After reading this post, you will learn everything about Equity Market, so let’s first know-
What is Equity Market
Equity market: Equity market is a platform where buyers and sellers buy and sell shares, hence equity market is also called share market or stock market because shares are traded here.
If you also want to buy or sell shares, then you can buy or sell shares of companies listed on NSE i.e. National Stock Exchange and BSE i.e. Bombay Stock Exchange.
In olden times you had to go to Mumbai Stock Exchange to buy or sell shares but nowadays you can trade shares online, for which today many brokers have come in the market like; Angel broking, Upstox, Zerodha, Kotak securities etc.
Apart from the equity share market, there are other markets in which different things are bought and sold like; Money is bought or sold in the currency market, futures and options in the derivatives market, gold, silver or oil in the commodity market.
What are the types of Equity Market?
Types of equity market
There are two types of equity market
1] primary market
2] secondary market
1. What is the primary market?
When a company issues its shares for the first time to raise money from the public and is listed on the stock exchange, then this process is called IPO i.e. Initial Public Offer.
When people buy the shares issued through IPO, the market in which it is bought is called ‘Primary Equity Market’.
2. What is the secondary market?
By selling its shares in the primary market, the company collects its money and exits and the company gets listed in the stock market And the shares that people have bought in the company continue to trade on the stock exchange and their price keeps on increasing or decreasing over time.
As people start buying more shares of companies then its price starts increasing and when people start selling most of the shares then the share price starts decreasing in the equity stock market.In this situation, the market in which the share is traded is called the secondary market, that is, after the IPO, when the share is traded, it is traded in the secondary market.
How does equity market works
In the equity market, stocks of companies listed on the stock exchange (NSE or BSE) are bought and sold. To buy or sell stocks, you need to open a demat account through an online broker.
The shares purchased by you are stored in the demat account. All the shares purchased by you are stored in dematerialized form. Apart from this, there is also a trading account and through this you buy and sell equity shares.
For this, you have to add money to your broker app like zerodha or upstox through the savings account of any of your banks, through which you take delivery of stocks or do trading.
When you take delivery of a stock, then you hold it for more than 1 day means keep it with you whereas if you buy and sell the stock on the same day then it is called intraday trading in which the broker will ask you some brokerage. Also charges brokerage fees.
Should I invest money in equity market or not?
This is one of the most asked question and its answer is also very important for all investors because when market is boom in India i.e. uptrend in) then many new investors invest money in it without thinking And when the market crash happens as fast, people sell their purchased shares and withdraw their money, in this way most people lose.
So if you ask me whether to invest in share market or not? So I will tell you that before investing in share market you have to learn a lot like;
1) First of all you should know about the basic terms of share market like; Bull, Bear, SEBI, NSE, BSE, Broker, Stock Exchange, Debenture, Bond, Face Value, Book Value, Market Capitalization etc.
2] Apart from this, you should be able to do fundamental and technical analysis. If you want to invest in equity market for long term then you have to learn fundamental analysis and if you want to trade then you should have knowledge of technical analysis.
3) After this, you should understand the management of the company and its business model very well.
When you understand all these things very well only then you should invest in share market or else you should stay away from it because by learning this you can lose your money in share market.
Why is Equity Market Important?
What are the benefits of Equity Market and why is it important? Some important points are given below
1) Equity market or stock market plays a big role in the growth of any country’s economy.
2] Equity market or stock market plays a big role in the growth of any country’s economy.
3] Companies need equity capital to grow their business, which can be easily raised through equity market.
4] Mutual funds also invest their money in the equity stock market and give it to you by earning multibagger returns on your money.
5] Through Equity Market, you can earn more returns from Bank, Fixed Deposit (FD), Bond, PPF or any other.
6] The faster the Nifty and Sensex go up in our country, the faster the economy of our country also grows.
7] Nifty and Sensex are a kind of index which shows how the biggest companies of our country are performing.
8] Retail investors can also buy shares of big companies and get ownership in them.
9] Small investors can get good return on their money in the long term by investing money in the stock of any fundamentally strong company.
10] By learning the equity market or share market well, you can earn a lot of money.
How to Invest in Equity Market?
For this you need three things: Trading Account, Demat Account and Savings Account. Today you can open all these three accounts online through any broker and start investing in equity shares.
How to make money from Equity Market?
To earn money from Equity Stock Market, you should buy undervalued stocks and sell them when the share price rises i.e. when the shares are sold at the overvalued price. In this way you can earn good returns or profit on the stock you buy but keep in mind that the stock you are buying should be fundamentally strong.
What is the return on money invested in equity market?
If someone thinks that he can double or multiply his money by buying stocks through equity market then it is possible by buying shares of fundamentally strong company but if you If you invest in any cheap stock just by looking at the price chart, you can also lose your money.
Conclusin (What is Equity Market)
Those who invest in the stock market without learning, there is the highest risk, while on the other hand, those people who understand the basics of the stock market well, know how to do fundamental and technical research and before investing in any company’s stock. Understand his business very well, for such people this market is not risky at all.
I hope you have found the information given in this post useful.