How the market actually works

Most investors start with "what stock should I buy." The better question is "how does the market decide what a stock is worth." Order books, price discovery, indices, corporate actions, costs and taxes. These are the plumbing. Without them, factor and momentum strategies are just words.

23.44 Cr
Demat accounts in India, July 2026
Depository data
T+1
Settlement for every listed share since 27 Jan 2023
SEBI
23,119
Nifty 50 close on 15 Sep 2026, 7.8% below a year earlier
NSE
1.1How Indian stock markets work13 min 1.2Understanding stock data13 min 1.3Indices and benchmarks14 min 1.4Reading financial statements12 min 1.5Orders, costs, and taxation13 min
What these 5 modules cover
  • 1.1 How Indian stock markets work: NSE, BSE, clearing corporations, depositories, price discovery, circuit filters.
  • 1.2 Understanding stock data: OHLC, volume, open interest, circuit limits, corporate action adjustments.
  • 1.3 Indices and benchmarks: Nifty 50, Nifty 500, sectoral indices, how weights are computed.
  • 1.4 Reading financial statements: Income statement, balance sheet, cash flow. What to look for, what to ignore.
  • 1.5 Orders, costs, and taxation: Market vs limit orders, STT, brokerage, GST, slippage, and the real cost of a trade.
Read 2 more paragraphs, 137 words

India has two main exchanges. The National Stock Exchange (NSE) is the larger by volume and the venue for most derivatives. The Bombay Stock Exchange (BSE) is older and still the primary listing venue for many corporates. Both are regulated by SEBI. The equity day runs from a 9:00 pre-open auction to continuous trading from 9:15, and since 3 August 2026 stocks with F&O contracts close through an auction after 3:15 pm while the rest trade until 3:30. Every trade settles T+1.

The rules underneath change more often than people think. In the last two years alone, tick sizes started to vary with price, index lot sizes were cut, the closing price moved to an auction for the largest stocks, and retail algo trading got its own framework. Module 10.1 has the current plumbing in one place.

The products you can actually buy

Equity shares are only one of many instruments that trade on Indian exchanges. Mutual funds, ETFs, index funds, bonds, derivatives, REITs, InvITs, and commodities each serve different purposes in a portfolio. Knowing which is which, and which belongs in your allocation, is half the work.

This path is deliberately structured so a complete beginner can start at module 6.1 and finish module 6.9 with a working map of the entire Indian investable universe.

6.1Equity shares: structure, rights, corporate actions11 min 6.2IPOs and new listings9 min 6.3Mutual funds: structure, types, costs8 min 6.4ETFs: how they work8 min 6.5Index funds vs ETFs vs active8 min 6.6Derivatives: futures and options9 min 6.7Bonds and fixed income in India8 min 6.8REITs and InvITs8 min 6.9Gold, commodities, and international8 min
What these 9 modules cover
  • 6.1 Equity shares: structure, rights, corporate actions: What you actually own when you buy a share. Splits, bonuses, dividends, rights issues.
  • 6.2 IPOs and new listings: How to evaluate a new listing. Why most IPOs underperform and which ones do not.
  • 6.3 Mutual funds: structure, types, costs: AMCs, schemes, categories, expense ratios, NAVs, and the hidden costs.
  • 6.4 ETFs: how they work: Creation baskets, authorised participants, tracking error, liquidity.
  • 6.5 Index funds vs ETFs vs active: When to pick which, Indian specific cost comparisons.
  • 6.6 Derivatives: futures and options: Lot sizes, margins, expiries and hedging. Why 87.7 percent of individual F&O traders lost money in FY26.
  • 6.7 Bonds and fixed income in India: G-Secs, corporate bonds, NCDs, tax free bonds, SGBs, yield curves.
  • 6.8 REITs and InvITs: Indian REITs explained. Yields, distribution taxation, suitability.
  • 6.9 Gold, commodities, and international: SGBs vs gold ETFs, MCX commodities, LRS for foreign equity.

Common questions about Indian stock markets

How does the Indian stock market work?

India has two main exchanges, NSE and BSE, both regulated by SEBI and open from 09:15 to 15:30 IST on weekdays. NSE is larger by volume and the venue for most derivatives. BSE is older and still the main listing venue for many companies.

What can I invest in on Indian exchanges?

Equity shares, mutual funds, ETFs, index funds, bonds, derivatives, REITs, InvITs and commodities all trade in India. Path 6 explains each one, from equity shares in Module 6.1 to gold, commodities and international investing in Module 6.9.

What is a stock market index like the Nifty 50?

A stock market index tracks a basket of stocks and serves as a benchmark. Module 1.3 covers Nifty 50, Nifty 500 and sectoral indices and how their weights are computed. Most plain indices weight stocks by company size, while a quantitative index weights them by fixed rules.