Frequently Asked Questions on Share Market

The share market is a place or platform where investors can buy, sell, or trade a wide range of market securities such as shares, bonds, derivative contracts like currencies and commodities, mutual funds, etc. The market is categorised into two types – the primary share market, where a company registers itself for the first time in order to raise funds from public investors by selling its shares through an Initial Public Offering (IPO) and then becomes a publicly-traded company. Then there is the secondary share market, where shares of already-listed companies are traded at their current price. Here, investors can buy and sell shares anytime and enter or exit the market as they please.

The basics of stock market investment you need to know to include the following

• You will need to open a DEMAT and Trading Account with a SEBI-recognised broker

• You must consider your risk profile, investment goals, and preferred investment tenures before you begin investing.

• You must familiarise yourself with the basic stock market jargon, the various exchanges, and trading platforms.

• You must review the costs associated with share market investments

• You must avoid putting all your eggs in one basket, and instead diversify your investments.

A combination of the words Sensitive and Index, the Sensex is the equity benchmark index of the Bombay Stock Exchange, comprising of the top 30 companies in terms of free-float market capitalisation from various sectors and trading on the BSE. In India, there are various Sensex indices, including the S&P Sensex Index, BSE Midcap and the BSE Bankex, among others.

Like the Sensex is to the BSE, the Nifty is the equity market index of the Indian National Stock Exchange (NSE). It combines the words National and Fifty and comprises the top 50 stocks in terms of free-float market capitalisation, from different sectors, and trading on the NSE. The prominent Nifty Indices in India include Nifty 50, Auto Nifty, Bank Nifty, Nifty IT, Nifty FMCG, etc.

The NSE and BSE are the two leading stock exchanges in India. NSE stands for the National Stock Exchange. It is the world's fourth-largest exchange based on its equity trading volume. It holds the distinction of being India's first stock exchange to offer screen-based trading. Then there is the Bombay Stock Exchange, or BSE, which holds the record of being Asia's first stock exchange. The BSE is regarded as the world's fastest stock exchange thanks to its trading speed of 6 microseconds per order.

The formula for investing in stocks for beginners is simple. Just follow these below-mentioned steps.

• Select a SEBI-approved and recognised stock brokerage platform to open your DEMAT and trading account – Mirae Asset, for instance.

• Provide the necessary documents (ID, address, and income proof) and complete the Know Your Customer (KYC) process.

• Login to your DEMAT account with the username and default password and change it to something strong. Memorise the password.

• Research about the stocks you wish to buy by considering your risk appetite, investment goals, and preferred investment duration. Also, assess the past performance of the stocks you choose across various market cycles to check how stably it has generated returns.

• Decide on the order quantity and optimise your investment portfolio with diversification to mitigate your investment risks.

In the share market, moving averages are technical indicators that investors and market analysts use to determine the direction of a trend. A moving average allows technical traders to generate various trading signals. Analysts use the moving averages to examine an asset's support and resistance ratios and evaluate its price movements. It helps them determine the potential price direction of an asset and trails the action price of the asset to demonstrate the direction of a given trend.

Share market volume indicators are essentially mathematical formulas, which are visually represented in the most commonly used charting platforms. Volume indicators can be of different types, and each indicator uses a marginally different formula. As a share trader, you should find the indicator that works best for your specific market approach, i.e., the method you use to determine the value of an asset after analysing the selling prices of similar assets. The three most common types of share market volume indicators include On-balance Volume (OBV) indicator, the Chaikin Money Flow indicator and the Klinger Oscillator indicator.

A share market breakout represents a share price moving outside of a defined support or resistance level at an increased volume. Breakout traders typically enter long positions after the share price breaks above the resistance level and enter short positions after the stick breaks below the support level.

A breakdown in stock market is basically the opposite of a breakout. It is a downward move in the price of a security, usually via an unidentified level of support, which signifies a further decline in the security price. Stock market breakdowns commonly occur on heavy volumes, and the resultant move lower tends to be relatively quick and severe in magnitude. Traders can identify stock market breakdowns using technical tools, live chart patterns, moving averages and trend lines.

