what is share market in India

A single country or region may have multiple stock trading venues, that allow transactions in stocks and other types of securities. Although both stock market and stock exchange are used for this purpose only, a stock exchange is often a subset of the stock market.

If someone say that he trades in the stock market, it means that he buys or sells share equities on a stock exchange, which is a part of the stock market. New York stock exchange among major US stock exchange ( NYSE), Nasdaq and the include of Chicago board options exchange (CBOE).The two major stock exchanges in India are (BSE) Bombay Stock Exchange and (NSE) National Stock Exchange of India Ltd.

What is share market? 

The meaning of share in common language is used to represent a fraction. When a company wants to raise capital, it sells a part of its ownership to the public. This part is called a share. People who buy these shares are called shareholders of the company.

Let us take a real example to understand the meaning of share.

For example, the total capital of a firm is Rs 10 lakh. The firm divides its total capital into 1000 parts at an equal price. Now each divided part of the company's capital is the smallest part of the company's capital.

In this way, the price of each part i.e. share will be Rs 100. And this small part is called a share. If you buy shares of that company, then you will become the owner of the share you pay to buy.

Note:- Share is also known as stock, equity in the stock market. Thus, the words share, stock or equity all have the same meaning.

What is a share market investment?

Dividend Yield

Dividend Yield or DY is a ratio of total dividends distributed in the last 12 months divided by the share price, which shows how much the company pays out in dividends each year as per its share price. In other words, the company distributes an annual dividend to its shareholders every year and when you divide this annual dividend by the company's share market price, we get the dividend yield of the company.

Bull Market 

Bull Market is the financial condition of the market that reflects investor confidence, optimism and positive expectations. Bull market is usually related to the stock market, but it applies to all financial markets such as currencies, brands, commodities, etc. During a bull market, everything in the economy moves upward amazingly, such as rising GDP, job growth, rising stock prices, etc. In simple terms, a bull market often leads to overvaluation of stocks because investors are overly optimistic and believe that the stock will always go up.

 

Bear Market 

The opposite of a bull market is a bear market, which usually reflects a poor economy, fewer jobs, recession, and falling stock prices. Investor behavior during a bear market is highly pessimistic because they fear that the stock will go down and down. Bear Market makes it difficult for investors to choose profitable stocks for the short term. Interestingly, Bull means ox and Bear means bear. The words bull and bear that are used in the market are derived from the way these animals attack their opponents. A bull thrusts its horns upwards in the air, while a bear thrusts its claws downwards. These actions are metaphors for the movement of a market. If the trend is upward, it is a bull market. And, if the trend is downward, it is a Bear Market. 

Demat & Trading Account 

Demat Account Do you know the most basic requirement for trading in the stock market? You must have a bank account, similarly a demat account is required to trade in the stock market, but for all this it is important to know what is a demat account? A demat account is just like your bank account. The only difference is that in a bank account you keep your capital in digital format, similarly in a demat account you deposit shares in digital format. b. Trading Account Like a demat account, a trading account is also important for investing in the stock market. It allows you to buy or sell shares and other securities in electronic form in the stock market. 

What is IPO?

IPO means Initial Public Offering. When a company offers its shares to the public for the first time, it is called an IPO. Understand it like this that many private companies in the country work in different sectors. When these companies need funds, they get themselves listed in the stock market and the best way for this is IPO. After issuing the IPO, the company gets listed in the stock market. After this, investors can buy and sell its shares! 

 What is a blue chip company? 

The best companies selected in the stock market are called blue chip companies. These are the most reliable and most traded companies in the market. Blue chip companies are financially very strong, due to which they are not much affected by the fluctuations in the market. For example: Reliance, Infosys, HDFC, SBI, TATA, all these are blue chip companies selected on the stock exchange.

What is capital expenditure (CapEx)? 

