BASICS OF SHARE MARKET OR STOCK MARKET FOR BEGINNERS. | WHAT IS SHARE MARKET? (EXPLAINED)|HINDI

HELLO FRIENDS,

TODAY WE'RE GOING TO LEARN THE BASICS OF SHARE MARKET OR STOCK MARKET. (TO UNDERSTAND AND WATCH THE VIDEO ON THE BASICS OF STOCK MARKET IN HINDIClick here)

FIRST WE'LL SE WHAT ARE SHARES? SO, BASICALLY SHARES ARE SMALL UNITS OF THE COMPANIES, WHEN ANY INDIVIDUAL OR FIRM BUY THESE SHARES THEY BECOME PARTLY OWNER OF THAT PARTICULAR COMPANY OR FIRM OF WHICH SHARES THEY HAVE BOUGHT, THEY ARE ALSO KNOWN AS SHAREHOLDERS OF THE COMPANY.

There are two types of shareholders of a company. The first type is a common or equity shareholder in which a shareholder purchases common stock and is able to vote to elect board of directors. The second type is a preferred or preference shareholder, who receives a steady dividend before a common shareholder.

WHAT IS DIVIDEND?

Dividend refers to a reward, cash or otherwise, that a company gives to its shareholders. Dividends can be issued in various forms, such as cash payment, stocks or any other form. A company's dividend is decided by its board of directors and it requires the shareholders' approval.

WHAT IS BASICS OF SHARE MARKET?

There are two types of market the first one is primary market where the securities or shares are created and second one is secondary market where the trading by the investors takes place.

In secondary market there are Stock Exchanges which provides platform to investors to buy or sell the securities or shares.

The share market helps companies or firms to raise funds by issuing their shares through IPO (Initial Public Offer) to Investors. The advantage of raising fund like this, is that the company does not have to return the funds to the investors. the investors become partly owners after buying the shares.

The investors can transfer the ownership of shares anytime by selling it.

RISK IN SHARE MARKET

The risk in share market depends upon the type of share you buy, the risk in preference share is very low compared to equity shares and the returns are also low.

The risk in equity shares are very high but the returns are also very high compared to preference shares.

HOW TO MINIMIZE THE RISK?

If you invest in a particular share without any research or analysis the risk of making loss in that particular share will increase.

So, Rather than investing without any research or analysis it is advised to not invest.

Before investing if you do research and analysis for that particular share it will increase the chances of making profit in that particular share.

There are two types of analysis you can do before investing

1.Technical analysis.

2.Fundamental analysis.

Technical analysis is used for trading or short term investment.

Fundamental analysis is used for long term investment.

HOW TO INVEST OR TRADE IN SHARE MARKET?

To invest or trade in share market you first need a Demat account.

You can open your Demat account with any listed broker or with discounted broker like, upstox, zerodha, etc.

PROCEDURE TO OPEN A DEMAT ACCOUNT:

To open a demat account you must approach your Depository Participant (DP). The DP could be your broker or a bank. While you will open your demat account with the DP, the actual shares will be held in custody by one of the depositories (CDSL or NSDL). These are institutions sponsored by large institutions with government participation and hence you are assured of safety and security.

The next step is to submit your KYC (Know your Client) documents. Along with filling the Account Opening form and filling all the details, you will also be required to submit copies of your passport sized photographs and your PAN card. Additional, you need to furnish one proof of identity and one proof of your current residential address. The KYC form has the DP-Investor agreement, which lays out the rules and regulations and your rights and obligations. Do read the fine print in detail.

At the third stage, most DPs will insist on an in-person-verification (IVP). Either you can personally visit the centre or the representative will visit your place. Some brokers permit IVP over the web cam, although most brokers still insist on IVP.

The last step is the allocation of the Beneficiary ID (demat account number) once all the documents are in place and verified. The DP id and the Beneficiary id combined becomes your unique DP code for all future transactions, IPO applications etc. Demat account can only hold shares in custody and you still need a trading account with a broker to buy and sell shares.

A few basic things to take care of here! All documents should be self-attested and originals produced on request. Proof of identity and address provided should exactly match with the details provided in the account opening form.