Basics of Stock Market

INTRODUCTION
(BIRD’ S– EYEVIEW)

♦ A Stock Exchange Or Stock Market Is A Physical Or Digital Place Where Investors Can Buy And Sell Stock, Or Shares, In Publicly Traded Companies. The Price Of Each Share Is Driven By Supply And Demand.

♦ Stock Exchanges In India Began Informally Back In 1850s When 22 Stockbrokers Began Trading Opposite The Town Hall Of Bombay Under A Banyan Tree.

♦ Investors Who Trade Stocks Do Extensive Research, Often Devoting Hours A Day To Following The Market. They Rely On Technical Stock Analysis, Using Tools To Chart A Stock’s Movements In An Attempt To Find Trading Opportunities And Trends.

♦ Two Primary Stock Exchanges In The Country: Bombay Stock Exchange (BSE) And National Stock Exchange (NSE). All Companies Who Want To Get Listed Approach Either NSE, BSE Or Both.

♦ All Stock Exchanges Need Equity Benchmarks To Signify The Trend In The Stock Market In The Best Way Possible.

WHAT ARE SHARES?

• Shares are a way to own a part of the company’ s value. In proportion to the capital you invest, you can get ownership rights to a certain percentage of the company.
• Shares are units of ownership in the company and its financial assets. Shares are also known as stocks, equity, scrips etc.
• After purchasing them you will be known as a stockholder or a shareholder of the company.
• There are different types of shares available in the market to invest/trade in.

WHY DO COMPANIES NEED SHARES?

• When A Company Is Scaling Up, Expanding Its Business Etc, It Will Need More Capital. During Such Times, A Company Can Tap Into The Share Market And Offer A Certain Number Of Shares Based On Its Market Value, Which Investors Can Buy.
• Investors Will Be Paying The Company Some Money And In Return Get To Be Part Owners. So When The Value Of Shares Rises, The Value Of Shares Investors Own Rises. Investors Are However Not Lending Money To The Company So They Are Not Creditors.

HOW DOES A COMPANY LIST ITS SHARES?

~ The first time a company offers its shares to the public, it is called an Initial Public Offering (IPO)

~ Securities and Exchange Board of India (SEBI), our markets regulator, has laid out a few rules and regulations for a company to list its IPO on exchanges which they have to comply with before being eligible for listing.

HOW DO YOU MAKE MONEY?

STOCK INVESTORS

~ Stock Investors Are Those Who Keep Their Money In The Stock For A Longer Period O1 Time, Sometimes Even Years.

~ Investors Use Fundamental Analysis As Returns Are Compounded Over A Period O1 Time.

~ They Look At The Growth Trajectory O1 The Company Because Your Investment Literally Grows With The Company In The Long Term.

STOCK TRADERS

~ Stock Traders Generally Buy And Sell Within The Same Trading Session

~ Traders Use Technical Analysis To Understand Which Stocks To Invest In.

~ Traders Look For Short And Quick Gains.

~ Stock Trading Basics Will Require You To Learn Technical Indicators Like Momentum Oscillators, Bollinger Bands, Charts And More.

CONCLUSION

ARE THERE ANY TAXES?

Yes, Taxes Are Applicable To The Gains You Make From Your Stock Market Transactions. Long Term Capital Gains Are Defined As Gains You Make After Holding Your Shares For A Period Of 1 Year Or More And Short Term Capital Gains Are Gains You Make When You Hold The Shares For A Period Of Less Than A Year.

As Now You Know The Basics Of Stock Market,You Must Know That Unlike Consuming, Investing Puts Money To Work So It Can Grow Over lime. However, Investing Also Comes With The Risk Of Losses. Investing Is The Act Of Committing Money Or Capital To An Endeavor With The Expectation Of Obtaining Additional Income Or Profit. The Stock Market Is A Comm Way For Investors, No Matter Their Experience, To Invest For A Lifetime. Beginning Investors Can Get Help From Expert Advisors, Leave Their Portfolio Selection And Management To Robo-advisors, Or Take A DIY Approach To Investing In Stocks.

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AUTHOR: BHUPINDER DIXIT | FOUNDER OF GYANSETU EDUCATIONAL TRUST