Share Market and Students - Understanding Share Market

We all, often come across the term Share Market but at the least we try looking further into it. We also have a perception that Share Market is all about easy money making and this creates a bit curiosity too but that doesn't last long. This is because as we march forward things start seeming complicated than expected and we easily give up. Some of us still being interested work out hard for the things but give up on their way to investment and the reason for this is insecurities maybe sometimes them thinking as having insufficient funds.

So guys, in this blog we'll be dealing with the basics of Share Market so that we get an idea of what share market is and the terms related to it so this would simplify the things at root level. Then we'll have an overlook at the problems we face, as being a student or fresher in the initial stage of investing. Also I'll be adding a interesting story which will clarify the potential of share market. So guys lets get started straightaway.

What is Share Market ?

The Share Market/Stock Market is a source for companies to raise funds and for investors to buy part-ownership in growing businesses and grow their wealth. However besides shares of companies other instruments like Bonds, Mutual Funds and Derivative Contracts too are traded in Stock Market.

Share: In general a share is a part of the ownership of a company. A person who buys a portion of a company's capital becomes a shareholder in that company's assets and receives the share of company's profit on annual dividend basis.

Basic Terms Used in Share Market

Bull Market :A bull market is the condition of a financial market in which prices are rising or are expected to rise.

Bear Market :A bear market is when a market experiences prolonged price declines. It typically describes a condition in which securities prices fall 20% or more.

Dividend :It is sum of money paid regularly (typically annually) by a company to its shareholders out of its profits.

Blue Chip Stocks :A blue chip is stock in a corporation with a national reputation for quality, reliability, and the ability to operate profitably in good and bad times.

Close :The close is the end of a trading session in the financial market when the markets close.

Bid :A bid is the highest price that a buyer is the willing to pay for a stock.

Ask: The ask price is the lowest price a seller of a stock is willing to accept.

Spread :Spread refers to the difference between the lowest ask price and the highest bid price.

These are most important and frequently used terms in the share market. 

Now we'll be looking at the problems that occur at the initial stages and the way in which we can overcome them.

▪︎Inadequate Information 

Poor knowledge of the market trends, inadequate information of the share market and no mentors leads to failure in the initial stages itself. This loss of money causes discouragement and kills the interest in share market. So the responsibility is ours be knowledgeable about the shares you are ought to buy. Having mentors helps us to find ropes in our earliest of investments.

▪︎Avoiding Financial Responsibility 

This kind of mind-set keeps us away from investing our money and we rather focus on spending it. It just makes us financially more dependable. Investing what we have now will make us more sensible in organizing the funds and definitely make us a good investor.

▪︎News Media

The news regarding Share Market is broadcasted in such a way that it mainly focuses on the losses of share market rather than highlighting the gains. So this has created a tendency of us thinking it as curse. Also mostly the gain and loss is discussed and the influencing the market remain out of sight. So following the correct news through various platforms becomes a need. Apps like ET Market, Money Control provide information and news regarding the factors influencing market trends.

▪︎Trustable Source of Investment 

Many apps and sites are available which act as a platform for Stock Marketing and this has created a feeling of insecurity and sense of confusion for choosing the best one. The some of the best apps for share market in India are Kite by Zerodha, Money Control, Upstox and IIFL. These are the the most reliable and trusted apps with minimum charges.

▪︎Time Management 

We all have a common conception that share market consumes a lot of time and requires special attention throughout the day. We need to keep examining the prices of shares every while. So this isn't the case share market takes minutes for buying and selling and may consume an hour or a bit more. So dealing with share market doesn't require a very good portion of our time but we need to invest our time in studying the market trends, reading books and being knowledgeable.

▪︎Learn to Hold On

Patience is the key, what has gone down will definitely rise up again. So rather than panicking at the lowest times its better to hold on what we have. This is an important principle of the share market. Being knowledgeable, confident and believing in what you do will really make things work your way.

▪︎Capital Management

Many of the initial investors give up thinking that they have insufficient funds but the fact here is there's no any minimum amount we should possess in order to start investing and starting low always helps as the good you be at managing low funds, the better you be at managing high funds. 

Now lets get through a short success story as stories inspire us a lot and also we'll get an idea about the potential of share market if done with passion. This story is about the India's leading share market investor also known as "Big Bull" and "Indian Warren Buffett"  RAKESH JHUNJHUNWALA.

According to the latest updates on Forbes (28 Jan 2020), the net worth of Rakesh Jhunjhunwala is $2.6 Billion. So, how did a regular guy from Mumbai with just Rs 5,000 became one of the most successful stock investors in Indian history? This is what we are going to see now.

Mr. Rakesh Jhunjhunwala entered the stock market with just Rs 5,000 in 1985. At that time, Sensex was at 150 points (currently Sensex is hovering at 35,000 points).Nevertheless, soon Rakesh Jhunjhunwala was able to take an amount of Rs 2.5 lakhs from one of his brother’s clients by promising to give higher returns compared to the fixed deposits. Rakesh Jhunjhunwala’s first big profit was Rs 0.5 million in 1986. He bought 5,000 shares of Tata Tea at Rs 43 and within 3 months it was trading at Rs 143. He made a profit of over 3 times by selling the stocks of Tata tea.

During his long career in the stock market Rakesh Jhunjhunwala invested in a number of multi-bagger stocks.

In 2002-03, Rakesh Jhunjhunwala bought ‘Titan Company Limited’ at an average price of Rs 3 and currently it is trading at a price of Rs 817. He is holding over 7.5 crore shares of titan company. He has an ‘overall’ holding of 8.45% in the company.2006, he invested in LUPIN and his average purchase price was Rs 150. Today, LUPIN is trading at Rs 822.20. A few other multi-baggers in Rakesh Jhunjhunwala’s portfolio are CRISIL, PRAJ IND, Aurobindo Pharma, NCC, etc.

The sole of purpose of this blog is to create a curosity among youngsters regarding Share Market. Share Market really works as easy money if we act enough. So in this blog we have tried dealing with basics of share market which will clarify what this is all about and the problems we would face in the initial stages. In upcoming blogs, we'll be discussing about actual investing and also summary of the best book considered for investments ,"The Intelligent Investor" by Benjamin Graham.

 Hope I was successful in creating some curiosity. Do ask for queries if any and what more you would like to know about. Do share with your friends and every share market enthusiast you know.

Until next time.