A grounding in equities, bonds and the other instruments that make up the market — the vocabulary every investor needs first.
Every financial security falls into one of two families: you either own a piece of something (equity) or someone owes you money (debt). Almost everything else — mutual funds, ETFs, derivatives — is built by combining or repackaging these two basic building blocks.
Buying a share of stock makes you a part-owner of that company. Your return depends entirely on how the business performs — there's no ceiling, and no floor.
Buying a bond or debenture means you've lent money to a company or government, in exchange for regular interest and your principal back at maturity. Lower risk, and a return that's capped by design.
Every instrument sits somewhere on the same trade-off: the more potential upside it offers, the more risk of loss it's carrying alongside it. Anyone offering high returns with "zero risk" is describing a contradiction, not a product.
Lowest risk, lowest return. Principal is protected; returns rarely outpace inflation by much.
Moderate, predictable returns. Risk depends heavily on who's borrowing — a government bond and a small company's debenture are not the same risk at all.
Higher long-term return potential, with real short-term volatility. Ownership means sharing in both the upside and the downside.
The highest-risk end of the spectrum. SEBI's own data shows the large majority of individual F&O traders lose money — this is a tool for hedging and experienced traders, not a shortcut to wealth.
Opened with a SEBI-registered broker — your Demat account holds the shares, your trading account places the orders.
Your buy order is routed to a recognised exchange — NSE or BSE — never settled privately off-book.
The exchange matches your order and shares are credited to your Demat account, typically within one working day.
A digital contract note confirms exactly what was bought, at what price, and the charges applied — your proof the trade was real.
This is exactly the process illegal Dabba trading bypasses — private ledgers, cash settlement, and zero contract notes. If any of these four steps is missing, you're not actually trading on the stock market, whatever the app on your phone shows you. (We cover this in detail in our Cyber Crime lesson.)
A company raises fresh capital directly from investors for the first time — most commonly through an IPO (Initial Public Offering). The money goes to the company itself.
Once listed, investors buy and sell existing shares among themselves on the exchange. This is the day-to-day stock market most people mean when they say "the market."
Brokers, advisors and fund managers must hold a valid SEBI registration — checkable directly on sebi.gov.in/intermediaries.html.
SEBI's official grievance portal for lodging complaints against any registered broker or advisor who's let you down.
Exchanges maintain an IPF to compensate investors in specific default scenarios — a protection that simply doesn't exist outside the regulated system.