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| What is Stock Market Basic for Beginner |
While there is a high risk on money here, this is when the investor does not have the knowledge of How to invest in the stock market, so every beginner must have knowledge and proper information of the stock market before investing in the stock market or share market.
Stock Market Basic for Beginner
Beginners see the following content in a stock market article.
- Capital market and Stock market Basic for Beginner
- Type of Capital Market
- Primary Capital Market
- Secondary Capital Market / Stock Market
- What is Stock Market Basic for Beginner
- Stock Market Example
- How to invest in Stock Market
- Things to remember in the stock market.
- Company Indexing Process in Stock Market.
- Risk and Returns in Stock Market
- Important Vocabulary of Stock Market
Before starting Stock Market will talk about capital market because stock market is a second type of Capital Market.
capital market
* In this, the investor collects the money by issuing bonds, debenture coupons bonds and collecting money.
* The risk is high here
* Liquidity is low
* Is more arranged and organized
* Small investors and common people can participate in it.
* There are shares and debentures here.
* Here the transaction takes place through a very systematic way.
Type of Capital market / Stock Market.
Capital Market is divided into two parts Primary and Secondary
Primary Capital Market :-
* In primary market, long-term funds are arranged for the company through shares and debentures without stock exchange.
* Shares are offered by new companies only.
* This is not a stock market.
Let's understand the primary market through examples
Ex-
Suppose that you are going to start a Company but you don't have money so that you offer investor to invest in your company by share of your company or bonds or many way.
There are also two types of Share
Preference Share
Preference share is only profit base and it is always bought by the profit earners. This investor always thinks of profit even if the company is in loss, it does not matter.
The first time the repayment is paid is given to the preference share holders.
Equity Share
Those who buy the shares of the company from these shares get a stake on a fixed share of the company. If the company is in loss, then the investor will also be in loss and if the company makes profit, then the investor will also profit and here the company also gets the administration power.
Secondary Capital Market and Stock Market :-
The secondary capital market or stock market provides a systematic market for the purchase or sale of shares purchased in the primary market in the primary market or for long-term per-share values.
* There is a market to buy and sell already purchased shares.
What is Stock Market Basic for Beginner
Any company needs a lot of money to start or grow up. Now money can be earned for the company in three ways, the first is to invest money in the company by itself or from any relative, the second is an option is taking a loan from the bank where it will have to pay a huge interest, the third is to raise the money by collecting from public funding.
Public Fund
Public money here means the raising of funds for the company by the general public.
IPO (Initial public offer)
For the funds raising, the company offers its shares or equity in the stock market, people buy these shares / equity and become shareholders in the company (based on the equity purchased). When a company issues its shares / equity for the first time in the stock market, it is called an IPO.
Stock Exchange
The shares of the company are indexed in the stock market through an IPO in the Stock Exchange Market, where the shares / equity of the company are bought and sold, it acts as an intermediate between the company and the public.
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| Stock Market || BSE NSE |
There are two stock markets in India, first is Bombay stock exchange 💱 (BSE) and second is National Stock exchange 💱 (NSE).
Bombay stock exchange (BSE).
More than 5000 companies have been indexed in Bombay stock exchange. Sensex is used as an index on the Bombay Stock Exchange
Sensex
Sensex values reflect the average volatility of the top three companies of different sectors in the index of Mumbai Stock Exchange. This value indicates the difference in the stock of yesterday and today.
National Stock exchange (NSE).
The National Stock Exchange (NSE) has more than 1600 companies indexed. This is a smaller Stock Exchange market than the Bombay Stock Exchange, here Nifty is used as an index.
Nifty
Nifty values reflect the average volatility of the National Stock Exchange's index by including twenty-five companies from different sectors.
Once all the shares of the company are sold, it is called a company listed company. The shares of the listed company are bought and sold by the people in the stock exchange market, which is called the stock market.
Stock Market Example
A company needs ₹ 50 lacs to grow / start, so currently the price of the company is 50 lacs rupees. The founder of this company has presented 50 thousand shares of the company in the market and the price of each share is 100 rupees.
If you buy 100 shares out of these shares, then you become the owner or shareholder of 10 thousand rupees in that company. This share purchased is called share or equity.
In future, when the company reaches a million crore by growing, then the shares of the company also double, the price of the share you bought becomes ₹ 20 thousand. Similarly, when the company grows, the value of its share increases. And when the company goes into loss, its stock value decreases.
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| Stock Market || Profit & Lose |
This means that when the company is benefited then the demand for the company's stock increases. Everyone is ready to buy the company's shares, which increases the value of the share. In contrast, when the company incurs losses, the shares of the company are Have not bought and the demand for the stock decreases, which also reduces the value of the share. Here you can sell and buy your shares anytime.
