Everything You Want to know about Share Market

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Everything You Want to know about Share Market Meager Income and ascending Inflation has always made a common man think of ways of earning money through different sources and the main source of income for the same has always been investing in Share Market.

But before investing in Share Market, it is important to know the basic terms and keywords so that investing becomes easy because investing in Share Market can become disastrous without proper knowledge.
Hence, Read On to Know more !!!

What is Share Market?

Is it actually Gambling?
Or a Mind-Game?

Let’s see what it is…

Share Market is actually a place which acts as a source of capital for companies. Shares are bought and sold in the share market.
It is a way through which the PUBLIC companies can expand their business.

There are 2 types of Share Markets:

1. Primary Share Market:
Basically used by companies to raise funds. Companies generally get listed on the stock exchange through the primary market route. When a company is selling shares for the first time, it is called an Initial Public Offering or IPO, after which the company becomes public.
2. Secondary share market
In the secondary market, investors trade on already listed securities by buying and selling them.

Investors or Market participants need to get registered with the stock exchange and market regulator SEBI to be able to trade and do anything and everything in the stock market. 
Now, let’s see the next important topic.

What are Stocks?
Ownership of company in share market is sold to investors in form of stocks/shares. Stocks are often termed as Equities as they represent equity (ownership) in the business.
Individual stocks or shares represent ownership of any company further divided into small units.

There are 2 types of Stocks:
1. Common Stocks: Stocks in which the shareholders receive their proportionate share of profit or losses. The most important point is that the Shareholders purchasing Common Stocks have the right to elect the Board of Directors of the company.

2. Preferred stocks: Stocks in which the shareholders receive a specific dividend at predefined intervals. The most important point is, the dividend paid to shareholders of the preferred stocks are generally before the dividends paid to the shareholders of common stock.

Now, when we know what all about share market and stocks; let us see how can we invest in the share market.

How to invest in Share Market?
Share market acts as an interface between companies and investors and is the platform where companies list their stocks for selling.
The investors buy the companies stocks and the money raised by the companies in selling their stocks is the accumulated capital which is further used by the company to modernize or expand their business.
The main advantage of a company in raising capital from the share market is that the capital is interest-free i.e. no interest needs to be paid on the borrowed fund as in the case of banks.

Easy to understand, right.

But, Invest Karna Kha he?

Well, there are actually two very big Share Markets in India namely:

● Bombay Stocks Exchange (BSE) and
● National Stock Exchange (NSE)

There is no need for traveling to Bombay or Delhi just to buy stocks. Either take the help of a broker or You can DO IT AT YOUR HOME TOO.
All you will need is just a Demat Account and an online trading platform which is provided by all major banks like ICICI, SBI, HDFC, AXIS etc.

And, what is the use of buying these stocks of the companies?

Stocks are actually brought for 2 reasons:
1. For Earning Dividends
2. For claiming Capital Appreciation

Let’s have a look at each of the point.
For Earning Dividends:
A person becomes a proportionate owner of a company on buying a stock. It means the person is eligible for a proportionate claim in the company’s earnings.

Dividend Earning is purely dependent on companies profits i.e whatever the company earns or whatever the profit of a company is; the shareholder will earn accordingly.

Hence, when a company distributes its earnings or profit among the shareholders, it is known as Dividend Distribution and the Shareholder earning is known as Dividend Earning.

For Claiming Capital Appreciation:
Earning through Capital Appreciation is purely dependent on the price of stocks in the near future. For example, If you bought stocks at some price today; but after some years the company gains profit and its market value increases and hence, its stock value also increases. Now, if you sell the stocks, then due to the increased stock price; you will earn the profit and that will be your capital appreciation.

It is because Capital Appreciation is the appreciation of the market price of the share and is dependent on the growth of companies assets and earnings.

This was all about Share Market and its whereabouts.
Share market is a powerful and vital platform for both companies and investors and hence, having complete knowledge of the same can be beneficial economically and statistically.
Hope the post helps…

Cheers!!!

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