What is the stock market?
In recent days the trend about the Stock Market in India is wavering around the nation. The stock market is the aggregation of buyers and merchandisers of stocks which represent power claims on businesses. These will include securities listed on the Public stock exchange as shares of private companies which are vended to investors through equity crowdfunding platforms.
Investors
An investor is a person that investes in a company. Types of investments include equity,mutual funds,securities etc. There is no difference between the investors who invest in the primary market and secondary market. An investor who owns a stock is known as a shareholder of the respective company.
An investor seeks benefits over a prolonged period through buying and holding(long term).Short term investors invest for one financial year or less. They gain smaller profits according to the type of investment.
Traders
Stock trader is an investor who is involved in trading equity securities and gets benefits from the purchase and trade of those securities. Taking it as a profession or as career can be like advising the investor, managing their holdings and gaining commission which is called as stock broker.
Primary market
This is where all the securities were formed regarding the new stocks and bonds. In this platform, where the sellers will sell their new stocks and bonds to the public which is called initial public offering or IPO.
Secondary market
In this category the investors can trade among themselves where the companies will not be involved. For example, an investor is selling their share from the company to other investors, in this process the company is not involved.
Types of stocks in India
- BSE Bombay Stock Exchange Ltd.
- NSE International Exchange Ltd.
- Multi Commodity Exchange of India Ltd.
- Calcutta Stock Exchange Ltd.
- India International Exchange Ltd.
- Indian Commodity exchange.
- Metropolitan Stock Exchange of India Ltd.
- National Commodity Exchange of India Ltd.
- National Stock Exchange of India.
Merits
Great profits.
As a stock investor one must plan and be patient for larger benefits. Investing a minimal amount and gaining profits on the long term plans. Stock market can fluctuate and show some losses. But it gives profit for the investors who are committed towards their investments.
Transparency and accountability.
An investor or a trader can have access to the entire information about a company’s financial status. All the shares and bonds are well protected by regulatory bodies.
Demerits
Market risk
In the stock market this is the most common issue. Where the major issues of market risk faced by investors involve interest rate risk, equity risk, commodity risk and currency risk. Interest rate risk is because of an inconsistency in the share profit value. Equity risk is related to the share prices. Commodity risks affect the prices of goods which include gas ,crude oil etc. Currency risk is related to when a person invests in the international market and faces fluctuations in FOREX values.
Brokerage
When an investor sells their stock, they lose a large amount of money on brokerage commissions. Some of the stock market platforms charge a certain amount per transaction as brokerage, so it depends on the investor to choose the right platform which has less brokerage otherwise it is a loss for the investor.
Investment tips
As an investor one should have knowledge about technicals,daily stock values ,SENSEX,NIFTY .One can always learn from videos available on youtube for learning how to invest at the right company. Be patient and invest in long term plans for better profits.
Don’t forget that StuCred is always with you! And be sure to always refer to our blog for further tips on financing your future.
