What Is the Share Market and How Is the Stock Market Described? | What Are the Sensex and Nifty? | INFOCOTE

What Is the Share Market and How Is the Stock Market Described? | What Are the Sensex and Nifty?

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Stock exchange, Sensex, and share market:

What fundamental ideas underpin each of these? While NIFTY has decreased, the Sensex has increased by 100 points. What does all of this mean, then? We’ll explain everything in this article in such a way that someone learning about it for the first time can go online and invest in the stock market without any assistance. An illustration will help you comprehend this. Let’s say South Delhi has a Pani Puri corner. Additionally, you have a recipe for Pani Puri that is well-liked by many people. All of your Pani Puri are now sold within an hour of you setting up your stand, and you leave with your profit.

One day you had the idea that if people were enjoying it so much, you should strive to make as many as you can and provide seating for more people by starting a shop. This would allow you to make more money, but the shop would require a financial arrangement for all of these expenses. Therefore, you can invest if you have money. If not, you must borrow money from friends and relatives. Therefore, you borrowed money, invested it, and then paid it back after your business was up and running. However, even after this, customers kept coming in and were even more enthusiastic about your product, so you began to wonder why you hadn’t started selling it throughout Delhi. Profit will be very beneficial.

Angel Investors

But now that you have to purchase stores in Delhi and hire staff, you will require a lot of money, and your buddies won’t be able to come up with it. You can therefore go to a bank to get the money as one option. The first is that you might or might not be approved for a loan from the bank, and the second is that if you do, you’ll have to pay 12 to 13% in interest and begin making payments on your loan the next month. It also takes time to establish a firm. When you consider carrying out the plan in Delhi, the bank’s EMI would be on your mind. And it’s also possible that you decrease profit instead of raising it. There is a third available alternative in this situation, namely an angel investor. You are not required to repay the money that these angel investors offer you. However, they will accept shares of your company in exchange for the cash. That entails a business partnership. Consider a scenario in which you agreed to receive 1 crore Rs. in exchange for a 10% partnership and that you would subsequently be required to give an angel investor 10% of whatever profits you made. Angel investors can invest money and take 10% of your profits as they sit at home without having to work with you.

You are now well-known in Delhi, and customers genuinely enjoy your products. You then suggested that we broaden its application to new states, which will require more funding. And this sum of money will leave the angel investor’s possession. The venture capitalist can assist you in this situation. In order to locate startups and enterprises, venture capitalists are a particular class of business that buys their stock. Venture capitalists are capable of making substantial investments. Now you’ll claim that your product is succeeding as well and that you have an excellent idea. Where can we locate these venture capitalists and angel investors? A good investment banker or financial advisor must be sought out and hired. They’ll create a fantastic file for you and advance you. You’ll receive the financing if your company qualifies, and these angel investors and venture capitalists don’t just hand out cash. Your revenue information is carefully scrutinised, and you are required to make an appropriate presentation. Consider that you received funding from an angel investor in exchange for 10% of the company. You may have also received funding from venture capitalists in exchange for 10% of the company, and despite all of this, demand for your product has continued to grow. You are now considering expanding it internationally and setting up offices throughout India.

IPO

And neither investors nor venture capitalists will hold the necessary funds for this. And in this situation, you’ll have to sell your shares on the open market in return for cash. An initial public offering (IPO) occurs whenever a firm raises money from the public for the first time. initial offering to the public Public limited companies have received funds from the general public in exchange for shares, and you can purchase these shares on the open market. You launched the Pani Puri business on your own, but your product had the potential, and everyone is now profiting from it. You granted them a partnership, and now they are all making money. As a result, in business, your product should be more powerful than its price. Additionally, bringing an IPO does not need going to people and announcing a loud speaker. For IPOs, there is a procedure.

STOCK MARKET

You must first work with an investment banker or underwriter. He will examine your company’s background, the amount of funding required, and the number of shares you’ll provide. After that, he will check your eligibility, among other things, such as the requirement that your daily turnover be greater than 10 lakhs, among many other things. These things are checked. You must register after examining these items, and SEBI will then approve your file. Your IPO won’t take place without SEBI’s authorization. The next step is to submit an application to a stock market. You must determine the price for the shares you are considering listing on the stock market. Its cost is up to you to determine. For instance, when Paytm announced its IPO, the price per share was 2150 Rupees. They used this to raise a sum totaling 18300 crores. The decision to conduct an IPO is entirely up to you. What percentage would you like to fix the share price at? However, you shouldn’t set it too high because if people don’t buy it—90% of them won’t buy shares—your IPO won’t proceed.

