A stock market is a place where the shares of different companies are listed and traded. The stock market helps companies to raise funds by selling ownership stakes to investors. The share market in India is divided into two types of markets: the primary market and the secondary market.
Primary Stock Market: In the primary market, securities are created for the first time for investors to purchase. In the primary market, new securities are issued in the market through a stock exchange that helps companies and the government to raise capital. Three entities are involved in the transactional process, a company, investors, and an underwriter. A company issues the security in the primary market as an Initial Public Offering and the selling prices of the new issue are determined by the underwriter. After that, investors purchase the newly issued securities. SEBI (Securities and Exchange Board of India) regulates this market.
Secondary Stock Market: A secondary market is a place where the securities that investors already own are bought and sold. It is a platform where investors can freely buy and sell shares without the intervention of the issuing company. Stock exchanges and over-the-counter markets are the two types of secondary markets. You can learn about all the important factors of the market through a professional Stock Market Institute.
The Future of the Stock Market:
The Indian economy is one of the fastest-growing economies in the world and it is estimated to touch 5 trillion dollars by the end of the year 2025. The Demat accounts have crossed four crores which is the first step of trading in the stock market. Investors need to look at the market from a different perspective.
They should know the risk-factor and investment goals and they should set a disciplined approach as it requires patience. “6 to 12 months some of these markets that have become oversold may do better than India has outperformed so much in the last 18 months”- said Hiren Dasani, managing director at Goldman Sachs Asset Management.
The year 2020 saw the Sensex in a rally of 15.75% which wasn’t left out and rose to 14.90%. By the end of the year 2021, the NIFTY and Sensex have risen to 20%. In the past 2 years, the midcaps were the stocks that performed better. It is said that NIFTY targets 17,700 by the end of the year 2023.
Investors are looking forward to India being added to Global Indexes after JP Morgan and FTSE Russell help back from the move this year, creating operational issues that should be resolved immediately.
The majority of the experts say that consumer sentiment will see an uptick in 2023. The Indian market performance will be high in the areas like banking, automobiles, real estate, and company stocks. Kamath sees India’s current account deficit to $23.9 billion, or 2.8% of GDP, and the market contributes between 40%- 75% of the revenues earned by Indian IT companies. B, Gopkumar expects the housing and banking sector to be a crucial sector in 2023 due to the improved economic outlook.
Investment in the stock market is risky and one wrong step might result in huge capital loss. To take a calculated risk the investor needs to analyze the value of the stock properly.
10 Best Benefits of Investing:
The stock market provides the investor with several benefits. When the investor makes the right investing choice, there are higher chances to gain a good return on their investment. The future of the stock market is unpredictable so with proper stock or market knowledge, one can earn maximum returns.
Some Major Benefits Of Investing In The Stock Market Are As Follows: –
- Satisfactory Long-term Returns: There is a buy-and-hold approach in the stock market. Investors buy the shares and hold them for a longer period of time in order to achieve maximum return. As we know the market is unpredictable so investors should be patient. They should watch the price fluctuations. If the prices of individual stocks grow rapidly, the overall stock market value tends to grow in value.
- Liquidity: Stocks are considered liquid assets as they can be easily converted into cash. This allows the investors or traders to buy and sell the stocks immediately than other assets like real estate or long-term debt instruments.
- Transparency: The Indian stock market is regulated by a regulatory body, the Stock Exchange Board of India (SEBI). That means when an investor invests their money to buy shares, then his money and rights are protected by the SEBI. Investing in the stock market is much safer and more transparent than other investments. All the transactions and activities are overseen by the SEBI which reduces the risk of fraudulent activities by the companies.
- Dividend Income: A dividend is an additional income for the investors that have been paid by the company by the end of the year. Companies paid a portion of the profits to their shareholders, even if the stock has fallen in value.
- Ownership: Purchasing a stock of the company means gaining ownership. That means a shareholder has the power to vote in the company’s decisions. Having ownership in the company ensures that the shareholders can decide for the welfare of their interests.
- Higher Return in Shorter Duration: Investing in the stock market helps investors to get higher returns on their investments in a shorter duration.
- Safety Against Inflation: One of the biggest advantages of investing in the stock market as it guarantees the future of an investor. But we should keep proper track or knowledge of inflation or price fluctuations. The rate of return should be higher than inflation.
- Passive Income: Dividend stocks help an investor to gain passive income. Well finding good stocks is a tricky and knowledgeable task but investing a good amount of money in the right stock will result in big dividend checks.
- Small Amount Investment: The stock market also gives the option to start investing journey with a small investment by purchasing stocks of small-cap or mid-cap companies in smaller units. Receiving a good return on investment boosts the confidence of investors.
- Easy Trading Process: Buying and selling in the stock market is very easy. An investor can start their investment journey by following simple steps- Open a Demat and Trading Account, Select Shares, Select the Price Point, and Complete the transactions.
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