Share Market - Basic

 

Share Market

 Beginners

Introduction -

We often heard in the news terms like stocks, shares and phrases like “The market is up”, “Invest in Mutual fund”. But how many people actually know what these really mean? Sometimes we heard correct information or sometimes it’s false and misleading information. Only 2% of people in India invest in share market or mutual funds.

Why a company raising shares?

Companies are investing investors’ money for the expansion of their business and to function efficiently.

Share market is where buying and selling of shares. Share is nothing but a unit of ownership of the company. It means if I bought 100 shares of ABCD Company then you become a shareholder of that company. It not only for shares but even bonds, mutual funds.  It also classified into two types Primary and Secondary stock market. Primary means when a company is listed the first time then offering IPO (Initial Public Offering), after which the company becomes Public. The secondary market is already registered in market where we buy/sell their shares at current price. Companies can raise shares to both individual and corporate. If company grows up then automatically share will also increase.

What is an Index?

From among the stocks listed on the exchange, some similar stocks are grouped together and form an Index. It consist of similar stocks basis on industry, company, size, market capitalization, etc. Any change in the price of the stocks leads to a change in the index value. Indices are useful for sorting, to compare the performance with peer one, It Represents a certain segment of the market.

There are a lot of indices in the market but I will give you an overview of major once.
1. Bombay Stock Exchange (BSE) – BSE SENSEX – 30 well-established companies are listed with various industries. The oldest stock market in India. Established at – 1957. The number of listed companies are 5749.

 

2. National Stock Exchange (NSE) – NIFTY 50 – It is a collection of 50 stocks. NIFTY is a market indicator of NSE. It is the biggest stock market in India and Youngest one. Established at – 1993. Th number of listed companies are 1696.

 

What is stock broker? Why it is important?

For investing money in shares we need DEMAT account and Stock broker is nothing but buying and selling the orders. They are bridge between investor and market.

 

Stock brokers are important because they invest money in right place and right direction. Investing

In market is quite if you don’t know how and when to invest.

 

Major stock brokers in India -

1.       Zerodha

2.       Sharekhan

3.       Angel Broking

4.       Motilal Oswal.

 

Difference between Intraday and Delivery trading -

 

Intraday –

             Intraday trade involves buying and selling a shares within a trading session. Those who are not interested in long term trading. You need to square off the position before market closes or else square off the positions automatically. In Intraday we make the profit from buying and selling the shares within a same day.

           

Advantages –

1.      It allows to buy shares with margin

2.      The brokerage fees in low

3.      It allows to short sell the shares.

 

Disadvantages –

1.      It required monitored it closely.

2.       Timeframe is shorter in intraday trading.

 

Delivery –

 

Here we can buy the stock for long term perspective it can be a possession for day, month, or year. Here system will not directly sell the share like intraday but when trader want to sell.

 

Advantages -

1.      Investor receives the dividend, bonus of the shares.

2.      At the initial stage Delivery trading is the safest.

 

Disadvantages –

1.      Blocked the money for a long term perspective.

 Invest in shares is not a big deal but we should know in which shares and when to buy/sell the shares and the most important thing in trading is “TIMING”. 

 Kindly invest your hard-earned money at the right time and in right direction.

 Thanks for reading and suggestions are always welcome.