Brief Summary
This video serves as an introductory guide to the stock market, simplifying key terminologies and concepts for beginners. It explains what shares are, how the stock market operates, the reasons behind market fluctuations, methods for tracking market performance, and common trading strategies.
- Shares represent ownership in a company.
- Stock market facilitates buying and selling of shares.
- Market fluctuations are driven by supply and demand.
- Trading strategies include intraday trading, position trading, and option trading.
What is Share?
A share represents a unit of ownership in a company. For instance, if Mr. Sharma's company, valued at ₹100 crore, needs ₹50 crore for expansion, he can offer shares to the public. By dividing the company's valuation into smaller parts, like ₹50 per share, he can sell these shares to raise capital. Those who purchase these shares gain a proportional ownership in the company.
How to Make Money with Shares?
There are multiple ways to profit from shares. One way is by selling shares at a higher price than the purchase price, capitalizing on the company's improved performance. Another method involves receiving dividends, which are portions of the company's profit distributed to shareholders, often quarterly. Additionally, companies may issue bonus shares, providing shareholders with extra shares based on their existing holdings, increasing their ownership without additional cost.
How Does the Stock Market Work?
The stock market facilitates the buying and selling of shares through stock exchanges, which act as intermediaries. In India, while there is only one stock market, it comprises several stock exchanges like the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Stockbrokers execute buy and sell orders on behalf of investors, charging a commission for their services. When a buy order is placed, the broker relays it to the stock exchange, which matches it with a corresponding sell order to complete the transaction.
Market Ups and Downs
Market fluctuations occur due to supply and demand dynamics. When demand exceeds supply, prices rise, and when supply exceeds demand, prices fall. Stock exchanges use algorithms to list share prices based on current stock prices and traded volumes, leading to rapid price changes. To track market performance, stock market indices like the Sensex and Nifty 50 are used, representing the performance of stocks in specific industries or segments.
Trading Strategies
Several strategies exist for stock trading. Intraday trading, or day trading, involves buying and selling stocks on the same day to profit from short-term price movements, requiring quick decisions and technical expertise. Position trading, conversely, is a long-term strategy where stocks are held for months or years, focusing on long-term trends rather than short-term price fluctuations.
