INVESTMENTS ( EQUITIES )
EQUITIES
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Invest in all these segments in a single account
What Is a Share or Stock?
Assume you own a premium bakery chain looking to expand your business. You have explored various funding options and would now like to go for equity. In case of equity, you sell ownership of your business for funds. Think of it like this. Your business represents a pizza, which has 10 slices. If you want to sell that pizza in the market, there would eventually be a price for it. That price is the value of your entire business. Let’s say the pizza (business) is worth ₹1,000.That price is also the value of the ownership of the company. So, if you sell the entire pizza, you give away 100% of the ownership and get the monetary value. But if you sell only two pieces of the pizza, you sell part of the business. This means you sell 20% of the ownership and get ₹200 in return.In the case of a company, each slice of the pizza is called a share or a stock. Such shares are transferable, meaning they can exchange various hands. Today, Aaron might buy them. Tomorrow, he can sell them to Chris.
Types of Stocks
Stocks or shares are primarily of 2 types, common stock and preferred stock. Let us quickly go over their differences
Common Shares
Client of Company
Preference Shares
Manager of CompanyCapital Fluctuation
There is potential for an increase or decrease in the share price based on company performance and the market sentiment. This helps in the appreciation and depreciation of your invested capital
Ownership and Vote
Equity shares grant partial ownership and voting rights to investors or shareholders, allowing them to influence company decisions
Profit Share or Dividends:
Limited Liability:
Types of Income from Stock Ownership
- Capital appreciation
- Short selling in intraday
- Dividend income
- Valuating the best investment options and identifying the investment plans suitable for your financial situation forms an integral part of financial planning process. Investment options should not be selected at random based on popular recommendations. They have to be critically analysed to evaluate whether they suit your risk appetite or not.
- We often fail to design a systematic investment plan which increases our probability of success. It is important that we bring objectivity to every investment decision being made. While defining your investment plan make sure you:
- Define the goals and the respective time lines when you want to achieve them.
- Assess your surplus.
- Assess your risk profile.
- Diversify the investment allocations based on your risk appetite.
- A systematic investment plan has the potential to bridge the gap between your dreams and reality. However, your behavioural biases limit this potential thus creating a difference between your expected returns and actual results. The Investment options which you undertake has to meet your risk appetite parameters and should be in sync with your goals. Even the best Investment planning services in India have to address your risk tolerance levels. In your quest to invest in the best investment plan in India, you should not forget your core investment objectives.
- At EETTAL FINSERV we deploy the techniques of behavioural finance to counter the biases of individuals and help them bring discipline to their investments.
- Finally, in some cases, you are allowed to sell a stock in the morning and then buy it back before the trading day ends. This means it is not necessary for you to own the stock at the moment when you make the sell transaction. This phenomenon allows you to make a profit even on a day when the price of the stock falls as you sell at a price higher than the buying price. This phenomenon is called short selling.
- However, you need to buy the same share in the same quantity by the end of the day in order to go through with the short selling. This is because you must have the shares that you sold in the morning at the time of its delivery to the buyer in that transaction. You will be able to deliver these shares only if you have bought the same quantity of shares and have them at the time of the said delivery. This is possible because it takes one extra day to actually take delivery of the shares.
Sometimes, a company may decide to distribute a portion of its profits among the shareholders. This amount is known as a dividend. It is one way of appealing to the shareholders to continue holding stocks and in a way, increase the demand for the stock in the market
Where Are Stocks Bought and Sold?
There are two ways in which stocks can be bought and sold
Private deals
Stocks can be sold in large block deals to big institutional investors such as Peak XV Partners, Tiger Global or any other private firm
Public trading
The company can choose the common public buy and sell shares in open market by releasing some of shares into the public market through an IPO
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How To Buy Stocks in the Public Market
If you are not trading on behalf of an institution, then you are likely a retail trader or investor. In that case, you can take the following steps to buy shares of a company in the public market:Open a bank account with a bank of your choice.Open a demat account and trading account with a broker.Once the accounts are activated, transfer adequate funds from your bank account to your trading account.Find the stocks that are available in the public market. Do some research about its financial health and growth prospects and choose which stocks to buy.Open your Trading account, e.g. your Angel One account. Click on the search icon and look for your chosen stocks.Now, place your buy order. Simply click on the ‘Buy’ button, enter your desired quantity on the order pad, and select the order type. To complete your transaction, click on the ‘Buy’ button.If you don’t have a Demat account with Angel One, you can open one for free online within minutes.
What Is Trading vs Investing in Stocks
The main difference between trading and investing is really a matter of timelines and a change in the approach. If you are thinking of holding the stocks for the short term, for example, a day or a week, then it would fall under the ambit of trading. In that case, you need to focus on either the price fluctuation patterns or a particular event that can have a short-term impact on the stock.However, if you are planning to hold the stock for a long term, e.g. 5 years, then it would fall under the category of investing. In that case, rather than checking for short-term events and price fluctuations, you would rather look at the long-term capabilities of the company. The quality of management, the financial performance, and the ability of the company to grow and take up market share would start to matter more in your decision to invest or not
Benefits of Investing in Stocks
Trading software
Trade all the segments (Equity, Equity derivatives, Commodity, Currency) in a single trading platform
Desktop based
Mobile platform
- Trade software is an exe-based desktop software designed for active traders who transact frequently, offering them a faster trading experience with customized features.
- It provides the users with a trading terminal experience and can be downloaded on to you PCs easily.
- Monitor markets by creating customizable MarketWatch in the trading terminal
- Real time advanced charts with technical analysis for both intraday and short term trade
- In depth Market history to help back testing of investment strategy
- Create Market Watch as per your requirement, add, delete and rearrange columns as per your viewing preferences
- Watch price movements by minutes, days, or weeks through advanced charting capabilities offering multiple indicators.
- Trade anywhere anytime through our user friendly mobile trading application
- Access to live Market Data
- Quotes on stocks of your choice
- Status of orders, trades & positions
- Sneak peak at Intraday charts
- Track top gainers and losers
- Add, modify, delete market watch
- Place orders, modify orders, cancel orders
- Watch portfolio