One of the main functions of the stock market is to provide companies with a way to raise capital by selling shares of ownership in the company. This allows companies to expand and grow, create new products , services and shareholders have the opportunity to share in the profits of the company through dividends , bonus shares and the potential appreciation of the value of their shares.
Stock markets can be further classified into two parts primary market and secondary market.
1.Primary Share Market :- When a company registers itself for the first time at the stock exchange to raise funds through shares, it enters the primary market. This is called an Initial Public Offering (IPO). For example mama earth was a private company but now is planning to go public by listing its IPO very soon.
2. Secondary Market :- After the trade in primary market (i.e IPO) the company is ready to be traded in Secondary Market .Here, investors get the opportunity to buy and sell the shares among themselves at the prevailing market prices. For example HDFC bank , TATA motors etc.
Investors buy and sell stocks on the stock market through brokers, ( like upstock , zerodha , angle one ) who facilitate the transactions and charge a commission for their services. The price of a stocks is determined by supply and demand, with the price rising when there is more demand and falling when there is less demand.There are many factors that can impact the performance of the stock market, including macroeconomic conditions, government policies, and the performance of individual companies. It is important for investors to do their due diligence and carefully
consider these factors before making investment decisions. The next question arises how one can earn through stock market ? While the answer to this question is very simple suppose you buy 10 stock of the tata motors @ 400 rs (total investment 4000 rs) and then after after few months the share price soars to 495 rs and you sell your stocks . So now in every stock you earned 95 rs and since you bought 10 stocks your total returns would be 950 rs. So on the investment of 4000 rs you earned 950 rs (23.75 %).
There are diffrent forms through which you can trade in stock market .
1. Delivery :- when you buy stock for long term like for investment purpose or positional trade like 2- 3 months etc. Holding stocks more than 1 day comes under delivery.
2. Intraday :- when you buy/sell stocks and then square off your position on the same day then that trade is called intraday trading.
3. Future & options :- Future and options in the share market are contracts signed by two parties for trading a stock asset at a predetermined price on a later date.
In stock market there are two types of analysis one is fundamental analysis of stocks and other one is Technical Analysis . In the Fundamental analysis of stocks we deal with the balance sheet of the company , the profits company is making , future goals of company , ROE , ROCE , earning per share , promoters holding etc. Fundamental analysis is done if we want to hold the stocks for long term so that the company can give us good returns in long run. While Technical analysis is done on the charts of the company and its current price , candlestick patterns , price action and many indicators like RSI , moving average , ADX etc are analysed. Together fundamental and technical analysis can help us to choose a multibagger stocks if used properly .Investing in the stock market can be a way to grow your wealth over the long term, but it is not without risks. It is important to carefully consider your financial goals and risk tolerance before making any investment decisions.
In conclusion, the stock market plays a vital role in the economy by providing a platform for companies to raise capital and for individuals and businesses to buy and sell stocks. It is also an important source of funding for government and can serve as an indicator of the overall health of the economy.
watch this to know more :- click here
Comments
Post a Comment