IPO LAUNCH

Launching an IPO costs between 6 and 7 crores. There will be no profit from marketing or other fees. Additionally, it damages the company’s reputation, which is why you must maintain your share price so that people will subscribe to your shares. Companies launch IPOs during these times because of this. You may have noticed that IPOs weren’t coming during the COVID and those that were ready to come were put on hold when a market is up and the average person’s purchasing power is high. In cases where a company offers 1 lakh shares in an initial public offering and there are 5 lakh buyers, the public receives the shares using a lottery mechanism. Following the IPO, the firm begins operations and begins to turn a profit, regardless of how much the stock market rises or falls or how much the company’s share price changes. There is no connection to the company at all. It must conduct an initial public offering (IPO) if it wishes to return to the stock market. FPO refers to a company’s second initial public offering.

SHARE PRICES

Now you say that we have seen in movies and the news that owners panic when a company’s shares fluctuate. The business is impacted, but not directly. It suffers indirect consequences. The value of the stock represents the company’s standing in general. The going rate serves as a sort of baseline for any business when determining how much money to take from the market for any work. The second factor is whether a business obtains a bank loan. Then it posts its shares with the bank as collateral. If you deposit 1,000 rupees in shares, the bank will loan you 600 to 650 rupees based on that. Now when the price of the shares has decreased for any reason, the bank will ask the company to provide additional shares to them as a result. Thus, when the share price drops, business owners become alarmed. When a firm conducts another IPO, another option known as FPO is available. It won’t be possible to fix the share prices at that time. The rates in effect at the time will serve as the foundation for FPO.

Founder of BSE

The company, as you can see, raises money through an IPO and begins working, but the public that purchased IPO shares is waiting for the company to make money so they may benefit from it. However, if you were unable to purchase shares at the time of the IPO, there is still a chance for you to do so. You can negotiate with those who did and purchase shares from them. The stock exchange is the location where all of this haggling takes place. Prem Chand founded the Bombay Stock Exchange in 1875, which is where a location is chosen and where people used to congregate and barter. and used to exchange shares via written agreements. As a result of its growing popularity and the government’s recognition of its potential, the National Stock Exchange was established in 1992. And in the days that followed, BSE likewise automated its system. Today, it appears as though you may purchase or sell shares by simply clicking on your mobile device. These days, there are numerous exchanges, including those in Jaipur and Kolkata. However, NSE and BSE are well-known.

SENSEX

They are both in Mumbai. You might now ask, “How is the money invested in this?” What does it imply when the Sensex is up 100 points and the NIFTY is falling? We will explore each of these topics in more detail, but first, please comprehend this. You can conduct research on the stock market and purchase anything you desire, if you so want. However, there are other efficient alternatives, such as index funds, to purchase multiple shares across various industries. As you can see, an index fund is a sort of mutual fund that mimics a recognised benchmark index. When you invest in that index, your money is spread across a variety of index companies, giving you a more diversified portfolio than if you had purchased individual stocks. Such indices include NIFTY50, NIFTY100, and others.

If we consider the current situation, a report indicates that India’s manufacturing sector has grown by more than 210%. Contributors come from a wide range of industries, including automotive, chemical, consumer goods, construction, healthcare equipment, oil and gas, paper and jute, pharmaceutical, industrial manufacturing, metals, telecom, and textiles. In order to lessen its reliance on foreign nations, the Indian government has also backed manufacturing through the Make in India campaign. The sector has benefited from this good push, which has helped the industrial sector. Either invest in individual companies or a group of stocks, such as the NIFTY India Manufacturing Index, to join. In the past ten years, the NIFTY India Manufacturing Index has generated an annualised return of 14.5%.
Note: Carefully study all documentation linked to the programme before investing in mutual funds since they are susceptible to market risk. Yojana se jude sabhi dastavejon ko dhyaan se padhein, Mutual Fund nivesh bazaar ke jokhimo ke adheen hai As we talked about the National Stock Exchange and the Bombay Stock Exchange You may have heard that the Sensex increased by 100 points today or that the NIFTY decreased by 50 points.

What does this entail, then? What occurs when they rise or fall? You have undoubtedly heard of TV TRP, a gadget that is installed on some TVs to track viewership. Not all TVs have it installed. Due of the impossibility of doing so, a gadget is installed in every TV in India to monitor what people are watching. Because of this, certain samples are collected, and on the basis of those results, an assumption is built about what viewers in all of India are watching. TRP is determined in this manner, and because it’s challenging to keep track of all the companies Therefore, the Bombay Stock Exchange monitors the top 30 companies and makes market predictions. The National Stock Exchange, which is given the moniker Sensex, uses a sample of the top 50 firms to forecast the market known as NIFTY. The market often moves in the same direction as the leading Sensex and NIFTY businesses.

