What is share market and how it works
णंWhat is share market?
What is share market ? – ‘Historical surge of 1000 points in the stock market’, ‘Increase in investors’ wealth by Rs 2 lakh crore’, sometimes ‘A massive fall of 1000 points in the stock market’, ‘Huge amount of investors’ capital wiped out’ – these types of news. After reading this, various kinds of questions arise in the minds of millions of people that why do such sudden fluctuations occur in the stock market? What happens on a particular day that suddenly causes an upheaval worth trillions of rupees in this market?
Enlightened readers should understand that everything like this happens in the stock market, that is why it is a stock market and its index is called sensitive index ‘Sensex’. Due to its sensitivity, it fluctuates due to the news of events happening in the society, country and abroad. Sensex needs only excuses to rise or fall and when there is no such reason, the market remains stable. But who would be interested in such a stable market?
The stock market is fickle, but due to its fickleness it should not be considered a mere speculative market. There is definitely betting here, but this market has different stadiums for each of its players. For day traders (those who keep buying and selling continuously throughout the day, they are called day traders) it is casino-gambling, while for those who simply stay in the market by investing, it is a pure investment market. in this market
It is safer to stay as an investor. His investments can remain safe as well as create more wealth.
An attempt can be made to explain the matter on the basis of one or two true stories. If a person had invested Rs 10,000 in a company called Wipro in the year 1980 and had kept that investment safe till the year 2006, then its value would have been Rs 200 crore. When Dhirubhai Ambani brought the first public issue of his Reliance Industries, if a person had invested Rs 10,000 in his company, it would have become Rs 2 crore by now. In summary, by choosing good companies in the stock market, the investor who keeps his investment in it for a long time gets a lot of benefits. These can be purchased at any time to buy shares for a long term. The reason is that the basic nature of the market is such that one who is patient gets huge profits.
What is IPO ?
When any company issues a public issue for the first time to raise capital, it is called ‘Initial Public Offer’ (IPO). Applicants who are allotted shares in the public issue can buy and sell them through the stock exchange after listing of the shares. The deals that take place after listing are called ‘secondary market’. When a company offers shares to its existing shareholders only, then such an issue is called a rights issue, in which the shareholders get the right to apply for new shares of the company on the basis of the proportion of their shares. But it is not his responsibility to apply for these new shares. When a company is continuously earning profits, it distributes some part of the profits to the shareholders as dividends from year to year. When the remaining profit share is accumulated and that accumulated amount is capitalized, shares are allotted free of cost to its existing shareholders in the prescribed ratio. So it is called ‘Bonus Share’.
Keep this in mind while applying for IPO
IPO of any company. While applying, the investor should know who are the promoters of the company? What is the past record of these promoters? If these promoters own any other company then what is the financial performance of that company? Which industry sector does the company belong to? What are the current status and future prospects of that industry? What are the future plans of the company? What will be its possible result? Answers to many such questions are found in the offer document (prospectus) of the company. In this, information about the risk aspects of the company is also given. Now companies have to start their IPO. Grading has to be done for. This grading is given by various grading agencies including CRISIL. This grading is given on a scale of one to five based on the fundamentals of the company. In this, the company ranked first is considered weak from the fundamental point of view. It is better not to apply for the issues of such companies, whereas Grade-2 is an ordinary company, Grade-3 is a sign of a good company. The fundamentals of Grade-4 and Grade-5 companies are indicative of strong and remarkable level.
Meaning of ‘PAN’ in stock market
One thing should be clearly understood that before making a deal to invest in the stock market or IPO. Now Income Tax Permanent Account Number (PAN) is also required to apply for Income Tax. Similarly, to trade in the stock market, it is also necessary to have a demat account. Demat account cannot be opened without PAN card. Thus now dealing in shares is not possible without PAN number. There is no need to panic after hearing the name of Income Tax PAN number. In this age of computers, transparency related to income tax has increased, hence investors dealing in shares should not worry too much about income tax. The government has kept the dividends received on shares tax-free, that is, there is no tax on the amount that the company gives to the shareholders every year as dividend from its profit.
Apart from this, the government has also given many other tax benefits to the investors investing in the stock market. When a shareholder makes a profit by selling a share within twelve months of its purchase, then short term capital gain can be earned on this profit. This is called ‘Long Term Capital Gain’ and there is no tax on this gain. This means that if investors make profit by selling the purchased shares after twelve months, there is no tax on such profit.
stock market information
This question also arises among a large section of investors that B.S.E. And NSE. What is the difference between? Not only this, for whom are the stock markets existing in different states and how are they different from these? B.S.E. (Bombay Stock Exchange) and NSE. (National Stock Exchange) Both of these are fully computerized-online stock exchanges.
B.S.E. It is the largest stock exchange not only in the country but also in Asia, on which the largest number of listed companies are listed, while NSE is the largest stock exchange in the world. It has been established for almost 17 years. Both these stock exchanges have become global level today and its members can transact deals with these exchanges from any corner of the country. In contrast, the stock exchanges of various states have now become volume-depleted and the number of trades on them is now negligible. Not only this, these are equivalent to stock market closure, but these are equivalent to BSE. And NSE. Become a member and make a deal on it.
What is Sensex and other indices?
Whenever there is talk of stock market, the word ‘Sensex’ is heard or read first. Headlines like ‘Sensex has crossed the level of 20 thousand’ or ‘Sensex broken’ are read in newspapers or on TV. But get to hear. Sensex BSE Or the benchmark index, which consists of 30 blue chip companies from 12 important industrial sectors, due to which it is considered a barometer of market fluctuations. The rise and fall of Sensex indicates recession or bullishness of the market.
When an investor invests in the companies included in the Sensex, he has the confidence that the companies in which he has invested are very strong companies in terms of fundamentals and growth. If you think that the Sensex is going to rise then you can make a deal to buy it and if you think that the Sensex is going to fall then you can make a deal to sell it. These types of deals are called ‘Sensex futures deals’. B.S.E. ‘Mini Futures Contract’ has also been started to enable investors to trade in Sensex with less capital investment.
Broker’s Choice
Dealings in the stock market can be done only through registered stock brokers. Investors should choose the broker carefully and while choosing it, they should keep in mind their track record, quality of service, advisory service to the clients, how they behave with you after research etc. If a stock broker provides cheap facilities, charges low brokerage, gives captivating and attractive news then it is not advisable to select the broker only on the basis of these qualities.
Similarly, while opening a demat account, you require a Depository Participant (DP). From brokerage to banks, anyone can be your DP. It is possible If you trust your broker, you can open your demat account with him in any nearby bank. At present, many banks are providing the facility of trading account along with demat facility. While opening a trading account, you have to provide information about demat account, PAN card number, your photo, address proof, bank etc. Now transparency in such behavior is continuously increasing.
mathematics of tips
You hear the word ‘tips’ again and again in the stock market. People keep telling each other which stock will double in three months, etc. In market language such advice is called ‘tips’. Operators and bookies spread a huge amount of tips-culture, in which information based on true, false or rumors keeps spreading in the market. Investors should always be cautious of tips spread in the market. During bullish times the tips culture becomes more developed in the market. Tips do not have any solid basis, due to which the amount of risk in the deals made on their basis is quite high. It is often seen that new investors get lured by these market tips and invest their hard-earned money and later regret incurring losses.
