Are you interested in Share Market? Do you want to learn about how
to earn from Stock Market? Here you are where you can learn the way how Stock
market works to earn. Wise world21st will help you to understand the structure of earning
path and various stages to earn and also we will share strategy. So let’s start
from Beginning:-😊
Introduction
Share market is where burying and
selling of share happens. So, 1st question is what is share? Let’s
understand:
Share means a unit of Capital of
the company which is divided into small parts. And as you know Capital is nothing
but the investment money of owners which helps in running the business. We will
discuss later about the term ‘Capital’ briefly. That small part of capitals
represents in number.
For Example: A Ltd. Having Capital
of 200 Crores INR. So, this huge money can’t be shared or invested by a small
group of people alone. And also a huge group of people can’t invest money
without any proper specification. For that purpose, the whole capital is
divided into very small part; such as Rs. 200 crore divided into 20 crores
unit, which causes each unit value just Rs.10. Now we can say A Ltd. has 20
crores Equity Share Capital of Rs. 10 each.
I hope, you understand the basic
meaning of share.
As I said, Capital is invested by owner, hence the share who hold
will be treated as owner for that particular share valued capital. It means, as
per above example, If any one hold 10 crores share, then he will be the owner
for Rs. 100 Crore capital or we can say 100/200 crores = 50% owner of the
Company. Let’s say if you have 1 Lakh unit of share of above Company, then you
are also owner and you will take part in the action of the Company. Hey hey! Stop
imagines. You can’t participate in the activity of the company, unless you are
not the part of the Board of the Company. You can only suggest, if you want
that only can happen in General meeting of the company.😜😜
All the above are basic ideas about share, because if you won’t
know what is it, then how can know how works it? Right!
So how you can earn from share? It’s
very simple. Buy share and sell it. The difference you gain is your profit, if
not it may causes loss. So, Buying in share is known as Investing.
Investing in shares allows you to fulfill your dreams. If you start investing as soon as possible and stay invested for a long time, the rate of return will be high.
You can plan your investment strategy based on the time you need money.
By buying
share, you are investing money in the company. As the company grows, the price
of your share will increase. You can get profit by selling the shares in
the market. There are various factors that affect the price of a share.
Sometimes the price can rise and sometimes it can fall. Long term investment
will nullify the fall in price.
Why a company sells it shares to the public?
A company requires capital or money for its expansion,
development, etc. and for this reason it raises money from public. The process
by which company issues shares is called Initial Public Offer (IPO). We will
read more about IPO under Primary Market.
You would have always
heard people talking about bull market and bear market. What are they? Bull
market is one where the prices of stocks keep rising and the bear market is
where the prices keep falling. Where all these buying and selling happens? There
are a lot of Institutions all over the world as Stock Exchange. Some of them
are:
1) New York Stock Exchange (NYSE), US.
2) NASDAQ, United States.
3) Shanghai Stock Exchange (SSE), China.
4) Honk Kong Stock Exchange (SEHK)
5) Japan Stock Exchange (JPX)
6) Shenzhen Stock Exchange (SZSE),
China.
7) EURONEXT, Europe.
8) LSE Group, UK and Italy.
9) NSE, India
10) BSE, India
In India, the two measure Stock Exchanges are NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) and are regulated by SEBI (Securities and Exchange Board of India). Brokers act as an intermediary between the stock exchange and the investors. So to start investing or trading, you have to open a demat account and trading account with a broker. You can open Demat Account online easily through a simple process by using the link below. After linking your bank account with these accounts, you can start your investment journey.
Upstox: https://bv7np.app.goo.gl/Msk3PDeVevzThPSa8
Zerodha: https://zerodha.com/?c=AT1313
Types of share Market
There are two kinds of Share Market:
·
1. Primary Market
·
2. Secondary Market
Primary Market:
The
primary market is where shares of a company are distributed or allocated to
public for first time. An initial public offering, or IPO, is an
example of a primary market. These trades provide an opportunity for investors
to buy the shares or bid in the new initiated shares for public. An IPO
occurs when a private company issues stock to the public for the first
time.
