For running a business, every company needs capital or money. Although sometimes, the sales and profit generated by sales do not meet the required work capital. And because of this, the company invites familiar people like you and many others to invest in the company. In return, they will get shares. If the company gains profit in any case, you will also get your amount of profit in your account. Before investing in the stock market, every person needs to know the basics of the stock market. You can also join the Stock Market Institute In Delhi, where you will learn from basic to advanced level stock market knowledge. Now let’s know the stock market basics in detail.
What Are Stocks/Shares?
The meaning of the term stock/share determines the part of the ownership of any company. Once you invest the amount of your capital in any company, you will have a certain percentage of ownership rights. For instance, you own 3% shares of the company that are being trade in the stock market. Then you can say to anyone that you have a 3% ownership stake in some particular companies’ stock.
Hence the stocks/shares determine the ownership units of the company, including its financial assets. Also, claims are well known as equity, scrips, and stocks. Once you purchase stocks/shares of any company, you will become a stockholder or shareholder of that particular company. You can also find the different types of claims for investing in the stock market, and a selection of them can be made based on your investment.
Why Do Any Company Need The Stocks/Shares?
What is the primary purpose of a company to get capital or money from the market? As explained above, if any company wants to expand its business or grow in the market, there is a need for additional capital. At that time company need to knock on the door of the stock market and issue the stock/share in the market, and the price of a claim is decided based on companies market value, which any investor can buy.
To get the ownership stake in the company or the number of stocks/shares, every investor needs to pay some amount of money in return. When the price of shares rises, the number of shares held by shareholders will also increase. Investors are not the creditors because they are not lending the money to the company. For every beginner, this is important to know the stock market basics, including why any company needs shares.
How Does a Company List Its Stocks/Shares
Initial Public Offering (IPO) is the other most essential stock market basic. The term IPO refers to those companies that issued their shares/stocks for the first time to the common public. Suppose any company needs to be eligible for issuing the shares. In that case, the company needs to follow some essential rules and regulations made by the regulator of the market SEBI (Security Board Exchange of India).
What Is the Security Board Exchange of India (SEBI)
Security Board Exchange of India is the stock market regulator, and also it supervises the fraudulent activities made by any of the parties, investors, brokers, and traders.
What Are Stock Exchanges? And How Many Types of Stock Exchanges Are There?
The stock exchange is a place where different traders and investors meet and perform the activity of buying and selling financial assets, including shares or stocks. However, there are two primary types of stock exchanges in India, 1 Bombay Stock Exchange (BSE) and 2 National Stock Exchange (NSE). It is the essential information that every investor should know regarding the stock market basics.
What Are SENSEX And Nifty?
Sensex and Nifty are broader Indices/Benchmarks that represent the Corporate Performance of the Indian Economy. It has 30/50 Large Cap Diversified companies across ten major Sectors/22 sub-sectors that contribute 80 to 85% of Indian GDP and thus can represent the Indian Economy. It comprises large-cap blue-chip stocks.
Nifty Index was at the level of 10000 a year earlier and one year later, if the index goes to 13000, which means Indian Economy Corporate performance has given a 30% return every year, which can be considered a good performance by the Indian Corporate Sector. Indices are also use as an underlying in derivatives. Other Indices are used as a benchmark for Portfolio Performance when we invest in analyzing the performance concerning benchmark indices. It helps us know whether the portfolio has outperformed/underperformed the index benchmark known as Alpha +/-ve in Portfolio performance.
When Can You Conduct Stock Market Transactions?
When it comes to India’s stock market basics, one should also know which tike they are allow to buy or sell the shares/stocks. In India, the working hours of the stock market are between 9:15 AM to 3:30 PM. As there are market holidays in-country, the market is closed at that time. For instance, Holi, Independence Day, and Republic day are some market holidays.
How Do You Make Money?
For making buy stocks at lower price and sell them at highest price is the best way to earn or make money. Although there are two ways of doing this, if you are a beginner or investing in the stock market for the first time, it is essential to know the difference between stock investment basics and stock trading basics.
The Two Ways Are
Investors who keep or put their money for a long time in the stock market are stock investors. Over the period, the returns on their investments are compounde. These kinds of investors use fundamental analysis. These investors look towards the company’s growth, and if the company goes, the part of your investment grows gradually.
Generally, stock traders do the buy and sell activity on the same day or during trading sessions. This technical analysis is use by traders, which helps select the rights stocks to invest. These traders look for quick short-term gains.
How Do You Start Trading Or Investing
To start investing in shares and stocks, you need to open a Demat or trading account. Nowadays, you can easily find out the demat cum trading account many investors provide. For performing the activity of buying and selling shares, there is a need for a trading account. Although as a trader, if you are buying or selling within the same day, you don’t need to open a Demat account. For this purpose trading account is sufficient. The place where the shares/stocks purchase by you are stored in electronic form is known as the Demat account. Transferring and dematerializing of claims will be done in 2 working days. And after the completion of this process, wherever you will buy or sell the shares, they will be automatically debit or credited from your account.
Are There Any Taxes?
- Gains you will get from stock market tax apply to it. You can get brief information on tax functional on your investment:
- One can easily hold long-term gains for one year or more.
Type of Tax
- 10% over or above Rs 1 lakh Long term Capital Gains On the sale of equity
- When securities transaction tax is applicable. Short-term capital gains tax is 15%
There are various questions ask by every beginner before investing in stock market. Because they don’t know the stock market basics. In this article we mentioned some important stock market basics which are important for every beginner before dive into stock market.