WELCOME TO SAMZOO!
Even if you have zero ideas regarding what Sensex and stock
market are, you may be able to find out about all of them in quarter-hour you
may also find out about the however you'll be able to get shares and invest
within the share market in the Republic of India and also the different types of
Stock Exchanges that exist. Namely, it's the Bombay stock market with Sensex
and also the National stock market with the Nifty Index. I'll also tell you if you
must invest in Share Market or not.
What is the equity share market?
The stock exchange, share market or equity market- all 3
mean constant. These square measure markets wherever you'll be able to obtain
or sell companies’ shares, shopping for shares of an organization suggests that
shopping for some share of possession of that company, and become the holder of
a share of that company.
If that company makes a profit, some share of that
profit would even be given to you, If that company incurs a loss, a share of
that loss would even be borne by you.
An example, presume you've got to
determine a start-up and you've got 10,000 rupees, however, that’s not enough
thus, you attend your friend and tell him to take a position another ten,000
rupees and supply him a 50-50 partnership. So, no matter your company profits
within the future, five-hundredths of it'd be yours. five-hundredths of it'd be
your friends during this case, you’ve given five-hundredths of the shares to
your friend within the company. the constant issue happens on a bigger scale within
the stock exchange. the sole distinction being, rather than planning to your
friend, you attend the whole world and invite them to shop for shares in your
company.
History & Purpose of Shares
The origin of share markets dates to around four hundred
years agone. around the 1600s, there was a Dutch East India Company, just like
the British East India Company, There was the same company within the country
of Netherlands nowadays, referred to as Dutch East India Company.
In those
days, individuals used to indulge in a lot of exploration using ships, the
entire world map had not however been discovered that the companies used to
send their ships to find new lands and trade with faraway places The journey
used to be of over thousands of kilometres aboard a ship,
There was an enormous
amount of cash needed for this, Not one person possessed such amounts of cash
one by one in those days. So, they publicly invited individuals to invest cash
in their ships, They were promised to share of treasures/money when the ships
would travel long distances to go to other lands and come back with treasures
from there eventually.
However, this was a really risky affair as a result of,
during those times, over half the ships did not come, They got lost, or bust
down or got empty. something may happen to them. So, investors realised the
risky nature of this enterprise, therefore, rather than finance in a very single the ship, they preferred to invest in 5-6 of them, so that at least one of them had
possibilities of coming One ship used to approach multiple investors for cash.
So, this created somewhat of a share market. there have been open biddings of
the ships on their docks, Docks are the
places where the ships come out from.
Gradually, this method became
successful because the cash crunch faced by the businesses was supplemented by the common people. and the common
people got an opportunity to earn extra money. Today, every country has its own
securities market and each country has become greatly dependent upon the stock
exchange.
What is the Stock Market?
The stock exchange is that place, that building where people buy
and sell shares of the companies.
The market can be divided into two types:
A point to be noted
here is that each share of the corporate has equal value. It is upon the
company to decide how many of its shares it wants to make, If the total value
of the company is 1 lakh, then it may make 1 lakh shares of 1 rupee each, Or it
may make 2 lakh shares of 50 paise each.
When companies sell their shares in
the share market, it never sells 100% of them because The owner always retains the majority of the shares to keep possession of his decision making power. If companies
sell all the shares, then all the buyers of the shares would become owners of
the corporate. Since they all become owners, they all can take decisions
regarding that company. So, only the individual who has more than 50% of the
shares would be able to make decisions regarding the company.
Therefore the
founders of the corporate like better to retain quite 50% of the shares. For
example, 60% of the shares of Facebook are retained by Mark Zuckerberg.
India stock exchange market
 | |
|
Almost every big country has its own stock market.
There
are two popular stock exchanges in India, One is that the Bombay stock market
which has around 5400 registered companies. The other is the National Stock An exchange that has 1700 registered companies, With so many countries registered
in the stock exchange, If we want to observe, overall, whether the prices of
the shares of the companies are moving up or down, How do we view this? To
measure this, some measurements have been put in place- Sensex and Nifty.
SENSEX
Sensex shows the average trend of the top thirty companies
of the Bombay Stock Exchange averaging out, whether the shares of the companies
are moving up or down.
The full form of Sensex, the sensitivity index displays
the same, The number of Sensex, that it has reached 40,000 marks, The number
itself means not a lot. The value of this number can be understood only upon
comparison with the past numbers Because this number has been randomly decided.
They decided at the beginning that the values of the shares of the thirty
companies would be this. So, we compile all the numbers and then say that it is
500. So, gradually, the Sensex has been rising and it's reached the 40,000
marks within the past 50 years. So, this shows how far up have the share prices
of those 30 companies gone in these past 50 years.
NIFTY
There is another similar index- NIFTY- National + Fifty.
Nifty shows the price fluctuations of the shares of the top 50 companies listed
on the National Stock Exchange.
How to sell your company’s shares?
