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PLAN YOUR STOCK Â INVESTMENT
                                MANAGE PROFITABLYÂ
BASICS OF STOCK MARKET INVESTMENT IN INDIA
SOME BASIC FACTS Â ABOUT STOCKSÂ
1.The stock  of a corporation constitutes the equity stake of its owners. It represents the residual assets of the company that would be due to stockholders after discharge of all  claims on the corporation . . Stockholders' equity cannot be withdrawn from the company in normal course .Â
2. Stocks of a  company are divided in to shares . Shares can be  divided into two categories - equity and preference shares. Equity shares  holders  have the power to share the earnings/profits in the company and  a vote in the AGMs of the company. Preference shares  holders earn  only  fixed dividends and have  no voting rights. Equity shareholders are regarded as the real owners of the company.The shares are offered for sale directly by the company for the first time in the primary market and  the trading of shares takes place in the secondary market.
3. A  shareholder of a company is  one of the owners of the company  along with all other shareholders .Â
4.  A retail investor would hold  a minuscule of the total shares of a company .Â
5.  In fact  funds collected from  a retail investor who holds  minority shares  are handled by the promoters of the company who hold major proportion of the shares and who manage the company .Â
6. Money invested for purchase of a share by an investor can not be redeemed by the investor  during the ordinary  course of the company's existence and can be redeemed only by selling those shares  in market .Â
7. A share holder is entitled  to the dividend declared by the profit making company .Â
8. As funds are being handed over to the majority holders / managers of the company and as minority share holder has little say in management of the company  , extreme diligence is required  with regard to the standing , trust worthiness , capability  of the promoters /  managers of the company . An unscrupulous promoter can misuse the funds in spite of various checks and balances .Â
9. Even when  funds are utilized for the genuine business of the company by promoters , the investment carries all the risks of the business and there is no guarantee of the success .Â
10. All the money invested in  a share can be lost  by liquidation of the company and company carrying  more losses than the investment .  Â
11. Hence an investor should be ready to bear the risk of loss of  entire investment while investing in  a share  and Investment is shares  is regarded as HIGH RISK category investmentÂ
12. If company makes  good profits  &  grows , the  value of shares will also grow and a shareholder reaps the benefit of  profit and growth .Â
13. Shareholders are entitled to the portion of profit  declared as dividend and distributed periodically .
14. The profits derived from  investment in shares  can be unlimited in a successful business.  As company grows , investment  value also grows .
15. Shareholders can sell their shares through stock market  at  a price determined by the market . Market prices keep on changing depending up on the demand and supply of shares in the market and may not reflect the actual value of the shares as seen in the books of the company .Â
16 . The new buyer will step in to the shoes of the seller and he will carry all the rights  of the shares against the  price paid by him for purchase . Â
13. In nutshell,Â
a. Investor is shares owns a part of the business which is manged by promoters / managers  .
b. Shares can be purchased at initial offering from the promoters or in a secondary market  through stock exchanges Â
c. the success of business  depends up on the capability of the managers to do the business profitablyÂ
d. the  company may  share a portion of profit it makes as dividend periodicallyÂ
e. Investor can redeem his investment  by selling  at  a price  offered by  a buyer  through stock market .  Â
Lure of unlimited profit in stock investment  brings the investors in to the stock market  .
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2. Stocks of a  company are divided in to shares . Shares can be  divided into two categories - equity and preference shares. Equity shares  holders  have the power to share the earnings/profits in the company and  a vote in the AGMs of the company. Preference shares  holders earn  only  fixed dividends and have  no voting rights. Equity shareholders are regarded as the real owners of the company.The shares are offered for sale directly by the company for the first time in the primary market and  the trading of shares takes place in the secondary market.
