Understand how the stock market works
Answers
If you want to invest in stock market, first you should understand how the stock market works in India. Buying a share or stock of a company simply means you are buying a unit of the company. Investors are able to buy the stocks of the company once the company share is launched in the market.
Share is a unit of ownership of a company and is offered for sale in the market when a company needs to raise money for further growth. The shares in the market are launched in the form of initial public offering (IPO). The price of IPO of a company is decided based on how much the company is estimated to be worth, and how many shares are being issued. The company gets to keep the money raised to grow its business, while the shares or stock of the company continue to trade on an exchange, such as the National Stock Exchange and Bombay Stock Exchange.
In stock market, a company gets only the amount collected through IPO launch. The money from buying or selling of the stock of the company on the exchanges is not received by the company. Investors gain or lose money in market depending on the perceived value of company.
Predicting the rise or fall of a particular stock or share is very difficult. The key to gain profit in the market is to create a diversified portfolio of stocks from different sectors and hold them for the long-term. It is generally seen that over a long period of time stocks as a whole tend
to rise.