What is Share Market? How to Invest in Share Market?

 Hey there, today I will give you a small idea about what is share market and how we can invest in the share market.

how to invest in share market

What is Share?

Capital is needed to start or grow any business. And also a lot of money for which the company is reduced to small parts which we call shares, and which are sold to people.



For example, a business man X is a company whose name is ABC, whose value is 50 lakh rupees. And they have to grow their business, for which they need 40 lakh more. and Mr. X doesn't have that much money.
So he will issue 4 lakh shares of his company in the market with a share value of Rs 10.
now people will start buying the share and Mr. X gets 40 lack of his share value for his business growth.


How to Invest in Share Market



Let's know about these 5 things.

1. Why invest in the Indian Share Market.

2. How to invest properly in the Share market.

3. The third way is how we trade using a Demat account. We will also know what you should know about a Demat account.

4. The fourth point is why Share prices are rising.

5. The fifth way is how to choose the right Share.

India is a developing country and is a paradise for foreign investors and institutions countries like China and the United States of America and the United Kingdom are all developed countries. but there is a drawback the companies that operate in these countries are matured to its full potential.


what that basically means is that they have grown so much over the years that there is only a tiny room for further growth. whereas in India you cheap labor high exports good GDP and unlimited resources with high consumption. it becomes the world's best investment hub. during the 2008 recession, the world was suffering as its financial markets collapsed. India, on the other hand, was as steady as a rock. investors all over the world have so much faith in the Indian government especially the Modi government that more than three billion dollars of funds inflow keen in the Indian economy in the last 24 months alone.

Indians to use jobs from foreign countries leaving the foreigners jobless but what we don't know is that the foreign countries invest in a stock market making three times more than money. thereby robbing us of our own wealth.

how to invest in share market
how to invest in share market


let me give you a simple example. an investment of one lakh in 2006 would give you 250 shares of either motor. each share costing 400 rupees approximately. today in 2016 the worth of your investment would be 57.2 lakhs. each share costing 23 thousand each approximately. so you see the potential of the Indian economy. and the growth of the Indian economy. I show Motors is basically a truck manufacturing company but it also owns the Royal Enfield brand. there are many other examples but this is one of the most prominent examples which I like to share.

let's talk about India's favorite form of investment the bank fixed deposit and let me tell you how bad it is like an investment for an individual in India.

let's say you made an investment of 10 lakhs and the bank will give you an interest rate of 7.5% per annum. so 12 months later the value of your investment would be 10 lakh 75 thousand.
see what you don't know is that your profit is not exactly 75 thousand. there are certain taxes that are applicable to the profit. the first one is TDS of 10% which comes out to be 7500. the second one would be the income tax slab. let's assume you fall in the second income tax slab which is 20%. so a deduction of 13,500 again so overall if you see your total gain is only 54,000 on an investment of 10 lakh for 12 months right.

now let me talk to you about inflation, since you made a profit of only 7500 just a second your total gain is only 5.4 percent per annum. the Indian inflation rate as of July 2006 is 6.31%.

so overall you're making a total capital loss or 1%. which is extremely bad. let me give you an example that will help you understand what a capital loss is.

let's say you buy 10 kg a bag of potato today 400 rupees. so 12 months later due to inflation, your amount would end up being 106 point 3 rupees. now let's say on the same date when you bought the bag of potato you made a fixed deposit of 100 rupees assuming that next year you might have a higher purchasing power, but what happened is due to the interest rate of 7.5% and all the tax deductions you only end up with 105 .4 rupees. so overall next year you need to pay 1 rupee additionally to buy the same bag of potato you bought like today because of the inflation rate.

how to invest in share market

so basically this is called the car the corrosion of capital, which is an extremely bad form of investment, and since most of the investors in India like or other people in India are not aware of this factor they're losing their money. they are not gaining the capital rather losing the capital and corroding the capital.

now let me talk to you about nifty. Indian nifty has a benchmark return of 10.8 percent for 12 months.

now let me give you situation let's say an investment of 10 lakhs today in the market if you withdraw the fund may be within 12 months, you are entitled to pay only 15 percent tax on the profit. whereas if the investment in this stock is above 12 months it is absolutely tax-free.

the example here is let's say you bought 100 shares at 300 rupees each and sold the shares at 332 each next year after 12 months. so if you solve these shares after 12 months you are entitled to the total profit without any certain deductions, but let's see you solve the stocks before the 12 months you need to pay a tax of 15% of the profit. which is 2550 which is not bad you're not losing your capital.
you're making a higher return on your capital right.

How Investment Cycle Works

 

how to invest in share market

 


Right now let me talk to you about how the structure of the investment cycle works. the first one is an investor which basically means me and you. we need to deposit our funds in the back.

now from the bank, we need to transfer our funds to the d-mat account or the stockbroker. now I would suggest you have an account like talk with your bank because they usually have a d-mat account present with their banking system. so you can open a d-mat account with them just call the mob they will tell you how to open the D-MAT account.

