Stock market

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 What is stock market?

        Stock market is market there, we can buy or sell a company stocks. In early years we want to go to the Bombay stock exchange or National stock exchange to buy a stock. But today we can buy or sell the stock through online by using the brokerage applications at anywhere.

Why company listed in stock market?

        When the company wants to enlarge or develop the plants or industry, They need money. For the money needs, the company can do two things.

1) They can take loans from the bank

2) They can sell the company value through share market, to collect the money for there needs.

Disadvantage of taking loans

        The interest rate of the banks are very high. This affect the growth of the company.

Advantage of stock selling

        They don't  want to pay any interest to the investors those who buying the stock of the company. on the other hand the price of the stocks can grow when the company performs well.

Reason for the share price increase?

        When the company performs well or any positive news for the company is published. It increase the share price (for example: When we buy the stock at  Rs350/-the stock price can go to Rs400/- constantly)

Reason for the share price fall?

        When the company did not performs well or the company have a temporary trouble or  the company did not have a future demand or growth  or  the company had a heavy Debt to pay, the stock price of the company is also reduce. This affect the investors those who invest in the company. (For example when we buy the stock at the price of  Rs400/- suddenly the price of the stock can go to Rs350/-) 

What are the 2 terms of stock?

 long term

        Before buying a company stocks, we wants to analyze the company( Fundamental and Technical)  and the business model. If the company have a future growth it is consider as a long term stock. In this scenario we wants hold the stocks for more than 15 years. (For example: banks and Automobiles sector) 

Short term

        In this scenario, the company have a temporary demands or short term demands this increase the share price of the company(For example: Oil & Infrastructure sector) We can not able to hold the stocks for more than1 year.

Advantage of Investing in stock market

        When we put our money in the bank, the bank pay interest of  4.5% but the value of money is 7% lower every year (for example: we can buy an apple at Rs100 in 2021 but in 2022 we want Rs107 to buy an apple) to escape from this we want to increase the value of money above 7% for this mutual funds and Investing in stocks are the only way. When we have the knowledge about share market, we can earn more money apart from others. 

        "Risk comes from not knowing what you are doing" by Warren buffet

 

Location: India

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