Some of the most commonly used and important chart types in stock market include:
 

• Line chart

• Bar chart

• Point and figure chart

• Head and shoulder chart

• Renko Chart

• Single and multiple candlestick chart

In the share market, a candlestick is a kind of price chart used in the technical analysis of market prices. This chart displays the highs and lows and opening and closing prices of a given security for a particular period. Candlesticks echo the impact of investor sentiments on the prices of securities. Technical analysts generally use them to determine when to enter or exit trades.

To minimise risk in the share market, you should start with thorough company research, diversify your portfolio, and avoid emotional decisions. Invest only what you can afford based on your current financial situation. Following daily share market movements and understanding market trends can also help manage risks and make more informed decisions.

Beginners in the share market often make mistakes like chasing quick profits, ignoring research, or blindly following tips available on social media. When starting out, you should avoid frequent buying and selling, and don’t invest without understanding the risks. Remember, patience and knowledge are key for success in share market trading.

The Indian share market today is influenced by global news, economic indicators, interest rates, company earnings, and government policies. Share market trading is also impacted by investor sentiment, political developments, and inflation data, making it important to stay updated with current events, both domestic and global.

Although used interchangeably, trading and investing differ in a few key aspects. Trading in the share market focuses on short-term price movements, while investing is for long-term growth and wealth creation. Share market trading usually aims for short-to-mid term returns through frequent buying and selling, whereas investing builds wealth gradually over years by holding quality stocks.

You can stay updated with share market tips by following financial news, subscribing to trusted market newsletters, using stock trading apps, or visiting online platforms, like m.Stock, that provide expert guidance and updates on the share market today (such as top gainers, top losers, etc.). With so much “information” available online and social media, remember to always verify tips before acting on them.

• Some brokers, mostly full service brokers give comprehensive research reports, detailed market insights and even personalised investment suggestions, as part of the services they offer along with the trading account. 
• Some brokers like m.Stock, partner with SEBI-registered RAs from the industry and host research calls from these RAs on their platform either free of cost or at certain fees. Most discount brokers may only provide access to a platform and not offer research at all. They focus on low-cost trading and typically offer investment and trading tools without any personalised advice. However, with m.Stock you can get access to expert curated research calls from SEBI registered RAs and Smart Advisory Portfolios from RIAs.
• An extra layer of research calls & reports from experts can be extremely helpful, especially for new investors who are still building their market knowledge and trading strategies.
• It is important to know specific services your broker offers and read any disclaimers about potential conflicts of interest. You can also check a broker's background and qualifications.

MTF, or Margin Trading Facility, is a funding facility where brokers like m.Stock provide partial funding/capital for Equity Delivery trades and charge interest for the same. . Here’s a list of applicable charges when you avail MTF: 

• Interest rate: While interest rates in the industry can go as high as 18%-24% p.a., m.Stock offers MTF at one of the lowest interest rates starting from 6.99% p.a. i.e., 0.0192% per day.
• Brokerage and DP charges: On m.Stock, ₹5 per order is charged on MTF trades. However, this can go up to ₹20 or % on volume traded with discount and full service brokers respectively. Additionally, you will be charged a pledge fee while taking a fresh MTF position and an unpledge fee while exiting the MTF position. At m.Stock, ₹32 is charged for pledge and unpledge.  
• Subscription fee: Some brokers charge subscription fees in the range of ₹5,000-₹10,000 annually for you to avail Margin Trading Facility. However, on m.Stock, you can avail MTF at ₹0 subscription fee. 
• Mandatory charges: Apart from brokerage, there are certain standard charges like STT, Transaction Charges, SEBI Charges, Stamp Charges and GST which are applicable on MTF trades irrespective of the broker platform used. 
• Square-off charges: If a broker has to mandatorily square off your MTF position due to margin shortfall or corporate actions, then additional square-off charges may apply. m.Stock charges ₹100+GST for RMS auto square-off. 

m.Stock offers transparent costs for MTF and provides an online MTF calculator to check interest, daily costs and the total payable amount. 

