A situation should be considered to understand the stock market. A person is knee-deep in debts from banks and creditors. He then opens the company for a common man to invest. The people who invest their money in his company become the owners of the company. The owners work together to make the company debt-free and earn profits. The people who became owners of the investing money are the owner of the shares of the company. The shareowners earn in two ways either when the company offers them dividends or when the price of the shares increases.
It may sound simple but, several things are required to understand before investing in shares. How do many people become owners of the same company? Why does one take the money and offer ownership rather than borrowing money from creditors and keeping the capital intact? How can one invest money in shares? What factors should be considered before investing money in shares?
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Share trading in India
Once the capital of the company has exhausted, and the company is of a certain size, and it desires to grow further then it can go to the public to raise funds. The share certificates issued to the public and they invest in a company in the form of equity shares. The company gets listed in two biggest marketplaces called NSE and BSE. The people start to trade in its equity shares.
Tips for share trading in India or NSE
- Always deal with the market intermediaries registered with SEBI or stock exchanges.
- The form or documents are registered as a client is fully filled.
- Be clear with your broker, agent, or depository participant in clear manner.
- Take contract notes from the broker. In case if there is any doubt regarding the genuineness of the broker, then check on the Base website.
- Settle the dues with banking channels.
- Before placing the order of buying the share check the details of the company, its fundamentals, announcements, legalities, and more. Business magazines, Stock Exchange, databases of data vendor and more.
- If there is a sudden increase in the price of the shares it is a red flag, especially low PE shares.
- Ensure that you are holding securities before sharing the shares.
- Remember there is no guarantee on returns on investment in shares.
- Keep track of the shares that you send or are yet to receive.
- Specify clearly that you want to transact in physical or Demat mode.
- Don’t follow anyone blindly regarding investment do your own thorough research.