¨WHAT IS STOCK MARKET –

A stock market is a marketplace where people buy and sell their ownership in the form of shares of a company. It is as good as other markets. Let’s understand it with the example of a vegetable market (sabzi mandi). For say today the price of tomatoes is 100/-INR per kg. You bought 10kgs of tomatoes. For the purpose of reselling, you think tomorrow the price of tomato is going to touch 120/-INR per kg. As per your understanding cum analysis of market demand. The price hikes are the same as you predict. Now you sold it for 120/-INR per kg with a profit of 20% in a single day.

In the same way the stock market works for example Reliance Industries is in your watch. If the price is running 2500/-INR per share. And you think the price will go up to 3000/-INR per share in the upcoming 2 months. On the basis of financial analysis cum price prediction of the company share. You bought 100 shares and the price hikes are the same as you predicted 3000/-INR and you sold it with a profit of 16.6%.

TECHNIQUES TO CREATE ANALYSIS –

Well if you are in any market everything is based upon analysis. Whether it is a vegetable market, a paper market, a clothing market or any kind of market available in the world.

there are two methods of analysing the stock market available.

FINANCIAL ANALYSIS –

Financial analysis is basically the process of evaluating the financial health and performance of a company. Based on various techniques and tools used by analysts and investors to examine the financial status and the economic trends of the company and other data of the company to assess the company’s potential for future growth and profitability at how much risk.

Here are a few aspects that we should always keep in mind while doing a financial analysis:

1. FINANCIAL STATEMENTS – It is the core of any company if we are performing financial analysis it consists of income statements, cash flow statements, and balance sheet. these statements provide crucial statements about the company’s revenue, assets, liabilities
2. RATIO ANALYSIS – These are the ratios that tell about the company’s potential to meet overall financial ability these ratios contain profitability ratios, solvency ratios, liquidity ratios
3. VALUATION TECHNIQUES – There are several techniques used by analysts ( P/E RATIO ) price per earning, ( P/B RATIO ) book value etc
4. RISK ASSESSMENT – Evaluating the risk is the most important part done before investing including market risks and company-specific risks.

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TECHNICAL ANALYSIS –

It is a method of analysing and evaluating stocks by evaluating the previous price, volume and data to identify the patterns, trends and future actions of a graph. In fundamental analysis, we evaluate a company’s financials but in technical analysis, it is a complete focus on charts, patterns and trends.

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Financial analysis is done for investment purposes while technical analysis is done for trading purposes.

Now, the question is what is the difference between investment and trading.

INVESTMENT –

Investment is the process done on the basis of fundamental analysis for the purpose of long-term holding of the stocks or say owning stocks as our own property

TRADING –

Trading is done on a daily basis where the broker lends you money as leverage 10-15 times the money invested. For the particular time frame. Whether you are in profit or loss doesn’t matter for the broker you have to return the lender-leveraged money back on time.

I hope now you are getting hints on how the stock market actually works. Now the question is what is the procedure and where should we buy and sell stocks?

To buy or sell stocks you need a broker who will buy and sell stocks for you. With the advancement of technology, everything is online now even you can sell or buy shares on your own at the broker’s platform. Every buy-and-sell broker will charge a maximum of 20/- INR per trade or a minimum of 0.05% depending upon the quantity. Charges vary from broker to broker here are some of the top broker’s lists available in the INDIAN market.

1. ZERODHA –
2. GROW –
3. PAYTM MONEY –
4. ANGEL BROKING –

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“RULE NO.1 IS NEVER LOSING MONEY

RULE NO.2 IS NEVER FORGET RULE NO.1 .”

— WARREN BUFFET,

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