If a company wants to sell its shares on the stock exchange,
then this is termed as “Public Listing”. If a company is selling its shares for
the first time, then it is called IPO- Initial Public Offering, that is
offering the shares to the public for the first time. During the days of the
East India Company, it was very easier to get this done, Anyone could sell the
shares of their company to the public.
But today, this procedure is very long
and complicated, but it is necessary because, on those days, it is easy to scam
the people and Anyone could get listed on the stock exchange with a fake the company, and exaggerate the value and achievements of its company They could
lie to the people and the people would foolishly invest in his company and then
he could abscond with the money. So, it has become extremely easy to scam
somebody, in Indian history, there is a lot of witness of scams like these.
For
example- Harshad Mehta scam, Satyam scam, they were all the same- fooling the
people and getting themselves listed on the stock exchange. collecting the
money and then absconding.
So, as and when these scams happened, the stock
exchanges realized that they need to make their procedures stronger and scam
proof or the resolutions and rules were made stronger due to which there are
very complicated rules today.
SEBI- Security And Exchange Board of India is a regulatory body that looks into issues like which companies should be listed on the stock
exchange and whether it is being done in the proper manner or not.
If you want
to enter into the stock exchange market, then you would have to fulfil the
norms of SEBI, Their norms are very strict, for example, there need to be a lot
of checks and balances on the accounting of your company, At least two auditors
must have had checked your companies accounting, This entire process may take
around 3 years. More than 50 shareholders should be present in the company if
you want a company to be publicly listed. When you go to sell their shares but
there’s no demand for it amongst people then, SEBI can remove your company from
the stock market list.
How can you buy Shares?
Now, how can you invest money in the stock markets? During
the times of the East India Company, one could go to the docks where the ships
departed from and indulge in biddings and buy and sell stocks. Before the dawn
of the internet, one had to physically go to the Bombay Stock Exchange building
to do this.
However, with the internet in place you merely need three things- A
bank account, a trading account and a DEMAT account, A bank account because you
would need your money. A trading account, to allow you to trade and invest
money in a company. A DEMAT account to store the stocks that you buy in a
digital form.
Most of the banks today have started offering a 3 in 1 account
with all three accounts encompassed within your bank account. People like us
would be called retail investors, that is, common people who want to invest in
the stock market. A retail investor always requires a broker; a broker is
someone who brings together the buyer and seller.
For us, our brokers might be
our banks, a third-party app or maybe a platform. When we invest money through
brokers within the stock exchange, a broker retains some money as his
commission. This is called “brokerage rate”. Banks mostly charge a brokerage
rate of around 1%, But 1% is a little high. That’s not how much it should be.
If you look properly you would discover platforms that charge a brokerage rate
of around 0.05% or 0.1%.
This brokerage rate is a disadvantage for those who
want to indulge in a lot of trading of stocks if a lot of stocks are bought and
sold in a day, a lot of money would be siphoned off as brokerage fee. But if
you want to invest for the long term, then a high brokerage rate wouldn’t make
a lot of difference because you’d pay it only once.
Difference between investing and trading
Investing and trading are two different things.
Investing means putting in some amount of money in the stock market and letting
it stays there for some time.
Trading means quickly putting in money at
different places and withdrawing from some places, this all happens in quick
succession.
In fact, trading of shares may be a job in itself. There are a lot
of people in our country who are traders and do this job all day long taking
out money from one share and putting it in another, removing from one place, putting
it in another and earning profit within the process.
Conclusion
An important question that arises is whether you should
invest money in the share markets? A lot of people compare it with gambling
because a lot of risks is involved in it.
In my opinion, it is correct to say
so because this is indeed some sort of gambling. If you're not conscious of the
sort of the corporate and its performance, the parameters of the corporate and
its financial record, if you do not observe its history and accounting the information then, in a way, this is akin to gambling, Because you would have no
idea of how the company would perform in the future. You merely listen to
people saying that the company is doing well and we should invest in it in the
share market, so that’s why you invest in it.
You should never do this because
it is extremely risky. And obviously, when there are people that do this job
day in and day out, for examples the traders, who are experts in this field and
have more knowledge about the stock market They obviously would outperform the
others because they have an idea of how this all works. So, in my opinion, you
ought to never directly invest within the share market and instead, believe the
experts. A very competent form of it is mutual funds Because in mutual funds
you don’t directly decide which companies you would invest in it.
In mutual
funds, you place your trust in experts and let the experts decide which
companies to invest in. In fact, a lot of mutual funds invest in many different
companies to minimize the chances of loss. For instance, I’ve given the example
of the East India company. Investors had quickly realized that they should not
invest their money in one single ship but Investing money in 5-6 of them would
ensure that at least one of them came back. Mutual funds work the same way,
investing money in many different places.
I hoped you liked this.
Thanks...
This is dummy text. It is not meant to be read. Accordingly, it is difficult to figure out when to end it. But then, this is dummy text. It is not meant to be read. Period.
Comments must relate to the post topic. This website is here to help people, not for your advertising purposes ConversionConversion EmoticonEmoticon