So once you open a d-mat account basically you need to transfer your funds from the band to the d-mat account or the stockbroker's account. now once the amount is transferred to the d-mat account you can purchase the stocks or the company shares from the d-mat account. the preferred shares that you want to purchase.

the d-mat account now there are certain d-mat accounts like I told you earlier the first one would be access securities which is linked with access bank. then there is yes invest which is linked with yes bank. third one again ICICI Direct is you see securities Carvey broker Moti Lala's well and 0.3 brokerages which are stockbrokers you do not have bank links but you can open an account with them. they will give you a demo on how to purchase the stock how to transact the stocks and all and this will again help you to navigate through the sections.

so that you can buy or sell the desired stocks. so the structure of the D-MAT account the first thing is open a bank limit account, then log into the d-mat account page transfer the funds into the d-mat account and then purchase your desired stocks like it spoke earlier.

The situation is like this as you mean that you choose to buy a Maruti Suzuki Limited assuming one share cost 4900 and assuming you want to purchase them such stocks so you need to transfer 49 thousand from your bank account into the d-mat account. now once you transfer that then you can simply go to the buy and sell section in the d-mat account page and class order for a buy order. which will help you to buy the share you can call the helpline support or the help desk if you find it difficult to do it on your own.



now let's talk about company shares and stocks there is two types of exchanges in which we can create in the Indian stock market.

the first one is the national stock exchange which I would like to talk to you about and the second one is the Bombay Stock Exchange. now I would recommend you to trade in the national stock exchange for the starting point because it's a bit like sefa because you see there are 5000 plus listings in the national stock exchange. because they have a higher criterion which the companies need to fulfill in order for them to be listed on the National Stock Exchange. whereas the Bombay Stock Exchange has more than 7,000 listings is because they have a smaller parameter. which companies need to succeed or satisfy in order for them to be listed in the stock market on the secondary market.




What Causes the stock market prices to move


so try trading in the National Stock Exchange or the NSE for the beginners.

okay, let me talk to you about the stock market prices and how they move to consider. the basic case of demand and supply if there is more demand ie more buyers the stock prices will go up and if there are more supply ie more sellers the stock prices will go down. the price of the stock VC on the TV screen flashing and on the mobile app.

the market value of the Share basically means the value of the Share considering its assets. like its operating cash balance building it owns at its present value plant its own and production capacity etc and on the other hand liabilities like loans which the company needs to pay back the interest it needs to pay off etc.

if you notice I'm talking about the friggin active speeches here figure 2 figures here actually we do not consider the value of building it purchased at or the cost of acquiring the plan 20 years ago.
we talk about the intrinsic value of the company. big financial institutions calculate the fair value of these assets and liabilities to determine the market price or the intrinsic value of the company.

Hence the price at which the assets where acquired are irrelevant to the market price calculations. the prices go up and down based on the assumptions but the company's performance and the profit and loss it can make over time. you as an investor need to keep in mind whether the company is able to make profits in the long run and won't collapse in case of a short-term problem.

let me give you an example, let's say Maruti Suzuki plans to launch a new car this month that basically means more sales for the company. which would boost up the revenue and profits. hence the prices will go up because investors think it will do well to launch the car and they will start buying the shares of the company.

the second example would be Larsen & Toubro the infrastructure giant lost a big deal to build a bridge. let's assume that this will cause the company stock prices to go down because investors will feel it lost the project. hence the revenue the less revenue for the company and then investors would start to sell their stock holdings.


How to find the ideal Share to Invest


Use your gut feeling

use your gut scale unless in the company you have always heard about from people in general from the news or some company you whose product you use and have full faith in the company survival. Google sorts the stock and reads the new section invest if you feel the company is on the right track follow the news channel.

follow the news channel

 the business news channel will keep showing you good stock picks and every now and then you can choose the best one you like out of the list. a try installing the money control app on your mobile phone. it's available on Android and iOS as well so you can just go to moneycontrol.com click on the link. it will show you the app installation pages from where you can navigate to the installation of the application.

now moneycontrol.com is a stock news and activities website keeps a track of the activities. in the website and install the mobile app as I told you earlier which will help you to keep a track of the movement of the stock which you are interested in.

 

Using technical analysis


 technical and I'll analysis is a widely used talk movement study stock traders you use this technique to determine the stock movement ie the change of the price whether it goes up or will go down is calculated using the study of charts with indicators like momentum the force of the investors whether they are buying the shares or selling the shares and so on so forth.

Fundamental analyses


the fifth one is fundamental is both long-term investors and short-term traders use this technique to determine the price movement. using company's financials like the Book value the price to earnings ratio etc. like what B's what this basically does is it calculates whether the company is going to make profits, in the long run, assuming their cash flows the structures of their asset holdings and so on so forthright.


How to open a DEMAT account

how to invest in share market


What is Share Market? How to Invest in Share Market? What is Share Market?  How to Invest in Share Market? Reviewed by Ajay on November 19, 2019 Rating: 5

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