Stocks! The most familiar term we hear in our day-to-day life where the newschannels aren’t tired of mentioning it. In my early teens, I was just so curious to know about these stocks, sensex, shares kinda stuff and then in my late teens I happened to watch a series called ‘Scam 1992’ and then boom! It intruiged my curiosity on stocks and shares. Like myself, many people might be curious to know about stocks and shares and how it works, and in this blog, we’ll look into it. 

Stock is a part of a company that is in market for sale and which the public can buy. With that amount, the company makes new implements and their business grows and eventually, the value of the stock raises, too.

Generally, if the company you’ve invested performes well, you’ll get profit but if it faces difficulties, it leads you to lose as a share holder. But if you come to know when to buy stocks/shares of which company at what time and when to sell it, then it’s a ‘goose that lays golden eggs’. But if you don’t have enough knowledge on it, it might lead you to a great loss. ’Greater the risk, greater the profit’.

In 1600s, The Dutch East India company started to ship things from the colonies to their motherland. But it involved heavy expenses, so they brought wealthy investors who could contribute this shipping. Instead they were made into share holders of the goods that were carried in the ships. This made the process easier and it grew faster with more ships and shipments. Hence, unknowingly the Dutch East India company invented the stocks and shares.

BSE, the Bombay Stock Exchange is the oldest stock exchange in Asia. Initially, there were just six brokers with no office under the balmy shades of the banyan tree. The American Civil War lead to acute global shortage of cotton in the market and this lead to major cotton export from Surat, creating a hike in price and thus starting the trading and share investment.

BSE was established in 1875, in Dalal Street, Bombay. It’s the 12th largest stock exchange in world which holds shares of more than 5500 companies and its market index is called SENSEX. NSE, the National Stock Exchange, established in 1992, is also located in Bombay. It’s the 10th largest stock exchange and the first fully automated one, that holds shares of 1600+ companies; NIFTY is its market index. It is difficult to manage or to look into thousands of companies’ shares at a time and to manage this hurdle, the shares of top companies are watched and this decides the index points – whether it increases or decreases according to the top companies’ growth or fall.

SENSEX is always said as SENSEX30 and NIFTY as NIFTY50 since it consideres the top 30 and 50 companies from different sectors respectively. The increase and decrease in these index points decides values of the stocks on that day.

Small samples that track and represent the entire share market is called as the INDEX and this shows the companies’ economic growth as well the countries’ growth. A company can be listed in both BSE as well as in NSE but its stocks’ price might differ and that depends on its buyers and sellers.

  ‘Stock is the most general term used which represents a slice of ownership of a company, whereas share refers to the ownership of a particular company.’ 

Now let’s come to the trading and investment part. Trading is for a short period of time where you buy and sell the stocks within few days or months; whereas investment is for a long period of time, minimum of a year. In investment, you (the buyer) will be the part time owner of that company from when you buy the share.

We would have heard from our surroundings that investing in stocks is of high risk and that it’s gambling. In fact, to speak the truth, know about the thing before you start. Some people just blindly and with poor knowledge or by peer influence invest in wrong shares and regret later. So, before you invest in stocks, know about the company and its performance (growth) in which you are going to invest. Even then if you are not sure, get some advice from experts and finance brokers who actually work for stocks and have great experience in investment. And to be noticed, share market completely works on the law of demand and supply.

Companies that perform well pay a class of their shareholders from their earnings on a regular basis, called the dividend. 

Now coming to the investers, who could invest? Anyone. Yes, any common man who holds a bank account can invest in stocks. They are called retail investers. The basic requirements are,

  • Bank account
  • Trading account
  • Demat account

Here, you can’t buy stocks directly, you have to approach through stock brokers which involves brokerage commission. Nowadays, rather than conventional trading, technology has led ways to copytrade using apps which is simpler with no brokerage which could be good enough for trading, but for investment conventional method is opted.

Before you invest, ask yourselves these three questions:

  • Why you want to invest
  • Where you want to invest
  • What you are investing

And make sure you are investing the amount which is excess and not your savings which are meant for future use.

Before you enter into investment and trading, make sure you are aware of what and where you invest and trade. Greater the investment, greater the risk but greater the profit; remember to track the INDEX in timely basis.

Stock market is a vast field. This blog is just the mere basics. The process of learning is the most important key here to earn more.


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