Confused about what exactly stock market is? Here I’m to make it easy for you and yes you are on the right article. Let’s start.
What is Share Bazar or Stock Market?
Stock Bazar or Share market or Equity market is nothing but huge groups of buyers and sellers of shares, that represents the ownership of their business. To be very simple and more precise stock market is a platform where trading of public listed companies take place.
The basic concept behind a Stock market is simple. A company for it’s development and expansion raises capital(money) from public. This process by which the shares are issued by the company is called Initial Public Offer(IPO).
The company sells shares or stocks and distributes some dividend of the company’s earnings to the shareholders.
As there is a designated market for each and every commodity, Stock market is also such designated market for trading by ensuring a secured, controlled, very well managed environment.
As Stock market brings a large number of market participants together who wants to buy or sell shares, it allows transparency in money transactions and also provides fair pricing. Share market ensures trading with minimal risks.
National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are the major stock exchange platforms in India which are regulated ultimately by Securities and Exchange Board of India(SEBI)
OK now let’s talk about the basic tips about Share market and be thorough with the concept. First and foremost basic is Investment.
2.Investment and need of Investing in Shares.
Instead of keeping your shares idle, those can be used in order to get returns on them in the future. This is what us called as Investment.
One needs to invest to:
- Earn returns on the resources you invested on.
- Generate money.
- Make a provision for future.
Most common doubt is When to start investing? Here I’m to give you a clear picture about it.
When to start Investing in share market?
It is better to start investing soon. By investing early your investments grow more and also increases your income by aggregation of interest earned on it year by year.
Three helpful rules for all investors are :
- Early investment.
- Regular investment.
- Long term investments, never make it short term.
- You can start your investment journey by opening a trading account with a broker and link your bank details and you are good to go.
Note : Before investing, it is always very important to learn the basics of Stock market. So it is wise to keep your basics crystal clear. I assure you by the end of this article you will be knowing all the necessary basics about the Stock market. Keep reading.
READ MORE: Top 10 Investors In India
Why trading in stock market is a better option?
Trading in Stock market is beneficial in many ways. Yes, here is your answer.
- You can start with small amount of money.
- Minimum time is required to trade here.
- It’s fast cash and also allows liquidation quickly.
- Profits from Stock market are worth the time.
How exactly stock market works?
Stock market works by two different markets. They are :
Primary market.
Secondary market.
What is Primary market?
- Primary market provides issuers the opportunity for the sale of new securities. Capital is raised by the company or government by issuing shares by the IPO.
- The issue can be either a public placement(shares are made to more than 200 members) or a private placement (shares are made to less than 200 members).
- Most of the companies are usually started privately by the promoter’s capital.
- Promoter’s capital is nothing but borrowing money from bank and various other financial institutions, this may not be enough for running a business for long term hence companies invite public for equity investment and give shares to investors individually.
What is Secondary market:
- Secondary market is a place where the securities are traded after initially offering public in the primary market.
- They are listed on the Stock exchange to be precise. Majority of the trading happens in the secondary market only.
- Secondary market further consists of further debt and equity markets.
What are the major notable differences between primary market and secondary market?
- In primary market, securities are issued to public for raising capital.
- In secondary market, pre-existing securities are traded among investors only.
What is equity Investment.
Equity is nothing but a Share. You become a shareholder in a company, when you buy a share from that company.
Equities are potential in increasing the value over time. They also provide a long term growth. Equities are most challenging and rewarding at the same time.
They can also give you superior and high yielding returns but are also high risk investments. So take care while investing.
What is the importance of stock market?
- Stock market is very important because they help to raise capital to companies and helping them to expand their business .
- Stock markets enable trading publicly.
- Stock markets are organized markets for buyers and sellers ensuring many benefits with lower risk rates.
- Stock markets aids in promoting investments. They help a business to grow and prosper
- For investors, stock market provides opportunity to potentially earn shares in company’s profits.
- Stock market is also important to estimate the economy of a country.
As all of us know by investing on shares, money can be earned. The money grows by the following ways:
Dividends.
- Dividends are nothing but company’s profit earnings that are shared among shareholders.
Capital growth.
- Investing in shares leads to Capital growth. The longer the investment duration, the higher returns you get back. Along with profits, there are risks as well. So one should be prepared for all these before investing in shares.
Buyback.
- Buybacks are nothing but the company buys back the shares by offering a higher value than the actual market price. A company generally does this when it has huge amount of money or to unify or centralize their ownership.
So take care of all the above mentioned facts and keep your basics about stock market clear to avoid future problems. Invest right and enjoy the profits.