The share market of India is very vast with more than 5000+ companies listed. SEBI is the regulatory board of the stock exchange in India.
NSE and BSE are two stock exchanges under which shares are traded.
Nifty-50 and Sensex are the two indexes of the market that includes the top companies trading on the stock exchange.
First of all, just relax and take a deep breath if you are reading this post and make sure to free your mind from all thoughts.
It is easy to start investing or trading in the stock exchange nowadays because everything is online and you do not have to call your broker every time you trade.
If you are a newbie then you can put your money on the index funds because it is the showcase of the share market and it grows in the long term whether any particular company in the index fund does not show growth.
There is always a risk in the market but if you consider your long-term goals then you will definitely be in profit.
There is a good saying in the market that do not put all your eggs in the same basket means do not put your money on one share instead of diversifying it into different shares, bonds, and funds.
Diversifying your money is very important in the share market. Because if any company fails to be profitable then it would not affect you.
The question is the same for many of us in India who want to earn money from the share market but are confused that it is good to start trading shares on the stock exchange.
So first you can start gaining knowledge from the internet about equity, bonds, and futures trading.
Varsity is Zerodha’s training program that I recommend to you from where you can get knowledge of the stock market.
You may hear about the book ‘The intelligent Investor‘ in videos or articles, you can read this book to better understand the core concept of the share market. Warren Buffet, the American-based investor, also recommends this book.
Before starting a trade, you have to put your focus on the basic terms used in the share market.
There is no get rich quick scheme, it takes time and you also can lose your money.
You can put your saved money’s partial amount to start investing and over time when you understood the market only then you can invest more money.
If you are a novice to the equity market then you can check my blog post on Share market basic information.
If you want to experience the share market without investing money then there are some stock simulators where you can experience how the stock market works.
Before starting to invest in any company you have to check a lot of factors here I discuss only a few with you.
Terms should be understood (Share Market of India)
BVPS(Book Value Per Share) is the ratio of the company’s common equity value to the total common shareholding.
For example, a company’s market value is 100 crore and outstanding shareholding is 10 crore then the BVPS is 10rs.
Many investors use book value to evaluate the company’s stock price. If book value is more than the current price the company is undervalued and if book value is less than the current stock price then it is overvalued.
ROE(Return On Equity) is the ratio of the company’s net profit and equity shareholding.
It is used to measure the growth rate of a company and check whether the company is profitable or not.
Debt to Equity ratio
The D/E ratio is the ratio of the total liabilities upon total equity shareholding.
This ratio calculates the amount of debt and liabilities against the equity shareholding.
EPS is Earning Per Share and it is the profit shared by the company’s equity holder.
It is the tool that is used by market investors to check the profitability of a company.
EPS is a competitive factor because when any investor goes to invest in a company then he compares the EPS of various companies.
Price to earnings ratio is the ratio of the current stock price to the earnings per share.
It is a widely used term and it tells you how much you are willing to pay to earn a rupee from a single share of the company.
It is the profit generated by a company or person after deducting all taxes, costs, and expenses.
The balance sheet is the biodata of a company and it includes assets, liabilities, and shareholding details.
All these terms of a company represent the company’s growth, profit, vision, etc. It is not for an India-based company but for all over companies.
Note: The share market is subject to loss and risk and I am not responsible for that in any way. It is just for education and understanding.