-open session for index and stock futures.

4. Key Market Participants — Who's Actually Buying & Selling?

• Retail investors: Individual investors like you, investing personal money.

• HNIs (High Net-worth Individuals): Invest ₹2 lakh+ per IPO application or hold portfolios above ₹2 crore.

• Domestic Institutional Investors (DIIs): Indian mutual funds (managed by AMCs like SBI MF, HDFC MF, ICICI Pru AMC), insurance companies (LIC is the largest), pension funds (EPFO, NPS), and banks.

• Foreign Portfolio Investors (FPIs): Earlier known as FIIs — overseas funds, sovereign wealth funds, ETFs. As of early 2026, FPI ownership of Indian equities fell to a 14-year low of 14.7%, even as DII ownership rose to 18.9%.

• Market makers: Registered members who provide continuous two-way quotes to ensure liquidity.

• Investment bankers / Merchant bankers: Manage IPOs and large fund-raising transactions.

• Sub-brokers and Authorised Persons: Work under a main broker, mostly in tier-2/3 towns.

India's Quiet Strength in 2026

While foreign investors pulled ₹1.92 lakh crore out of Indian equities in the first four months of 2026 alone (the worst since 1993), DIIs absorbed nearly 90% of that selling, deploying ~₹1.7 lakh crore. The cushion came almost entirely from relentless SIP flows — proof that India's domestic investor base has matured.

5. Types of Shares & Financial Instruments You Can Trade

Shares: The Two Main Types

• Equity shares: Carry voting rights, variable dividends, and perpetual life. The most commonly traded.

• Preference shares: Priority on dividend payouts and on company assets in case of liquidation; usually no voting rights.

• DVR (Differential Voting Rights) shares: e.g., Tata Motors DVR — fewer voting rights but typically a slightly higher dividend.

SEBI's Official Market-Cap Classification

Other Style Classifications

• Blue-chip stocks: Financially sound, market-leading large-caps — Reliance, HDFC Bank, TCS, Infosys, ITC.

• Growth stocks: Fast-growing earnings, often at higher P/E (new-age tech, consumer discretionary).

• Value stocks: Trading below intrinsic value (often PSUs, traditional manufacturers).

• Penny stocks: Usually priced below ₹10, often small-cap, highly volatile, prone to manipulation.

Other Instruments Traded on Exchanges

• Bonds and Debentures: Debt instruments paying fixed interest. India's outstanding corporate bonds grew from ₹17.5 trillion in FY15 to ₹53.6 trillion in FY25.

• Mutual Funds: Pooled investment vehicles. Industry AUM stood at ₹81.92 trillion as of 30 April 2026, with 27.53 crore folios.

• ETFs (Exchange-Traded Funds): Index funds that trade like stocks. 190+ ETFs are listed on NSE.

• Derivatives (F&O): Futures and options on indices and stocks. India is the world's largest F&O market by volume.

• REITs (Real Estate Investment Trusts): First REIT listed on NSE in 2019 (Embassy REIT).

• InvITs (Infrastructure Investment Trusts): First listed in 2017.

• SGBs (Sovereign Gold Bonds): Issued by RBI; fresh issuances paused since 2024 but listed series still trade.

• EGRs (Electronic Gold Receipts): NSE launched these in May 2026.

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6. How to Start Investing in India — Step-by-Step

Prerequisites — Get These Ready First

• PAN card — mandatory.

• Aadhaar — for paperless e-KYC.

• Bank account — savings account in your name.

• Mobile number linked to Aadhaar — for OTP-based KYC.

• Minimum age: 18. Minors can have demat accounts operated by guardians.

The 8-Step Process to Buying Your First Share

1. Choose a broker. Discount broker if you're DIY and cost-conscious (Zerodha, Groww, Angel One, Upstox, Dhan); full-service broker if you want research and a relationship manager (ICICI Direct, HDFC Securities, Kotak Securities).

2. Open a 2-in-1 (or 3-in-1) account. A 2-in-1 includes a demat account (to hold shares) plus a trading account (to place orders). A 3-in-1 from banks bundles a savings account too. Most discount brokers complete e-KYC in 15–30 minutes.

