Hii,
In this post I would like to share my knowledge about the stocks.
What is a stock or share or equity?
A stock is simply ownership of the company.So,the number of stocks you purchase determines your ownership of the company.If a company share value is 50, it means each share of the company is 50 rupees in the market.
Why would a company sell its shares?
Because if a company plans to expand it needs capital, which it can take from banks but it has to pay back the money with interest, instead if it sells the stocks by dividing the ownership it gets capital and there is no need to pay back,even the losses are also divided among everyone who owns stock.
If you have some shares of company it does not mean you can run the company with your decision.For you to become a board of director you need some minimum number of shares or percentage of ownership. It is just open to public and if you wish to buy you can buy.
Why people invest in stocks?
Say you have 1 lack rupees which you can afford to loose, with that money you can buy 500 shares of a company whose share value is 200(100000/200=500) and if in 2 months share value of the company increases by 50 points you i.e share value becomes 250,you can sell each share at 250 rs so you have 250*500=125000 rs you got 25000 rs profit which is huge when compared to interest given by banks, but risk is also high if you loose you would loose amount in your 1 lack.
How will you determine if a share value increases?
Actually we can not.
We cannot determine how the market runs with absolute certainty.
But we can predict the market to good extent by doing fundamental and technical analysis.
Fundamental analysis-We analyse the company situation and its value from its performance,for example if a company is going to take a new government project obviously it is going to get profits and the profits are distributed among the stocks which increases the share value.
Then why do people loose money in stock market?
First thing we do not know which company is going to get project, A lot of predictions will come in the market we do not know which is gonna be true.By the time it knows to everyone the number of people who wants to buy the stocks increases than the sellers which in turn increases the stock value,for example Now the stock value of a company is 50 as the hype increases the stock value increases to 80 and we buy here and after project completes profits are distributed say stock value is 90 now,people sell the stock and as the sellers increases stock value decreases say it decreases to 60 or 50 so eventually a person who buys at 85 is at loss. Last part comes under technical analysis.
Thank You for reading.
In this post I would like to share my knowledge about the stocks.
What is a stock or share or equity?
A stock is simply ownership of the company.So,the number of stocks you purchase determines your ownership of the company.If a company share value is 50, it means each share of the company is 50 rupees in the market.
Why would a company sell its shares?
Because if a company plans to expand it needs capital, which it can take from banks but it has to pay back the money with interest, instead if it sells the stocks by dividing the ownership it gets capital and there is no need to pay back,even the losses are also divided among everyone who owns stock.
If you have some shares of company it does not mean you can run the company with your decision.For you to become a board of director you need some minimum number of shares or percentage of ownership. It is just open to public and if you wish to buy you can buy.
Why people invest in stocks?
Say you have 1 lack rupees which you can afford to loose, with that money you can buy 500 shares of a company whose share value is 200(100000/200=500) and if in 2 months share value of the company increases by 50 points you i.e share value becomes 250,you can sell each share at 250 rs so you have 250*500=125000 rs you got 25000 rs profit which is huge when compared to interest given by banks, but risk is also high if you loose you would loose amount in your 1 lack.
How will you determine if a share value increases?
Actually we can not.
We cannot determine how the market runs with absolute certainty.
But we can predict the market to good extent by doing fundamental and technical analysis.
Fundamental analysis-We analyse the company situation and its value from its performance,for example if a company is going to take a new government project obviously it is going to get profits and the profits are distributed among the stocks which increases the share value.
Then why do people loose money in stock market?
First thing we do not know which company is going to get project, A lot of predictions will come in the market we do not know which is gonna be true.By the time it knows to everyone the number of people who wants to buy the stocks increases than the sellers which in turn increases the stock value,for example Now the stock value of a company is 50 as the hype increases the stock value increases to 80 and we buy here and after project completes profits are distributed say stock value is 90 now,people sell the stock and as the sellers increases stock value decreases say it decreases to 60 or 50 so eventually a person who buys at 85 is at loss. Last part comes under technical analysis.
Thank You for reading.
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