How to invest in Stock Market.
If you are coming as a beginner in the stock market then you should start with very little investment
To buy the stock for the first time one has to follow the following steps : -
1. Firstly you will need a savings account which can be in any bank. The money investing in the stock market will be kept in the savings account.
2. After this you will need a DEMAT account. Here a demat account means when you buy shares of a company, it is displayed in digital form in the demat account. It is a type of certificate that shows the shares you have bought or sold.
When you link these two accounts, you can buy a stock in the stock market with the money from your savings account which will be displayed in your demat account. When you feel that your share price has gone up, you can sell it. When the shares are sold, the shares are converted out of demat account into money in the savings account.
Here the value of the share depends on the stock market.
Things to remember in the stock market.
If you are going to invest as a beginner in the stock market or for the first time, then the following points should be kept in mind
# Before buying shares or equity of any company in the stock market, keep complete information about that company.
# Must see the growth last few years, dividend, management, founder of the company of which you are going to buy shares.
# If you are going to buy shares for the first time avoid maximum investment.
# The company of which you are going to buy shares, you should know where that company is investing your money, this information is obtained from the Red Herring Prospectus (RHP) document.
# Avoid buying new company shares that are too risky.
# Suck long term plan for maximum investment, where you will have full chances to benefit.
# Before investing in the stock market, you must take the opinion of the expert
# It is not true that all experts are working, some experts work for companies, so avoid such people.
# Short time investments in stock market are risky and less profitable.
# There are more chances of benefits from buying shares in a mid-range company.
Company Indexing Process in Stock Market.
If you are as a beginner in the stock market and want to start the company with public funding of the stock market then you have to follow the following steps : -
Red Herring Prospectus RHP document || First Step.
For the funding of the company, first of all you have to prepare a RHP document. It is a type of certificate that gives all the details of the company like who is the founder of the company, how many founders are there, education, qualification and where the company will use the money received from the stock market. This document has to be prepared.
Securities and Exchange Board of India (SEBI) || Second Step.
Companies are listed on the stock market through SEBI. SEBI maintains an account of all the companies listed on the stock market. You have to verify RHP document in SEBI
Here the approval time is from 1 month to 2 years.
Stock Exchange Market || Third Step.
In the stock exchange market, your company's shares are indexed as IPOs from where people buy shares of your company and you get money.
Risk and Returns in Stock Market
Many people say a lot of profit in this, though the statement about the stock market is true but not completely. Because there is as much risk in it as there is profit.
If we talk about the risk, the risk is on the stove while cooking, and if you do not know how to burn the stove, then the risk is also while driving, if you do not know how to drive, that's why life is a risk if we do not know how to live it. so. Likewise, if you invest in a stock market without any information, you may face risk.
Apart from this, when it comes to profits or returns of returns, it depends on the risk on the money invested in the stock market, yet here returns more than other types of investment.
Regarding Risk and Profit (Returns), here are some figures which are given below.
| Investment Option | Risk | Profits | Profit Rate |
| Stock Market | High | High | +20% |
| Mutual Fund | Low to High | Moderate to High | 5% to +14% |
| Real & Gold Estate | Low | Moderate | 5% and more |
| Fixed Deposits | Low | Low | 7% |
| Debt Funds | Low | Low | 6% |
| Saving Account | No or Less Risk | Very Low | 3% to 5% |
| Current Account | No or Less Risk | No | 0% |
Important Vocabulary of Stock Market
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| Stock Market Bull & Bear |
BULL
The person who hopes that the market will accelerate, that is why he buys shares, it's called Bull.BEAR
The person who hopes that there will be a slowdown in the market, that is why he sells shares, it's called Bear.
STAG
Primary market investors who invest in the future hoping to benefit the company. Who are neither Bull nor bear.
IPO (Initial public offer)
The shares are first issued by the new company. If the new company enters the market and indexes for the first time in the share market, it is called an IPO.
Follow on
If the company issues shares again after the IPO (Initial public offer), it is called follow on.
PRIMARY SHARE / BLUE CHIP COMPANY
The company which has the highest value in the market or has the highest trust in people comes in blue chip company like -TATA, Reliance etc.
BUYBACK OF SHARE
In order to increase the value of the stock in the market, the company buys back its own shares, which increases the value of that share in the market.
INSIDER TRADING
If a partner of the company knows that the value of the share will increase or decrease, then tell his relative or any other people, then it is called Insider Trading.
that is all we have on this topic"What is Stock Market Basic for Beginner." if you have any question please do write in the comment section below and do not forget to subscribe to our newsletter for more such great post have a great time ahead.
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