3. Complete KYC. Upload PAN, Aadhaar, signature, a cancelled cheque or bank statement, and a live selfie/video.

4. Link your bank account for fund transfers.

5. Activate segments — Cash (default), F&O (income proof required), commodities, currency, mutual funds.

6. Fund your trading account via UPI, net banking or NEFT.

7. Place your first trade. Search the stock, choose quantity, order type (Market / Limit), product (CNC for delivery, MIS for intraday).

8. For IPOs, apply via UPI mandate — no money is debited until allotment.

Charges to Expect

• Account opening: often free at discount brokers.

• Demat AMC: ₹0 – ₹300/year.

• Brokerage: ₹0 for equity delivery at most discount brokers; ₹20/order for intraday and F&O.

• Statutory charges: STT, GST, SEBI fees, stamp duty, exchange transaction charges.

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7. Essential Concepts Every Investor Must Understand

Market Indices & How They're Calculated

Indices like the Sensex and Nifty 50 are weighted baskets of stocks. Both use free-float market-capitalisation weighting: each company's weight = (its free-float market cap) ÷ (total free-float market cap of the index). Free-float excludes promoter holdings and locked-in shares.

Bull Market vs Bear Market

• Bull market: Sustained rise of 20%+ from recent lows; optimistic sentiment. India was in a structural bull market from April 2020 to September 2024.

• Bear market: Sustained decline of 20%+ from recent highs. India is currently in a correction (down ~10% in 2026 YTD), not yet a technical bear market.

IPO, FPO, OFS — Decoded

• IPO (Initial Public Offering): First-time public issue.

• FPO (Follow-on Public Offer): A listed company issues fresh shares to raise additional capital.

• OFS (Offer for Sale): Existing shareholders (usually promoters or government) sell stakes through the exchange — no new shares are created. OFS was a prominent feature of FY26.

Corporate Actions Every Shareholder Should Know

• Dividend: Cash distribution from profits.

• Bonus shares: Free additional shares — e.g., 1:1 bonus means one new share for every one held.

• Stock split: Face value reduced (e.g., ₹10 split into 2 of ₹5 each); share count doubles, price halves.

• Rights issue: Existing shareholders get the right to buy new shares at a discount.

• Buyback: Company repurchases its own shares. From 1 October 2024, buyback proceeds are taxed as dividend income in the shareholder's hands at slab rate.

Circuit Breakers — The Market's Emergency Brakes

Circuit breakers are pre-defined limits that pause trading when the index or a stock moves too sharply, preventing panic and manipulation.

• Stock-level circuits: Each stock has a daily upper/lower circuit (5%, 10%, 20%) above/below the previous close.

• Market-wide circuit breakers (NSE/BSE, per SEBI Circular CIR/MRD/DP/25/2013): triggered by Sensex or Nifty 50 movement, whichever is breached first, at 10%, 15% and 20% thresholds:

  • 10% before 1:00 PM → 45-minute halt + 15-min pre-open; between 1:00–2:30 PM → 15-minute halt + 15-min pre-open; after 2:30 PM → no halt.

  • 15% before 1:00 PM → 1 hour 45 minutes; 1:00–2:00 PM → 45 minutes; on/after 2:00 PM → remainder of the day.

  • 20% at any time → remainder of the day.

Block Deals vs Bulk Deals

• Block deals: Single trades of ₹10 crore or more, executed in special windows (8:45–9:00 AM and 2:05–2:20 PM).

• Bulk deals: Any trade where a single broker or client buys/sells more than 0.5% of a company's listed quantity in a day; disclosed by exchanges end-of-day.

Insider Trading — The Cardinal Sin

Insider trading is governed by the SEBI (Prohibition of Insider Trading) Regulations, 2015 (last amended August 2021, with a major UPSI-scope amendment effective June 2025). Under Regulation 2(1)(n), UPSI is "any information relating to a company or its securities that is not generally available, which, if made public, could materially affect the price of the securities."

Heavy Penalties Apply

Penalties under Section 15G of the SEBI Act, 1992 can range from ₹10 lakh to ₹25 crore or three times the profit gained, whichever is higher.

Key Ratios Every Investor Should Know

• Market Cap = Share price × Total shares outstanding.

