Share Market basic knowledge for a beginner.

 Basic Knowledge of the Share Market

1. What is a Share Market?

The share market, or stock market, is where shares of publicly listed companies are bought and sold. It's a marketplace for trading equity securities.

2. Types of Markets

Primary Market: Where new securities are issued via Initial Public Offerings (IPOs).

Secondary Market: Where existing shares are traded among investors.

3. Key Participants

Investors: Individuals or institutions buying or selling stocks.

Brokers: Intermediaries who execute buy/sell orders for investors.

Regulators: Bodies like SEBI (India) that oversee and regulate the market.

4. Types of Shares

Common Shares: Offer voting rights and dividends.

Preferred Shares: Provide fixed dividends but usually lack voting rights.

5. Important Terms

Index: Measures market performance (e.g., Nifty 50, Sensex).

Market Capitalization: Total market value of a company’s shares.

Dividend: A portion of a company’s earnings distributed to shareholders.

PE Ratio: Price-to-Earnings ratio, indicating the valuation of a company.

6. Market Orders

Market Order: Buy/sell immediately at current prices.

Limit Order: Buy/sell at a specific price or better.

Stop-Loss Order: Sell if the price drops to a certain level.

7. Investment Strategies

Long-Term Investing: Holding stocks for years to benefit from growth.

Short-Term Trading: Buying and selling stocks within days/weeks to capitalize on price volatility.

Dividend Investing: Focusing on stocks that pay regular dividends.

8. Risks and Returns

Market Risk: The potential for investment losses due to market fluctuations.

Diversification: Reducing risk by investing in a variety of assets.

Understanding these basics can help you navigate the share market and make informed investment decisions.