Indian stock markets are growing rapidly, especially post-pandemic, as financial literacy is increasing. In the last 5 years, the Nifty 50 index, which is a benchmark for the Indian stock market, increased by a whopping 119%. So, if this has caught your eye, and you want to learn how you can start investing in the Indian stock market, then you have landed right.
This article will help you understand the basic details that you need to know to start investing, and guide you about the ways and stock market courses for beginners you can join to start learning about the stock market from the basics, to build a solid understanding.
What are Stocks?
To invest in the stock market, an understanding of stocks is inevitable. Stocks are securities that represent fractional ownership in a company that issued the stock. Now, shares are often used as an alternative word for stocks; however, shares are units of a stock.
So, basically, a stock defines your ownership in the company, and accordingly, the rights and duties of the investors can be determined.
Different Types of Stocks
Stocks are categorized primarily according to ownership in a company. We just mentioned above that when you buy stocks, you get certain rights, but that depends on the type of stocks you purchased. So, if somebody has stocks of the AMC company, it doesn’t necessarily mean he or she has certain rights in the company’s decision.
Here are two types of stocks as per ownership in the company –
Common or Equity Stock
This stock offers direct ownership in a company, and the shareholder, even if they hold a single share of the company, gets voting rights proportionate to their holding. This means the shareholder can participate in the decision-making of the company, even if it is negligible. These stocks usually offer higher growth potential in terms of share price return; however, they are riskier as well.
Preferred Stock
So, equity stocks are riskier but have higher growth potential, compared to what? The answer is preferred stocks. Shareholders who invest in preferred stocks do not have any voting rights, but they are the ones to get the dividends before equity shareholders, and in case of the company winding up, they will be given preference to have a higher claim on assets compared to any equity shareholder. This makes their investment less risky compared to that of equity shareholders, but these stocks usually witness less capital appreciation.
To understand how voting rights help investors, how preferred stocks are traded, and how equity stocks are traded, you should join the best stock market course available online.
As per Market Capitalization
The stocks are categorized as Largecap, midcap, and smallcap stocks as per their ranking based on market capitalization.
Growth Stocks
These are stocks of such companies that are growing at a faster pace than the market, usually the new companies that are rapidly growing.
Value Stocks
These stocks are of such companies whose intrinsic or fair value is higher than the current market price of the stocks. Basically, these are the stocks that are undervalued. If you want to explore the value stocks, you must join share market online courses in Hindi, where mentors can guide you about the tactics of finding value stocks.
Other Categories
Dividend Stocks: These are the stocks that steadily pay dividends.
Cyclical stocks: These are the stocks that are highly sensitive to economic events, geopolitical issues, market volatility, etc.
While these are the common categories of stocks, there are many other subcategories as well, which you can learn by joining a free stock market course.
Long-term vs. short-term Investing
Now, as a beginner in the stock market, you must be thinking about whether you should start long-term investing or short-term investing. So, before you decide between these two, let’s find out how they are different.
- Long-term investing: Long-term investing usually refers to buying and holding stocks for more than a year. Now, it can depend on your investment goal for how long you want to hold the stocks. It also depends on the type of stocks that you have purchased. Long-term investments usually offer higher growth in terms of capital appreciation, and also risk is minimized when invested in stocks for the long term, but that again depends on the type of stocks invested in.
- Short-term investing: This, on the other hand, refers to investing for a timeframe up to 1 year. When you invest in stocks for the short term, the returns can be volatile depending on market conditions, also risk is higher due to volatility. So, you need a more in-depth understanding of the markets, stocks, which you can get from enrolling in a free stock market course and learning from the best mentor.
The tax implications vary according to long-term and short-term investing, which is important for you to know when starting to invest in the stock market. You can learn the tax implications in detail by joining a share market online course in Hindi.
Steps To Start Investing in Stocks
So, now that you know about the different types of stocks, different types of investing tactics, let’s see how you can start implementing them.
- First, you need to open a Free Demat Account and a trading account
- For this, you need to find the best brokerage platform online
- Then, following the easy account opening process, you can open and activate your account in a few minutes
- Now, explore the stocks you want to track. You can add them to your watchlist.
- As per your investment strategy, now you can buy, hold, and sell the stocks.
Conclusion
So, if you are interested in stock markets or want to build a passive income source, the stock market can be one of the best options. However, you must learn before you plan to earn from it. And to do so, you need to join a stock market course for beginners and then open a Free Demat Account to start investing after learning the basics.