• EPS (Earnings Per Share) = Net profit ÷ Shares outstanding.

• P/E Ratio = Share price ÷ EPS — how much you pay per ₹1 of earnings. Nifty 50 trailing P/E typically 20–25.

• P/B Ratio = Share price ÷ Book value per share — useful for banks and financials.

• ROE (Return on Equity) = Net profit ÷ Shareholders' equity. 15%+ is healthy.

• Dividend Yield = Annual dividend ÷ Share price.

Fundamental Analysis vs Technical Analysis

• Fundamental analysis examines a company's financials, business model, management quality, and industry — to estimate intrinsic value. Practised by long-term investors and value investors.

• Technical analysis studies price charts, volumes, patterns and indicators to predict short-term price movements. Practised by traders.

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8. Risks, Rewards & Comparison with Other Asset Classes

The Five Types of Risk Every Investor Faces

• Market risk (systematic): Affects the entire market — recession, war, oil shock.

• Company-specific risk (unsystematic): Fraud, weak earnings, management exit.

• Liquidity risk: Small-caps and penny stocks can be hard to exit.

• Currency risk: Affects FPIs and Indian investors in foreign stocks.

• Regulatory risk: Sudden policy or tax changes.

Historical Returns of the Indian Share Market

The BSE Sensex delivered a 15% CAGR in price-return terms from April 1979 to April 2023 — or roughly 17% including dividends. The 20-year rolling CAGR has ranged from a low of 9.66% (1994–2013) to a high of 21.08% (1988–2007). Over the last 10 years (FY15–FY25), the Sensex has compounded at around 12% per annum.

Equity vs Other Indian Asset Classes (Pre-tax, Long-term)

The Power of Compounding — A Real Example

The Magic of SIP + Time

A monthly SIP of ₹10,000 in a Nifty index fund earning 12% CAGR grows to roughly ₹1.0 crore in 20 years and ₹3.5 crore in 30 years. Add an annual step-up of 10%, and the 30-year corpus crosses ₹6 crore. This is why time in the market beats timing the market.

Risk Management for Indian Investors

• Diversification — across sectors, market caps and geographies.

• Asset allocation — equity + debt + gold in proportions matching your age and goals.

• SIPs — average your buy price across market cycles.

• Stop-losses for trading positions.

• Avoid leverage (F&O) until you understand the risks.

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9. Taxation of Share Market Gains in India (Post-Budget 2024)

The Finance (No. 2) Act, 2024 reset the tax structure for transfers made on or after 23 July 2024. Here's the latest applicable framework for FY 2025–26.

Securities Transaction Tax (STT) — Paid Automatically

STT is a cost, but paying it qualifies you for the concessional 20%/12.5% rates on equity gains. Without STT, gains are taxed at higher slab/normal rates.

10. Latest Share Market Trends & Statistics (2025–26)

• SIP boom: Monthly SIP inflows hit a record ₹26,632 crore in April 2025. Calendar 2025 attracted ₹3.34 lakh crore via SIPs — a sharp jump from ₹2.68 lakh crore in 2024. SIP AUM stood at ₹13.9 lakh crore in April 2025, nearly 20% of total MF AUM. Industry AUM hit ₹81.92 trillion by 30 April 2026, spread across 27.53 crore folios.

• Retail revolution: 4.11 crore demat accounts added in FY25 — the highest ever. Unique investors crossed 12 crore in September 2025, with women forming 25%.

• Discount-broker dominance: Groww (~12 million+), Zerodha (~6.8 million), Angel One (~6.7 million), Upstox (~2 million) — together command 60%+ of active accounts.

• F&O tightening: From 20 November 2024, single weekly index expiry per exchange, lot sizes raised to ₹15–20 lakh contract value, upfront option-premium collection (from Feb 2025), and intraday position-limit monitoring (Apr 2025). The result was an immediate, dramatic compression in volumes — NSE's notional average daily trading value for index options dropped from ₹357 trillion in early November 2024 to ₹207 trillion by early December 2024, a 42% drop.

• IPO surge: 2025 raised a record ₹1.75 lakh crore via 103 mainboard IPOs.

• AI and algo trading: Algo trading now accounts for over half of cash market turnover; SEBI has mandated broker-level supervision of retail algo APIs (effective 2025).