CapEx Capital Expenditure is the expenditure incurred when fixed assets are purchased in a company or factory like Machinery, Furniture, Vehicle or any Equipment or if a machine already exists then the machine is upgraded to increase its production capacity or its life, for this a lot of money has to be spent, this is what we call CapEx i.e. Capital Expenditure. We can also understand it this way that if there is a machine in a company and it is being used a lot and it has also become very old, then due to this the production has started to slow down or is decreasing. Now buy a new machine in its place so that it starts doing more or the production increases, so these Expenses that are made are of Capital nature and we call it Capital Exp. Thus, whenever a company makes a big expenditure for assets whose benefits it gets for many years to come, then this expenditure is called capital expenditure. These expenses are made only occasionally and not repeatedly.

What is EPS? EPS?

(Earning Per Share) is a number that tells how much profit a company is earning on each of its common shares in a fixed time interval. EPS is a very important number for investors, which increases the earning power of the company and the higher the earning power of a company, the higher can be the share price of that company. P/E and Dividend Payout are also calculated on the basis of EPS. It can also be known through EPS that how much money a company earns for each of its shares. In simple words, with the help of EPS we can also find out how much profit should come in the share of each share. 

What is ROE?

ROE (Return On Equity) tells how much return was received on investment in any company. That is, we can know how much return the investor and owner got on investing 1 rupee in equity in any company. The ROE of a company tells us whether we should invest in that company or not. That means the higher the ROE of a company, the better it is for investment! Although there is no fixed value of ROE, but if you are investing in a stock in the stock market, then you should see that the ROE is 20% to 25%. 

What is ROCE?

ROCE (Return on Capital Employed) is a financial ratio, which tells us how much profit the company is earning on the total capital invested in a business. Or it can also be said in this way that how well the company is utilizing its capital to make profit. This profit should be at least more than the interest on the loan, only then investors will get some return. Otherwise all the profit will be spent in paying interest only. And if the company is giving less returns than the interest on the loan, then the company will have to pay the interest on the loan from Reserves & Surplus. Which is a loss for investors. As an investor, we must look at ROCE for investing in any company. If the ROCE of a company is 20% or more than 20%, then it is a good option for investment! 

What is EBITDA? 

The full form of EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization. Its full form itself makes it clear that through this, the profit from the income of the company can be easily measured. It includes borrowing, tax and cost of debt. How much is the company earning, how much tax is it paying and how much debt is it repaying. This tells about the company in which direction it is moving. What is its financial condition? For this reason, any investor keeps an eye on EBITDA. Understand it like this that if you lend money to any person, then you give it only after understanding his financial condition. In such a situation, when you invest, keep in mind the financial condition of the company. Let us tell you that from EBITDA you can get the cash flow (C) of the company… 

Why do share prices fluctuate? 

There is not a single reason responsible for the fluctuation in share prices of a company, but there are many reasons responsible for it. For example, if the share prices of Reliance Industries increase, then the following reasons can be responsible for this: 

 1. Reliance announcing a policy due to which people buy more of its shares 

 2. The Government of India or any state government taking a good decision in favor of Reliance, due to which there is a possibility of increase in the price of Reliance shares in future. Due to this positive possibility, people will buy more shares of Reliance and the price of its shares will increase. 

52 Week High-Low 

In the stock market, the prices of commodities, securities and stocks always fluctuate. Sometimes it reaches a record high level and sometimes it touches its lowest level. In the stock market, in the last 52 weeks, the price of any security bond or stock has increased. The highest price of the stock is called its 52 Week High and the lowest price is called its 52 Week Low. 

 

What is SLB (Securities Lending And Borrowing)? 

“Securities Lending and Borrowing is a mechanism in which the owner of shares or bonds – which are approved by SEBI – temporarily transfers them to a borrower, in return the person borrowing the shares pays some amount or interest as collateral.” In this, shares are usually borrowed to do short selling. Like a loan, SLB has an interest rate and loan period, which is decided by the lender and the borrower with mutual consent. The important thing in this is that the interest rate is decided according to the market and is control free. Note- Lending and Borrowing is done only for the shares in the Futures and Options (F&O) segment.