3. A  shareholder of a company is  one of the owners of the company  along with all other shareholders .Â
4.  A retail investor would hold  a minuscule of the total shares of a company .Â
5.  In fact  funds collected from  a retail investor who holds  minority shares  are handled by the promoters of the company who hold major proportion of the shares and who manage the company .Â
6. Money invested for purchase of a share by an investor can not be redeemed by the investor  during the ordinary  course of the company's existence and can be redeemed only by selling those shares  in market .Â
7. A share holder is entitled  to the dividend declared by the profit making company .Â
8. As funds are being handed over to the majority holders / managers of the company and as minority share holder has little say in management of the company  , extreme diligence is required  with regard to the standing , trust worthiness , capability  of the promoters /  managers of the company . An unscrupulous promoter can misuse the funds in spite of various checks and balances .Â
9. Even when  funds are utilized for the genuine business of the company by promoters , the investment carries all the risks of the business and there is no guarantee of the success .Â
10. All the money invested in  a share can be lost  by liquidation of the company and company carrying  more losses than the investment .  Â
11. Hence an investor should be ready to bear the risk of loss of  entire investment while investing in  a share  and Investment is shares  is regarded as HIGH RISK category investmentÂ
12. If company makes  good profits  &  grows , the  value of shares will also grow and a shareholder reaps the benefit of  profit and growth .Â
13. Shareholders are entitled to the portion of profit  declared as dividend and distributed periodically .
14. The profits derived from  investment in shares  can be unlimited in a successful business.  As company grows , investment  value also grows .
15. Shareholders can sell their shares through stock market  at  a price determined by the market . Market prices keep on changing depending up on the demand and supply of shares in the market and may not reflect the actual value of the shares as seen in the books of the company .Â
16 . The new buyer will step in to the shoes of the seller and he will carry all the rights  of the shares against the  price paid by him for purchase . Â
13. In nutshell,Â
a. Investor is shares owns a part of the business which is manged by promoters / managers  .
b. Shares can be purchased at initial offering from the promoters or in a secondary market  through stock exchanges Â
c. the success of business  depends up on the capability of the managers to do the business profitablyÂ
d. the  company may  share a portion of profit it makes as dividend periodicallyÂ
e. Investor can redeem his investment  by selling  at  a price  offered by  a buyer  through stock market .  Â
Lure of unlimited profit in stock investment  brings the investors in to the stock market  .
Â
TRADING AND INVESTING IN TIMES OF TURBULANCEÂ Â
PLAN N PROGRESSÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Presents an INTERVIEWÂ
With Mr Indrazith Shantharaj  , author  of  TRADE AND GROW RICH
on  TRADING AND INVESTING IN STOCK MARKETSÂ
    ​
PLAN N PROGRESSÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Presents an INTERVIEWÂ
With Mr Indrazith Shantharaj  , author  of  TRADE AND GROW RICH
on  TRADING AND INVESTING IN STOCK MARKETSÂ
    ​
STOCK MARKETS Â IN INDIAÂ Â - BASICs
There are two  stock exchanges in India through whom most of  stock trading take place . They are National  Stock Exchange of India ( Website )  http://www.nseindia.com/  and  Bombay Stock Exchange  India Ltd  ( Web Site ) http://www.bseindia.com/ .Â
Trading Mechanism in stock exchanges
 All most all companies who have issued shares to the public are listed in either or both of the stock exchanges  and  the shares held by the investors  are kept in  a computer system  in a Demat  way  with  Depository agencies . There are two  Demat depositirs in India viz   National Securities Depository Limited (NSDL)  and Central Depository Service (India) Limited (CDSL) .  Buyers and sellers of shares give order  to stock exchanges  through their brokers  which will be forwarded to the trading computers . Trading at both the exchanges takes place through an open electronic limit order book, in which order matching is done by the trading computer. The market orders placed by investors are automatically matched with the best limit orders. As a result, buyers and sellers remain anonymous as there is no human intervention . The  exchange of funds and shares take place through clearing houses where settlement of  shares and funds take place Â
Trading Mechanism in stock exchanges
