A stock or a share basically means the share in the ownership of a company, including its assets or earnings. The company gives such an ownership because it needs money to meet its costs or to expand its business. And this financing can be debt financing (borrowing money) or equity financing (selling stocks).
Debt financing would require the company to pay back the loan with interest, whereas in equity financing there would be no interest and a probability of not paying back the money at all! Moreover, in case of failure the risk is distributed among a large number of stockholders.
So where can a company find such people who would want to buy his stocks? A stock market. It acts as a common platform for the buyers and sellers of stocks. And how does an investor buy the desired stocks if he cannot be present at the stock exchange, or does not know which stocks to buy?
Online trading comes to the rescue, and a stock broker can help too. A stock broker or an online share broker keeps himself updated on the share market and is experienced with trading of stocks.
He thus guides the investor about how and where to invest, for a brokerage fee.
Choosing the right share broker is crucial, as he would be the one deciding about the hard-earned money of an investor. A reliable share broker acts as an honest partner for the investor in his journey in the stock trading market. He should be trustworthy and capable of getting higher returns from the investments. A share broker or an online share brokerage firm should be providing quality services to its clients like reliable and prompt market information, convenient trading tools, and above all a reasonable brokerage fee.
Stock prices change constantly, and an investor would need to buy shares at a low price and sell them at a higher price to get higher returns. For this, keen observation of the stock market indices is required to follow the performances of various companies he is interested to buy stocks from. Stock market index is a group of the best performing companies listed on the respective stock market, and whose performance represents the performance of all the companies and in turn the overall sector they belong to.
But a major element contributing towards stock price is news. Domestic as well as international issues like terror, war, crime, fraud, etc. deteriorate the stock prices. This happens as the uncertainty of the situation makes people refrain from investing, which in turn affects the businesses. The fear of loss of money results in fall in share prices.
To invest in the Indian share market, you will first need to know about the functioning of the stock market. Gaining some knowledge on the fundamentals of share market will help you gain higher returns from your investments in the Indian share market.
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