·
A company or government raises money by issuing shares in
the primary market by the process of IPO.
·
The issue can be either through public or private
placement.
·
A
privately held company converts into a publicly-traded company when its shares
are offered to the public initially through IPO is known as Public
Placement.
·
When a
company offers its Shares to a small group of investors, it is called private
placement.
·
Qualified
institutional placement is another kind of private placement where a listed
company issues securities in the form of equity shares or partly or wholly
convertible debentures apart from such warrants convertible to equity shares
and purchased by a Qualified Institutional Buyer (QIB).
·
Price of a share can be based on Fixed price or Book building
issue; Fixed price is decided by the issuer and mentioned in offer document;
Book building is where the price of an issue is found out based on the demand
from the investors.
Secondary Market:
For Common buying and
selling shares in OTC platform is called Secondary Market. OTC (Over The
Counter Exchange of India) is an online platform where anyone can buy and sell
any shares with some conditions. The Secondary Market is commonly known as stock
Market which is like NSE and BSE. This is a very simple and easy platform for
investing in shares.
Why we should invest in Share Market?
Share market allows the
companies to raise capital for expansion and growth of its business. Companies
issue shares to the public through IPOs and receive funds from the public that
are used for various purposes. The company gets listed on the stock exchange
after IPO and this provides an opportunity to even a common man to invest in
the company. You can be a Intraday trader, Swing Trader or investor in the
share market.
Intraday Trader:
Intraday Traders are the trader who comes up with low
capital and use margin of broker to buy and sell share. Margin is nothing but
the extra benefit provided by broker to take trade in the same day. Trade means
Buying and selling, which means end of a complete process. They are very quick
and very aggressive. They capture the small-small movement and trade
day-by-day. It contains a high level of Risk and Reward as well. They go for 1-3%
of profit or loss per day.
Positional Trader:
These are the persons who take the trade for more than
one day but not more than 1 week. Mostly Intraday Trader are use the way, when
they find that, the trade is going against their view but it will go with the
view in very near future. Here is avg. 2-5% of Risk and Reward.
Swing
Trader or Mid Term Trader:
These are the person who buy the stock and hold it for a
short period but not less than one week and not more than 1 year. They just
book profit when they achieve target. They specify one level of risk and
reward. It causes a high reward but comparatively less risk than Intraday and
positional trader. Here is 10-20% of profit in some weeks with a risk of 5-7%. Per
trade.
Investor:
The last category is investor, who believes in small
growth is good more than taking risk. They go for a very long term like more than
1 year to 5 or more year of time period. Actually they earn by not only profit
earned from buying and selling stock, but also focus on Dividend, bonus, right
issue etc.
You know well that you can earn money by investing in shares. The following
are the ways through which your money grows.
- Dividend:
Dividend is
nothing but the part of profit company earned and decided to share among the
share holders. Dividend are distributed once in a year as profit is calculated
once in a year generally.
There are two
type of Dividend:
Ø Annual Dividend:
The dividend which is distributed once in a year after closing of financial
year of the company.
Ø Interim Dividend:
The dividend which is provided in middle of the year to appreciate the investors.
Dividends are distributed in different paths, such as: by cash, Bonus,
Right issue. Bonus means Company can provide its share instead of cash with the same value to the existing share holder. Where as Right issue means the issuing share to the existing share holder in discount price, which is available in lower rate than Market price
- Capital Growth:
Investment in equities/ shares leads to capital appreciation. The longer is the duration of investment, the higher the returns. Investment in stocks is associated with risks as well.
- Buyback:
The company buys back its share from the
investors by paying a higher value than the market value. It buys back shares
when it has a huge cash pile or to consolidate its ownership.
For today, This is enough. You can’t grab all knowledge in a day. Understand from the beginning and be pro with sufficient knowledge.
Thanks for Reading🙏
Wise wealth 21st
If you have any doubt please let me know.