 All most all companies who have issued shares to the public are listed in either or both of the stock exchanges  and  the shares held by the investors  are kept in  a computer system  in a Demat  way  with  Depository agencies . There are two  Demat depositirs in India viz   National Securities Depository Limited (NSDL)  and Central Depository Service (India) Limited (CDSL) .  Buyers and sellers of shares give order  to stock exchanges  through their brokers  which will be forwarded to the trading computers . Trading at both the exchanges takes place through an open electronic limit order book, in which order matching is done by the trading computer. The market orders placed by investors are automatically matched with the best limit orders. As a result, buyers and sellers remain anonymous as there is no human intervention . The  exchange of funds and shares take place through clearing houses where settlement of  shares and funds take place Â
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Accounts needed  to invest in sharesÂ
A prospective investor in shares requires the following  three accounts  to invest in sharesÂ
1. Savings Bank account with a Bank to deposit funds for purchasing shares .Â
2. Demat account  with a Depository Participant ( DP ) to deposit held shares and withdraw
3. Trading account with a broker for buying and selling of shares .Â
An investor gives order  to the broker for purchase of shares  at  a specified price on his account .  If the order gets executed,  purchase price  will be removed , on the settlement day , from investor's account  with the bank and  shares purchased will be credited to the demat account of the  investor with the DP .Â
 An investor  has to hold three accounts  one with broker , another with DP and third with banker . As giving orders   to three different entities are cumbersome  for an investors , there are  banks which  offer all the three services  so that transfer from one account to another is seamless .Â
1. Savings Bank account with a Bank to deposit funds for purchasing shares .Â
2. Demat account  with a Depository Participant ( DP ) to deposit held shares and withdraw
3. Trading account with a broker for buying and selling of shares .Â
An investor gives order  to the broker for purchase of shares  at  a specified price on his account .  If the order gets executed,  purchase price  will be removed , on the settlement day , from investor's account  with the bank and  shares purchased will be credited to the demat account of the  investor with the DP .Â
 An investor  has to hold three accounts  one with broker , another with DP and third with banker . As giving orders   to three different entities are cumbersome  for an investors , there are  banks which  offer all the three services  so that transfer from one account to another is seamless .Â
Risks and Rewards  of Investing in SharesÂ
As  earlier mentioned , Risks of an investing in shares  is losing of all the money invested while  rewards  are also unlimited . It is a high risk investment  as entire money invested can be lost .  It is  like  being a sleeping partner  in  partnership where business is managed  by  active partner and sleeping partner's gains depend up on the ability of active partners  to generate profit . Only difference is sleeping partner has unlimited liability in a partnership while share holder's liability is limited to  shares bought  and money invested .Â
In spite of such a a risk , investors are attracted to Share market  , firstly because of their greed to make more money and secondly lured by the history of the market where many investors have gained with their prudent investments . While risk is a possibility of loss , history of the market  shows  better yield on share investment than many other modes of investments . Â
Before investing in shares , one has to  study his own financial position , loss bearing ability  and the greed he has for the  money . A prudent investor will invest only that much funds which he  is comfortable to invest in a risky venture .  he will allocate  such a portion of his investable surplus which will not make him lose  his good night sleep. Further he diversifies  his investment in shares to various  sectors and sub-sectors of economy so that his risk is not concentrated .Â
In spite of such a a risk , investors are attracted to Share market  , firstly because of their greed to make more money and secondly lured by the history of the market where many investors have gained with their prudent investments . While risk is a possibility of loss , history of the market  shows  better yield on share investment than many other modes of investments . Â
Before investing in shares , one has to  study his own financial position , loss bearing ability  and the greed he has for the  money . A prudent investor will invest only that much funds which he  is comfortable to invest in a risky venture .  he will allocate  such a portion of his investable surplus which will not make him lose  his good night sleep. Further he diversifies  his investment in shares to various  sectors and sub-sectors of economy so that his risk is not concentrated .Â
​PRECAUTIONS WHILE  INVESTING Â
