Share Market

What is share market?

Share Market is a collection of markets which is a buying and selling house of shares which helps the company to raise the capital easier from banks, mutual funds etc. Share Market is the reflection of the overall performance of the corporates. Basically it is an upbeat mood. Predictions have been made by the Economists that the economy will be growing around 10% in the near future. Share market allows a company to achieve greater scale in its operations and to improve its profitability.

In simple words. A Share Market is a place where many companies have been listed and shares are available to Buy and Sell. One who holds the share of the company is known as a Shareholder. If in case the shareholder is not interested to hold the shares of the company he can sell those shares in the Share Market. Basically market is a place where we buyer buys and seller sells the goods; similarly stock exchange is a place where stock transactions are being exchanged within two individuals.

Share Market started working from 1875. Share Market mainly consists of two most important stock exchanges in India.

• Bombay Stock Exchange (BSE)
• National Stock Exchange (NSE)

Bombay stock exchange is the oldest stock exchange in Asia. It is the largest stock exchange with over 6,000 stocks listed. It is located in Mumbai. BSE started functioning with the name called- Native Share & Stock Broker’s Association. BSE is spreaded all over India. BSE made trade Efficient, transparent and time saving too. Index of Bombay stock exchange is SENSEX. BSE comprises of 30 companies. By using “Free Float Market Capitalization” methodology index calculation is being done.

To facilitate smooth transactions and to empower investors, various services are offered by BSE.

• BSE training Institutes.
• BSE online trading Facility.
• Investor Services.

National Stock Exchange is the largest stock exchange in India. It is responsible for vast majority of share transaction. NSE is the first exchange in the world to use satellite Communication for trading. There is a certification programme being conducted by NSE. The programme is named as ‘NCFM’ i.e. NSE’s Certification in Financial Markets. It is mandatory for NSE to meet International Standards. Its main objective is to establish nationwide trading facility for all types of securities. NSE provides the flexibility of providing maximum Security to investors.

In today’s time trading shares is one of the most fruitful or we can say is a worthwhile method of making money.

There are some reasons why to invest in Stock Market:

• It is quite easy to learn how to profit from the Stock Market.
• Minimal time is required in trading.
• Quick Liquidation.
• You do not need a huge amount of money to start with making money or trading.

Before investing in the Share Market it is recommended to be clear about the ‘Basics of Share Market’. Basics include to be clear about each and every aspect of Investments, share trading, share options, Company, Shares, Debentures, Mutual Funds, Share Trading etc.

Share

A Share is a document which is issued by a company, which entitles shareholders to be one of the owner of the company. A share is issued by the company or it can be very easily purchased from the Stock market. By selling the shares we can get capital gain and by owning we can earn a portion. A Company’s share price depends upon what investors think about the share, not necessarily what the company is “worth”. Some of the companies that are growing quickly often trade at higher price. Stock price of a company is also affected by market news. Basically a capital is subdivided into shares. We can very easily calculate the capital of any company. Capital is the difference between Assets and Liabilities. Examples of Assets are The machinery, Furniture, Buildings etc. Bank loans, Money Owned to people from whom things  have been bought on credit. Capital is the total amount an owner has in the business.

For Example: if the required capital of a company is Rs. 5,00,000 and is divided into 50,000 units of Rs. 10 each, each unit is called a share of face value Rs. 10. A share may be of any face value depending upon the capital required and the number of shares into which it is divided.

When you invest in share, you do not invest in market. You invest in equity shares in the market. Owning shares means having a share of a business without bothering about managing it.

Types of Shares:

There are basically various types of Shares.

ü  Preference Shares.

ü  Equity Shares.

ü  Bearer Shares.

ü  Registered Shares.

Preference shares are the shares that give political right. Equity Shares enjoy the classical rights. Equity Shares do not have any preferential rights. Bearer Shares are the Shares where the owner is who posses them. Registered Shares are assigned to a determined name of a person.

Important facts:

• Owning a stock means you are a partial owner of the company.
• Investments in stocks can generate returns through dividends.
• Share offer no guarantee of any returns and can lose value, even in long run.

Shares have number of Advantages which make it a desirable investment vehicle:

·         Shares offer limited legal liability.

·         Most shares are liquid.

·         Shares offer two ways for their owners to benefit- by capital gains and by Dividends.

·         Common share has the potential to deliver very large gains.

·         Shareholders have the right to vote.

·         Shareholders are able to buy as many new stocks as possible.

Disadvantages of Shares:

• Prices of shares Fluctuate a lot.
• There is no positive link between inflation and corporate profits.
• Shares require more Hardwork and Analysis.
• Some companies go broke therefore you need to diversify a lot.