The share market can seem complicated for those just starting out with investing. Fluctuating stock prices in the news and financial jargon can make it an intimidating place. However, with some basic knowledge, the share market becomes an approachable platform for growing wealth. In the section below, we’ll discuss the share market in detail.
What is the Share Market?
In simple terms, share market kya hai? The share market is where investors can buy or sell shares of publicly listed companies. When you purchase a share, you buy part ownership in that company. India’s two major stock exchanges are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The share market serves as a marketplace bringing together buyers and sellers. But instead of physical goods, the items traded are company shares. By owning shares, investors participate in a company’s profits and losses.
Understanding How Shares Work
A share represents ownership in a company. When an investor purchases shares, they hold a stake in that business. Successful, growing companies see their share prices rise over time. Investors aim to buy shares at a low price and sell them later at a higher price to turn a profit. Some established, consistently profitable companies also pay shareholders periodic dividends.
Dividends are portions of a company’s profits paid out to its shareholders. Not all companies issue dividends, but many leading ones do.
Navigating the Share Trading Process
Investors access the share market through stockbrokers or online trading platforms. These facilitate setting up a Demat account for paperless trading and linking to your bank account. The broker acts as an intermediary, enabling you to buy and sell shares on the NSE or BSE exchanges.
You can place orders on the trading platform to buy or sell shares. The exchanges match buyers and sellers, enabling trades. Share prices fluctuate throughout market hours based on demand and supply dynamics.
The Two Types of Stock Markets
There are two key share market types – primary and secondary.
- Primary Market: This is where companies first issue shares to the public through an Initial Public Offering (IPO). Buying shares here directly funds the company’s growth.
- Secondary Market: Here, investors trade already issued shares among themselves. The company does not benefit directly. Most daily trading occurs on the secondary market via the BSE and NSE.
Understanding Risks and Returns
Equity investing can glean higher returns than options like fixed deposits. However, there are inherent risks, too, due to volatile markets in the short term. Share values rise or dip based on the following:
- Investor sentiment and confidence
- Company performance and fundamentals
- Performance of the overall sector and industry
There is always a chance of losing money. Therefore, investors must diversify across sectors and companies while allocating funds wisely.
Getting Started with Share Investing
For new investors venturing into the share market, here are some tips:
- Research Extensively: First and foremost, read up on investing basics, risks, and metrics for picking stocks. Understand company fundamentals and sectors. News companies also impact educational content.
- Find a Reliable Broker: For convenient investing, open a demat and trading account with a reputable, cost-effective brokerage platform. Many leading players offer robust digital platforms.
- Start Small: Allocate a small corpus as you build experience. Consider mutual funds for diversification alongside direct equities. Understand your risk appetite.
- Think Long-Term: Equity investing is a long-haul journey. Short-term volatility should not deter you. Focus on fundamentals for shares you purchase and hold them for extended periods while tracking company performance. Market timing rarely works reliably.
Conclusion
The share market offers exciting potential for wealth creation if you research thoroughly and invest prudently. There may be ups and downs in the interim, but with a long-term portfolio, patience and timely adjustments, you can turn the stock market into a rewarding asset-creation avenue. Gradually increase invested amounts as you become more comfortable.