One has to be careful while investing in share market as the underlying securities come under HIGH RISK category . Â
​For the  article on precautions one has to take while investing  CLICK HEREÂ
​For the  article on precautions one has to take while investing  CLICK HEREÂ
Trading v/s InvestmentÂ
Even some  experienced investors  get confused over trading and investing in shares . While  traders hold their position for short period , investors hold  for their positions  a longer period . Of course both  take positions to earn profit . Basic difference is the traders  take position  based on their study of market price movement  while investors  take positions on the  fundamental values of the shares .  While study of movement of prices is called Technical analysis  ,  study of value of shares is called Fundamental analysis .  As market price moves swiftly during trading sessions ,  a  trader has to continuously monitor his position and decide when to come out .  An investor whose position is based on the study of fundamentals of the company and  fundamentals change  most of the time gradually and over a period . Hence investor need not worry about daily , hourly movement of the market prices . However he has to monitor  the financial position of the company on  a regular basis to decide when he has to come out .  A person who can not devote all his time to the market  has to refrain from trading .Â
TAX IMPLICATIONS ON STOCK INVESTMENTÂ
Investment in stocks are exempt from Income tax if the stocks are held for more than one year and if total gain in less than Rs 1.00 lakh in the financial year 2018-19 .  Dividends received on Equities are also Tax free . However If stocks held are disposed off within one year of its acquisition , then profit earned on sale  will be reckoned for income tax . It should be included under the head " CAPITAL GAINS " in the Income tax return .  Any  capitol  loss  on equities can be carried over  for 8 years .Â
NEW ARTICLE PUBLISHEDÂ
         TAX PLANNING FOR FY 2022-23 ( AY 2023-24 )Â
Comprehensive  Article on Income tax changes in Rules, Rates , Slabs , Rebates  and EstimationÂ
CLICK HERE TO READÂ
​
         TAX PLANNING FOR FY 2022-23 ( AY 2023-24 )Â
Comprehensive  Article on Income tax changes in Rules, Rates , Slabs , Rebates  and EstimationÂ
CLICK HERE TO READÂ
​
INVESTMENT ADVISORSÂ
As there are thousands of scripts available in stock market , a new investor gets perplexed in what to invest .  But there is no dearth of advise in what to invest . We have brokerages , TV channels , news papers and financial magazines , independent financial advisors , investment gurus ,  astrologers who all advise  what to buy , when to buy  and when to sell . Most of them trumpet about  their success in predictions and the profits earned by their followers . Many times they hide the fact that all their predictions have not come true  and their followers also have had losses .  Hence one has to be diligent in a choosing an advisor . Â
Investment Decisions on  stocksÂ
As a new investor  , one requires some advise from the knowledgables and gurus in the absence of personal experience .  Each one of the advisors will have his own favorites  and he/ she  would dish out few selections for action . However it will be prudent for the  investor to  independently study the company , its promoters , their track record , financial position of the company  and the business of the company and be satisfied before investing . In fact  it would be better to study  various opinions available in the media  on the stock and decide for himself to invest what percentage of excess fund reserved for stock investment  in to this stock .  One can make a short list of " his would be investing  shares "  for  final selection . Investment can be done  gradually over the period  waiting for the dips to improve the  buying cost .  One should be  careful about the advisors who have  personal  vested  interest in making you to buy a particular stock . Â
One can think of  investing  in  equity mutual funds  before actually start investing in individual shares  , as that will give glimpse of how the market movement  affects our investment .  Equity mutual funds are  managed by professionals and would be more diversified than investing in individual stock . However risk level continues to be High Only .Â
One can think of  investing  in  equity mutual funds  before actually start investing in individual shares  , as that will give glimpse of how the market movement  affects our investment .  Equity mutual funds are  managed by professionals and would be more diversified than investing in individual stock . However risk level continues to be High Only .Â
DISCLAIMERÂ
We are not SEBI  registered advisor and the the articles contained in the website , including this page , is not an investment advice .  In case if you are interested in Investing , you  may contact your Financial Advisor for  the same . We  cannot be held for any loss arising out  of your investment  made as per the article . ​