Yes, you can use your existing mutual fund investments to get extra trading margin. If your mutual funds are held in demat form and fall under the approved list, you can pledge them in a few simple steps. 

When you pledge them, the broker places a lien on the units in your demat account, but your units remain invested and continue to earn dividends or returns. The units are kept as collateral and you cannot redeem them until the loan or margin is repaid. It’s a smart way to access liquidity and keep your investments intact. 

Generally, the Margin Trading Facility cannot be used for intraday trading. It is created to support delivery-based trades. It does not serve the needs of users who enter and exit on the same day. 

MTF comes with no limit on the tenure of your holdings. You can fund the position using pledged shares or fresh capital through brokers like m.Stock.  This means you can hold positions for multiple days without selling them within the same trading session. It is best suited for users who want to build a position and hold it for some time. 

Retail investors can pledge shares to get margin. This is how it works - 

• You choose the stocks and raise a pledge request.
• The request is sent to CDSL or NSDL by the broker. 
• You confirm it through OTP. 
• Once confirmed, margin is made available. 

This can be applied to intraday or F&O trades. MTF can also be used by some brokers. You do not lose your shares, rather, they remain in your demat account. You also receive dividends on these shares. You can release them later and pay the fees to the broker on closure. Pledge margin helps you trade more without adding extra funds. 

Interest on MTF trades is calculated on the gross funded amount for the number of days you hold the position open, and the interest rate may vary depending on the broker.

The calculation follows a simple formula:

Interest = Borrowed amount × daily interest rate × number of holding days

For example, if you buy 100 shares of a stock priced at ₹1,000 each (total trade value ₹1,00,000). You pay ₹40,000 as your margin, and the remaining ₹60,000 is funded by the broker under MTF. The broker charges interest on this funded amount at a daily rate of 0.0411%. If you hold the position for 30 days, the interest adds up to around ₹739.8.

For a quick and accurate estimate, you can use the m.Stock Pay Later (MTF) Calculator, which instantly calculates interest on MTF trades, helping you plan your trade efficiently before placing the order.

MTF interest is usually charged on a daily basis, not monthly. When you buy shares using MTF, the broker funds a part of the amount for you. Interest starts applying from the day the position is created and is calculated per day on the funded amount. The longer you hold the MTF position, the more interest you pay.

Most brokers add this interest to your ledger and debit it monthly, but the calculation itself is daily. So even if you hold shares for just a few days, interest is charged only for those days. Always check your broker’s MTF rate and charging method before using it.

When you use MTF, it is usually safer to stick to well-known stocks that trade in high volumes every day. SEBI norms generally allow MTF only on selected “Group I” / approved stocks, and brokers typically prioritise liquid, widely traded names for this list. Large-cap companies and stocks from indices like Nifty or Sensex are often preferred because their prices move more steadily, and buying or selling is easier. These stocks also tend to stay eligible for margin support.

It is generally recommended to avoid stocks with low trading volume or that are experiencing sudden price fluctuations. Before placing any trade, always check your broker’s eligible MTF stock list. For example, m.Stock offers a list of 1100+ stocks to choose from. By choosing stable and liquid stocks, you can manage risk better while using MTF.

m.Stock gives access to one of the top trading APIs at no extra cost. Once your demat account is opened, you get access to the API. You can use it to place trades or check positions in real time. There are endpoints for orders, margin portfolio, and watchlists.

Additionally, the system works with secure login and live speed. Developers can build custom trading solutions directly on top of the m.Stock backend. You do not need a subscription, plus you can access the developer portal once your account is created. That makes this API setup useful for self-directed algo traders.

You need to have eligible stocks in your demat account to pledge shares. On m.Stock, it is entirely digital. You visit the platform and select stocks from the approved list. Once quantity is chosen, a pledge request is placed. Authentication is usually done by sending an OTP through NSDL or CDSL on their authorisation page, as per SEBI’s pledge/re‑pledge framework. 

The pledged value is recorded in the trading account once it is confirmed. This margin may be applied to F&O, MTF, and intraday, subject to the broker’s eligibility rules and applicable haircuts.