Stock Market

Everything you need to know !!!

The stock market has fascinated people for over a century now. Stocks are even seen by many as the quickest way to get rich. However, there are indeed very few investors who see the stock market and stocks in the right perspective. To most, these are just tickers of prices going up and down. If your ticker goes up, you make money. If it goes down, you lose. That's both the start and the end of the story.

But the thoughtful investor is more discerning than that. He looks at stocks not just as quotes going up and down, but as real, live businesses in action. Go one step further and one realize that stocks can be one of the most fabulous asset classes to invest in. They are a vehicle and mechanism that provides ordinary individual investors with some amazing advantages and opportunities. Advantages that are unparalleled by any other asset class.


What is the Stock Market?

The stock market refers to public markets that exist for issuing, buying, and selling stocks that trade on a stock exchange or over-the-counter. Stocks, also known as equities, represent fractional ownership in a company, and the stock market is a place where investors can buy and sell ownership of such investable assets. An efficiently functioning stock market is considered critical to economic development, as it gives companies the ability to quickly access capital from the public.


Purposes of the Stock Market – Capital and Investment Income

The stock market serves two very important purposes. The first is to provide capital to companies that they can use to fund and expand their businesses. If a company issues one million shares of stock that initially sell for $10 a share, then that provides the company with $10 million of capital that it can use to grow its business (minus whatever fees the company pays for an investment bank to manage the stock offering). By offering stock shares instead of borrowing the capital needed for expansion, the company avoids incurring debt and paying interest charges on that debt.
The BSE and NSE
Most of the trading in the Indian stock market takes place on its two stock exchanges: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Market Indexes


The two prominent Indian market indexes are Sensex and Nifty.


•Sensex is the oldest market index for equities; it includes shares of 30 firms listed on the BSE.

•Another index is the CNX Nifty; it includes 50 shares listed on the NSE


What are the factors that longer-term investors must look at while taking an investment decision?




  • Business model
Undoubtedly, the very first thing that any investor must look at is the business/sector that the company operates in.


  • Management
The management is another extremely important factor to consider before investing in any company. At the end of the day, it is the management that will be the driving force behind the future direction and success (or failure) of the company.
  • Competition in the industry.

Company's competition is another major factor that you as an investor should look at before deciding to buy (or not to buy) that company's stock.


  • Financial analysis


This of course, is one of the major factors that most investors already look at. It includes doing a detailed study about the company's financial position and performance over a reasonably long period of time. Such a study is commonly known as 'fundamental analysis'.


  • Dividend yield
Dividends are a form of income from shares and regular dividend-paying companies do provide some comfort that their profits and cash flows are stable enough for them to keep paying dividends each year.

  • Value
And finally, the last step in deciding whether or not to buy a stock - the valuation phase. While the business model, management, fundamentals, and market positioning of the company may be the best, if the stock is trading at valuations that are unwarranted, then it is not worth buying the stock.

At the end of the day, we believe that investing in shares is all about conviction - if you are not convinced about the company, then do not stake your hard-earned money

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