Understanding the Share Market: For All New Investors - Eternal Research
The stock market (or share market) is the oil that renders a country’s economy machine run smoothly. It enables businesses to access capital for expansion and innovation and investors to share in their success. Understanding the basics of how the share market operates enables people to access wealth creation and long-term financial security.
What is the Share Market?
The stock market is a place where the shares of publicly listed companies are traded. It lets companies raise money and allows investors to build wealth. Companies break their ownership into tiny shareholdings (shares) and offer these shares to the public. In exchange, investors are given a stake in the company and a share in its profits.
How the Share Market Works
Shares are traded on the stock exchanges BSE and NSE. On a global scale the likes of NYSE (New York Stock Exchange) and NASDAQ perform in much the same fashion. These exchanges create a safe, controlled space for people to buy and sell securities.
The worth of a share is subject to several determinants, such as the performance of a company, economic factors, investor sentiment and global events. As a SEBI compliant investment research company, Eternal Research Investment Advisor provides their investor accurate and timely information with which to decode the variables.
Key share market terms explained:
- Share of Stocks: Ownership interest in company.
- IPO (Initial Public Offering) : The first time a company sells its shares to the public.
- Bull Market: when stocks are in an upswing.
- Bear Market: A cycle of falling stock prices.
- Indices: These are indicators that represent overall trends in the market, such as Nifty and Sensex.
- Dividends: Payments made by a company from its profits to its shareholders.
- Types of Share Markets
- Primary Market
- Where newly issued securities, stocks and other investments are sold to the public.
- Secondary Market
- Shares previously issued by the corporation that are bought and sold by investors on exchanges. This juncture also offers liquidity and opportunities exist for fast, easy buy-sell transactions.
Types of Investors:
- Scalpers: Trading stocks in a matter of seconds or minutes to profit from price changes.
- Long-Term Investors: Hold shares for years and benefit from long-term capital appreciation and dividends.
- Advantages of Investment in the Share Market
- Wealth Creation: Over the long term, equity markets have historically performed better than any other investment option.
- Dividend Income: Periodic payments from profitable companies.
- Liquidity: Shares can easily be turned into cash when desired.
- Inflation Hedge: Over the long run, stocks have tended to beat inflation.
- Risks Involved
In the share market, although the profitability of shares can be high, this is not without risk. Stock values can fluctuate with changes in economic conditions, news about the company, and world events. Both Fundamental Analysis and Technical Analysis are very important in assessing a possible investment and minimizing risk.
Why Choose Eternal Research?
Being a SEBI Registered advisory firm Eternal Research has lots of signal for trading trade safely in NSE market with risk and reward ratio. We believe that investors need to make informed investment decisions that are appropriate to their financial needs.
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