A stock is the asset you invest in, while a share is the unit of measurement for that asset. It is also known as equity. It represents the ownership of a fraction of the issuing corporation.
Units of stocks are called shares, which entitles the owner to a proportion of the assets and profits equal to how much stock they own.
Stocks are shares of ownership in publicly traded companies. Companies issue them on stock exchanges to raise money, at which point investors buy and sell them based on their potential. Buying and holding stocks can help you grow wealth and reach your long-term financial goals.
A share represents a unit of equity ownership in a company. A share entitles the shareholders to an equal claim on the profit and losses of the company.
There are two kinds of shares – equity shares and preference shares.
Shareholders are entitled to any profits and losses that the company may face.
A stock market index is created by grouping similar kinds of stock.
The NIFTY is the National Stock Exchange FIFTY. It includes fifty stock exchanges that cover 23 economic sectors.
The SENSEX is the Stock Exchange Sensitive Index. BSE (Bombay Stock Exchange) is the oldest stock exchange in India. It is a free float, economy-weighted index of 30 financially sound and well-established organizations listed on BSE.
Share price depends on supply and demand in the marketplace.
A bull market is an upswing, while a bear market is a downturn. Bull markets often correspond to periods of economic and job growth; bear markets are because of economic decline and a shrinking economy.
To begin investing, you need a trading account with a broker or a stock brokerage platform. The broker or the stock brokerage platform opens a demat account for you. A Demat account holds the financial securities in your name.
Equities are generally considered the riskiest class of assets. Dividends aside, they offer no guarantees. The risk is due to the volatility. It refers to the rate of price fluctuations of a share. A highly volatile stock experiences daily up and down movements in its price.
The stock market has become electronic. Traders need an online trading account with a registered broker. All orders to buy or sell shares take place through this trading account.
The most common way to value a stock is to compute the company’s price-to-earnings (P/E) ratio. The P/E ratio equals the company’s stock price divided by its most recently reported earnings per share (EPS).
With its considerable potential, the stock market needs research, preparation, and opening a Demat account and trading account with a reliable brokerage firm.
Generally, undervalued shares are favored over overvalued ones, as the investors buy low and sell high. If the company is performing well, it can give promising returns. The process of investing in undervalued stocks is known as value investing.
Market capital is crucial as it determines the size and value of a publicly traded company. It aids investors in assessing risk, comparing companies, and identifying market trends. The stocks with a market cap of Rs.10,000 crore or more are large-cap stocks. Company stocks with a market cap between Rs.2 crore and ten crores are mid-cap stocks, and those with less than Rs.2 crore are small-cap stocks.
Before investing, please remember that it is your hard-earned money, so invest it wisely with your research. There may be many tips but rely on your research.
There is a good saying in Marathi,
“ऐकावे जनाचे करावे मनाचे.”
Keep Learning, Keep Investing !!!
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