Understanding Basics of Stock Market

Investing money early in life is a way to develop wealth over time. The earlier it is invested, the more time the money has to grow. The stock market is one way of investing for beginners of stock trading. Though the stock market has some risk, wise decisions can lead to a healthy portfolio. It is always advisable to learn and start investing at young age, beginners who want to make a career in stock trading must start investing early. The stock market is not difficult to navigate, and with a little understanding, motivation and background knowledge you can know how to invest in stock market.

Let us check out some important terms to acquaint with stock trading in India.

Broker: An individual or firm or a financial advisor that charges a brokerage fee or predefined commission for executing buy and sell orders on behalf of an investor.

Diversification: An investment strategy for absorbing certain risks by selecting a wide but different forms of investments.

Exchange: An organised market under regulatory body where securities are bought and sold.

Financial Goals: A planned strategy to achieve desired results from one’s efforts in Indian stock market.

Income: Money earned from stock market investments and management.

Investing: Purchasing units of securities in the form of bonds, stocks, and mutual funds with the aim of earning profit and increasing wealth over time.

Initial Public Offer (IPO): The first time a company discloses its mode of operation, management and business forecast to offer stocks to the public in open market.

Stock: A long term or short term investment, represented in a share form of ownership according to the valuation of assets and earnings of a company.

How Stocks are Listed?

You must know how and why the companies decide to sell stock. There are several reasons when company enters into stock market.

When a company decides to sell stock, it is said to be “going public.” This is because members of the public now have the opportunity to become part-owners of the company. The first time a company sells stock is referred to as the Initial Public Offering or IPO. When the company decides to become public it is  also known as “Initial Public Offering (IPO)” on the board.

Which Stocks to Buy in Indian Share Market?

Big question faced by beginners because many companies sell stocks so how to start share trading with the right company.

Which companies’ stock would you want to buy and why? Think about it in terms of company background, earnings and market capitalisation.

Conversely, many people choose to buy stock in companies they recognize or that have products they think are popular.

The strategy to “buy for popularity” works in some scenarios of trading but not always. It is important to research a company before deciding to invest. Companies will release financial information on how they are doing in terms of income, debt, and growth.

Most companies have an investor relations department where the company gives information to potential investors. This department holds press conferences, conference calls, and sometimes even one-on-one meetings. It is also important to look at the history of the company’s stock prices. Whether the prices are at a low point or on an upswing can help you decide what stocks to purchase. There is no perfect formula when it comes to investing, but being fully educated about the company should be a priority before any investment is made.

You must always check past record of companies before investing in them. You are given ample time to research before buying stocks. You can diversify your investments sector wise after knowing about the companies. case study and will be divided into groups to look at the case study together.

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