• ESG investing: SEBI's BRSR Core reporting is mandatory for the top 1,000 listed companies. ESG-themed mutual funds saw assets grow but remain a niche (under 1% of equity MF AUM).

• FPI exodus: Foreign investors pulled ₹1.92 lakh crore from Indian equities in just the first four months of 2026 — the worst since 1993 — driven by rupee depreciation (85 → 95/USD), US tariff uncertainty, crude price spikes and the AI-driven re-rating of Taiwan/South Korea.

• DII cushion: DIIs absorbed nearly 90% of FPI selling, deploying ~₹1.7 lakh crore YTD 2026, largely thanks to relentless SIP flows.

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11. Expert Tips & Best Practices for Beginners

1. Start with a SIP, not a stock. A monthly SIP in a low-cost Nifty 50 or Nifty Next 50 index fund gives you instant diversification.

2. Build an emergency fund first — 6 months of expenses in a liquid fund or FD before touching equity.

3. Use the 10-year rule. Money you don't need for at least 7–10 years can go into equity.

4. Diversify across market caps and sectors. A 60–25–15 split of large/mid/small caps works for most investors.

5. Reinvest dividends. Compounding is multiplicative when dividends are reinvested.

6. Read at least the first 10 pages of the annual report of any stock you buy — management discussion, key risks, auditor's notes.

7. Avoid F&O until you've invested for 3+ years. SEBI's September 2024 study revealed that 93% of individual traders incurred losses in Equity F&O between FY22 and FY24, with aggregate losses exceeding ₹1.8 lakh crore over three years.

8. Ignore Telegram tips, WhatsApp pump groups and YouTube "multibagger" promises. SEBI bans on hundreds of unregistered "finfluencers" in 2024–25 are a warning.

9. Track your portfolio quarterly, not daily. Excessive monitoring leads to emotional decisions.

10. Use tax-loss harvesting — book losses to offset gains and reduce tax outgo.

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12. Common Mistakes Beginners Make (And How to Avoid Them)

• Trying to time the market. Even legendary investors get this wrong; SIPs solve it.

• Putting all money in one "hot" stock — Yes Bank, DHFL and Vedanta investors learned this painfully.

• Falling for tips and rumours.

• Day-trading without education or capital. SEBI's January 2023 study found 89% of individual equity F&O traders lost money in FY22; the updated September 2024 study raised the figure to 93% across FY22–FY24.

• Investing in F&O for "extra income" — same data; same conclusion.

• Selling winners, holding losers — the classic disposition effect.

• Mistaking volatility for risk — a stock falling 30% in a year isn't necessarily risky if the business is fine.

• Ignoring asset allocation — overweighting equity at age 55, or underweighting it at age 25.

• Chasing IPOs blindly — 59% of 2025's 108 mainboard IPOs are trading below their listing price, with median listing gains of just 3.8%.

• Not tracking your XIRR — knowing your actual return is the start of making better decisions.
  

SEBI's Verdict on F&O

"93% of individual traders in Equity F&O incurred losses between FY22 and FY24, with aggregate losses exceeding ₹1.8 lakh crore over three years." (SEBI Press Release No. 37/2024, 23 September 2024). If you're a beginner, this should be enough to keep you away from F&O for at least your first few years.

FAQs

14. The Bottom Line: Your Wealth, Your Decision

India's share market in 2026 is bigger, more democratic and more regulated than at any point in its 150-year history. With over 21.6 crore demat accounts, record SIP flows of ₹26,000+ crore a month, and an ecosystem that lets you start investing for as little as ₹250, the barriers to participation have collapsed.

But the rules are still the same ones that have always rewarded equity investors: invest in good businesses, give them time, diversify, ignore the noise, and respect risk.

Whether the Sensex is at 75,000 (where it is in May 2026) or 1,50,000 a decade from now, the playbook for ordinary Indians remains the same: start early, start small, stay invested, and let compounding — and India's growth — do the heavy lifting.

The most expensive financial decision you can make is to wait. A SIP of ₹5,000 started today is worth more than ₹15,000 started five years from now. The share market doesn't care how much you start with — only how long you stay.