STOCK MARKET
Stock Market is the key component as it serves as a platform for trading of company shares and other securities online. Stocks can be traded only after listing it on Stock Exchange. Thus, it serves (NSE) as a meeting place for the stock’s buyers and sellers. They decide the stock price and buy and sell stock. Primary Stock Exchanges of India areBombay Stock Exchange (BSE) and the National Stock Exchange.
WHAT ARE STOCKS?
- It is a kind of a share that stock holder gets in the ownership of the company
- Buying shares of same company result in increasing stake in that company. Word “Stock” is termed differently by different people like shares, scrip, equity etc.
WHAT ARE DIFFERENT TYPES OF STOCKS AVAILABLE?
Stocks are divided into various categories:- Divided on basis of Size of market capitalization like Large-Cap Shares, Mid-Cap Shares & Small-cap shares
- On the basis of different sectors like IT, Pharmacy, Banking, etc.
- Divided on the basis of methods of stock issue like Preferred and Common stock
WHAT ARE DIFFERENT KINDS OF SHARE MARKETS?
There are two types of markets:Primary Market
The primary market is that when the company lists itself on the stock exchange for the first time by launching Initial Public Offering (IPO).Secondary Market
- After new securities are sold in Primary market, then these shares are further bought and sold in secondary market
- Secondary Market provides option to the investors to exit
- Transactions that take place in the Secondary market is considered as the trade where investors buy and sell shares from each other through stock exchange at the price prevailing or at price of their choice.
- Normally, such kind of transactions is done keeping broker as intermediary
STOCKS ON THE BASIS OF MARKET CAPITALIZATION:
Stocks are divided on the basis of market value of the company. These are:Large-cap stocks
- Large Cap stocks are stocks of large companies having large market capitalization like Infosys, Reliance etc.
- The shares of these companies are also known as “Blue Chip firms”
- These stocks draw you sustainable returns over a period of time and are considered safer, because these are renowned companies and are able to handle the downfall in market also there are minimal chances of going bankrupt for these companies
- These shares are less risky
Mid-cap stocks
- Mid-Cap Stocks are stocks of Mid-size companies that are in development phase
- These stocks can earn you the high rate of return during the bull market phase. As these companies have the potential of growth. But, rate of return is more than Large Cap stocks but less than small cap stocks
- The risk involved in these kinds of shares is larger than the large cap but less than small cap shares. As these companies have less potential to sustain market crash and also take a lot of time to recover from these crashes.
Small-cap stocks
- Small-Cap shares are stocks of small-size companies
- These stocks can earn you a very high rate of return during the bull market phase. As these companies have huge growth potential
- Risk involved in these kinds of stocks is also very high
- It is advisable only for people with high-risk appetite to invest in these stocks
LETS UNDERSTAND THE TERMS USED IN STOCK MARKET
Company name and symbol
- Every share in stock market allocated NSE & BSE Code and instead of using the whole name instead they use a symbol which is short for. Example For Infosys term used is Infy etc.
High/low
During the time stock market is open the price of a share keep on fluctuating. This is due to the fact the more number of shares are sold the price goes up and vice-versa. This results in the fact that the share price is continuously changing. After the market is closed the lowest price of the share for that particular day is called “Day’s Low” and the highest price of the share for that particular day is considered “Day’s High”. Also, the difference between highest and lowest price lets you know about the volatility in the price of stock.Net change
Closing price helps to ascertain the how much price of the stock has changed. Change is written in value as well as percentage. Calculation is as follows: Net Percentage Change= Previous closing price – Subtract today’s price- Closing price
