Concept of Share Market: –
Many people are ignorant about the concept of the share market, how it works, IPO, rules for buying and selling shares. Many people want to invest in the stock market, but they don’t know anything about the market. In today’s article, we will learn more about this topic
What is the stock market?
The most important thing to run a company or business is capital.
This capital is sold in small portions of the company’s ownership. These shares are called ‘shares’. The sale or purchase of shares is called ‘trading’ and the place where these transactions take place is called the ‘stock market’.
History of Indian Stock Market: –
In India, the first Stock Exchange (BSE) was established in Mumbai in 1875. It is the oldest stock market in Asia.
In 1894, the Ahmedabad Stock Exchange was started for the trading of textile mills. The Kolkata Stock Exchange was started in 1908 and the Madras Stock Exchange in 1920.
Gradually, it expanded and merged 24 different stock exchanges to form the National Stock Exchange (NSE) in 1993, which enabled all stock market transactions.
Stock market procedures:
Companies participating in the stock market, trading brokers, traders, and other investors buy and sell shares through the market.
First, companies that enter the market raise capital by selling shares through IPOs rather than borrowing, and use this capital for business growth.
Individuals who buy shares of such companies become partners of those companies. If the company makes a profit, the profit is distributed to the shareholders in the form of dividends.
As the company’s profits and business continue to grow, so does the value and demand for its shares. The price of a share depends on the demand for the stock. As demand increases, so does the price of shares.
Since it is not possible to deal with thousands of investors at a time, a person with a trading license, ie a stockbroker or some brokerage firm, is allowed to buy and sell shares.
Brokers act as intermediaries between the stock market and investors. Brokers charge a reasonable fee for buying and selling transactions, which they have to pay to investors.
1. When and where to invest –
There are many types of stocks available in the stock market for investment. But each investor has to decide how much to invest by recognizing his financial objectives, risk potential, and financial limits.
For example, you have just got a job and your monthly salary is around Rs 25,000. The rent is Rs. 10,000 and the rest will be 5,000. The remaining Rs 10,000 is left for investment. In this case, you can invest some of the remaining salary in a low-risk option.
It is very important to make a decision by recognizing the risks involved while investing.
2. Investment Plan –
It is important to study the market when making investment decisions. Understand the fluctuations in the share price and decide your investment strategy accordingly.
Once you have decided how much and when to invest, choose the right stocks.
E.g. Your budget is Rs. 1000, then you can buy one large-cap or some small-cap stocks. Choose high-dividend stocks to maximize profits.
Know the market position of the company you have invested in. Maybe the company’s market credit is declining. It is important to monitor the company’s performance to prevent such losses.
3. Identify the right time –
Time is of the essence in the stock market! Shares that are at the bottom today may also see a higher position tomorrow. So when it comes to investing, don’t go for less than your full potential. Always keep an eye on the market when buying and selling.
Sometimes when investing, there are problems like not getting enough agriculture, the market is falling. In such a case, it is convenient to wait for the right time.
4. Portfolio –
The stock market is a dynamic thing. Some companies may seem profitable in a moment, but at another moment they seem to have slipped into that market. In your investment profile to avoid unexpected difficulties (Investment profile) or portfolio needs to be changed.
New investors should not be intimidated by the falling price of the stock and turn their investment for the purpose of making a profit.
To overcome the volatility in the stock market, it is necessary to examine the portfolio and make the latest changes.
The “stock market” is a bit of a bold investment option. If you are considering investing in the stock market, you need to have enough information and study. The leading name among the successful investors in the world is “Warren Buffet” who amassed immense wealth on the strength of the stock market. Of course, this requires careful investment, so be sure to seek expert advice when investing in the stock market