COMPANY’S SHARES

However, the market need not follow these businesses’ lead. Additionally, it’s possible that although the Sensex rises, the stock you own declines. Thus, this might also occur. Now that you’re thinking about it, 30 large companies are chosen for the Sensex and 50 large companies are chosen for the NIFTY. What are these large corporations, then? What qualifies as a large company? How is this determined? the number of shares outstanding and their value If we multiply it, the resulting sum will be The largest corporation will be the one whose quantity is higher. The top 30 and top 50 firms in the Sensex and NIFTY are chosen in this manner, and they are constantly changing. A corporation is removed from the top 30 or top 50 if its share price is declining. The question now is: Why does the value of any share fluctuate so much? In the stock market, there are primarily three factors that affect how much a company’s shares are worth.

RETAIL INVESTORS

Retail investors are the first. Institutional investors come in second, followed by adviser rating agencies. Retail investors are people like you and me who purchase or sell shares in accordance with market conditions. The second group is institutional investors, who choose shares of any firm or industry in large quantities via mutual funds or index funds. The third group is adviser rating agencies. They foresee whether the economy will grow or contract or whether industry will experience rapid growth. Which industry will lose money? These three organisations control the market’s direction. If you want to invest in the stock market, you must conduct study and only believe trustworthy sources. If you decide to invest in the stock market after having a dream about Mungerilal, it will be a long-term game. The loss will then undoubtedly be felt by you. Additionally, there are market recommendations and bogus experts. Avoid getting bogged down in this. rely only on trustworthy sources and agencies Otherwise, we can’t depend on the local advice we keep getting.

In order to further illustrate, let’s say that I reached 4,000 people and generated a list of them. made 2000 persons in two groups. they were split up into two groups. told one group that the market would rise and another group that the market would decline Out of two things, one will happen. The market will either increase or decrease. After that, if the market goes up, I’ll leave the group for which the prediction was accurate and continue with the group for whom it was accurate. And in that group, I’ll divide it into two groups of 1000 people each and perform the same thing with the group for which the forecast is accurate. There will be at least 250 persons after doing this constantly for whom the forecast may have been accurate four times. They’ll see me as the stock market’s guru. I would then advise those 250 people to deposit 50,000 rupees, and because I am an expert in the market, you will soon become wealthy.

DEMAT ACCOUNT

After stealing money, some people go away. Therefore, avoid getting involved in these issues, and if you want to invest, conduct your study or rely on trustworthy companies. If you want to invest money in the stock market on your own without any assistance, you may do it all from home with just a mobile phone. Three elements are required for purchasing or selling shares on the stock market. Savings account, Demat account, and trading account are the first three. I’ll provide an example to explain these three. Consider that you visit a store, withdraw money from your wallet, and purchase a shirt. You then put the shirt in a bag. Your wallet is therefore your savings account. You are functioning as a trading account by keeping your shirt in the bag that contains your Demat account. You move funds from your savings account to your trading account, where you purchase shares that are then saved in your Demat account.

The Demat account displays how many shares of which companies you own in a similar manner to how your savings account displays your current bank balance. Many apps will appear if you simply type “Demat app” or “trading app.” Use these applications Finish your KYC. Your mobile device will be able to access your trading and demat accounts, and it will also connect to your savings account. Additionally, if you still don’t understand, the customer service number is provided on that specific app, and a step-by-step approach is described there. If you wish to take part in an IPO, buy or sell shares, you may do it all using that app from home.

Note: Content on the Edge disclaims all liability for any advise provided regarding mutual funds. These are our individual view points.

Disclaimer

Investments in mutual funds are exposed to market risks; thoroughly read all papers pertaining to the scheme. Depending on the dynamics and variables influencing the securities market, such as changes in interest rates, the NAVs of the schemes may increase or decrease. Mutual fund success in the past is not always a reliable predictor of future results for the schemes. Any dividend paid under one of the schemes is not guaranteed or assured by the Mutual Fund, and it is dependent on the existence and sufficiency of distributable surplus. Investors are urged to carefully read the prospectus and seek professional advice from experts regarding any particular legal, tax, and financial ramifications of their investment or participation in the plan.

Watch Video Below on Share Market by Famous Creator Dhruv Rathee.