How to invest in equity shares?

If you're in India, start an online account like http://www.icicidirect.com and trade online.

Open a demat account and bank account trading in equity shares.Take advice from knowledgeable share brokers who will guide for investment in good shares.

Hi Nitu,

First make up your mind on how much you are planning to invest in the stock market. This depends on your age profile and the amount. For example you are young and would like to take risks, invest a higher proportion of your investible amount in the stock market which is traditionally considered a risky investment. After deciding on your profile and the amount to be invested, decide which industry you want to invest in. Then, you can decide the company.
My sincere advise to you is that, in case you do not know the Indian market or you can spend some time daily on the market, route your funds through mutual funds.

Dear Nilu
This is called equity market this is not very easy to tell u that to invest in particular script better I suggest you to look for the right broker who knows everything of daily market but the important part is you will have to learn about benefits of investing n must prepare for the returns in %. you required don't invest blind i know lot of stocks can boom up but i still advice you to wait till year ending and see the budget if you are long term investor. Bcoz this market can go to panic again like the year 2002 do i wish you good luck and if you want taste the market masala invest in infotech enter ,mastek, mtnl for low risk but if you invest in mastek you can get more returns or loss also bit huge one more i can tell you tatapower sail thermax buy but watchdaily marekt be ready to sell any time.thanks

go to reputed bank like sbi or hdfc or bank of baroda etc
give adres proof, pan card number, u r photos,
open saving bank a/c with the bank
open demat a/c through the same bank ....
of national depository or central depository
open thru the same bank a trading a/c with a
reputed sebi registered broker
u r ready 4 trading of shares.
read daily economis times

Equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and funds in anticipation of income from dividends and capital gain as the value of the stock rises. It also sometimes refers to the acquisition of equity (ownership) participation in a private (unlisted) company or a startup (a company being created or newly created). When the investment is in infant companies, it is referred to as venture capital investing and is generally understood to be higher risk than investment in listed going-concern situations.

Direct holdings and pooled funds

The equities held by private individuals are often held via mutual funds or other forms of pooled investment vehicle, many of which have quoted prices that are listed in financial newspapers or magazines; the mutual funds are typically managed by prominent fund management firms (e.g. Fidelity or Vanguard). Such holdings allow individual investors to obtain the diversification of the fund(s) and to obtain the skill of the professional fund managers in charge of the fund(s). An alternative usually employed by large private investors and institutions (e.g. large pension funds) is to hold shares directly;in the institutional environment many clients that own portfolios have what are called segregated funds as opposed to, or in addition to, the pooled e.g. mutual fund alternative.

[edit] Pros and Cons

The major advantages of investing in pooled funds are access to professional investor skills and obtaining the diversification of the holdings within the fund. The investor also receives the services associated with the fund e.g. regular written reports and dividend payments (where applicable). The major disadvantages of investing in pooled funds are the fees payable to the managers of the fund (usually payable on entry and annually and sometimes on exit) and the diversification of the fund that may or may not be appropriate given the investors circumstances.

It is possible to over-diversify. If an investor holds several funds, then the risks and structure of his overall position is an amalgam of the holdings in all the different funds and arguably the investors holdings successively approximate to an index or market risk.

The costs or fees paid to the professional fund management organisation need to be monitored carefully. In the worst cases the costs (e.g. fees and other costs that may be less obvious hidden fees within the workings of the investing organisation) are large relative to the dividend income payable on the stock market and to the total post-tax return that the investor can anticipate in an average year.

[edit] Analysis

To try to identify good shares to invest in, two main schools of thought exist: technical analysis and fundamental analysis. The former involves the study of the price history of a share(s) and the price history of the stock market as a whole; technical analysts have developed an array of indicators, some very complex, that seek to tease useful information from the price and volume series. Fundamental analysis involves study of all pertinent information relevant to the stock and market in question in an attempt to forecast future business and financial developments including the likely trajectory of the share price(s) itself. The fundamental information studied will include the annual report and accounts, industry data (such as sales and order trends) and study of the financial and economic environment (e.g. the trend of interest rates).

[edit] Share price determination

Ultimately, at any given moment, an equity's price is strictly a result of supply and demand. The supply is the number of shares offered for sale at any one moment. The demand is the number of shares investors wish to buy at exactly that same time. The price of the stock moves in order to achieve and maintain equilibrium.

When buyers outnumber sellers, the price rises. Eventually sellers enter, and/or buyers leave, achieving equilibrium between buyers and sellers. When sellers outnumber buyers, the price falls. Eventually buyers enter, and/or sellers leave, again achieving equilibrium.

Thus, what a share of a company at any given moment is determined by all investors voting with their money. If more investors want a stock and are willing to pay more, the price will go up. If more investors are selling a stock and there aren't enough buyers, the price will go down.

Of course, that does not explain how people decide the maximum price at which they are willing to buy or the minimum at which they are willing to sell. In professional investment circles the Efficient Markets Hypothesis (EMH) continues to be popular, although this theory is widely discredited in academic and professional circles. Briefly, EMH says that investing is rational; that the price of a stock at any given moment represents a rational evaluation of the known information that might bear on the future value of the company; and that share prices of equities are priced efficiently, which is to say that they represent accurately the expected value of the stock, as best it can be known at a given moment. In other words, prices are the result of discounting expected future cash flows.

The EMH model, if true, has to at least two interesting consequences. First, because financial risk is presumed to require at least a small premium on expected value, the return on equity can be expected to be slightly greater than that available from non-equity investments: if not, the same rational calculations would lead equity investors to shift to these safer non-equity investments that could be expected to give the same or better return at lower risk. Second, because the price of a share at every given moment is an "efficient" reflection of expected value, thenâ€”relative to the curve of expected returnâ€”prices will tend to follow a random walk, determined by the emergence of news (randomly) over time. Professional equity investors therefore immerse themselves in the flow of fundamental information, seeking to gain an advantage over their competitors (mainly other professional investors) by more intelligently interpreting the emerging flow of information (news).

The EMH model does not seem to give a complete description of the process of equity price determination. For example, stock markets are more volatile than EMH would imply. In recent years it has come to be accepted that the share markets are not perfectly efficient, perhaps especially in emerging markets or other markets that are not dominated by well-informed professional investors.

Another theory of share price determination comes from the field of Behavioral Finance. According to Behavioral Finance, humans often make irrational decisionsâ€”particularly, related to the buying and selling of securitiesâ€”based upon fears and misperceptions of outcomes. The irrational trading of securities can often create securities prices which vary from rational, fundamental price valuations. For instance, during the technology bubble of the late 1990s (which was followed by the dot-com bust of 2000-2002), technology companies were often bid beyond any rational fundamental value because of what is commonly known as the "greater fool theory". The "greater fool theory" holds that, because the predominant method of realizing returns in equity is from the sale to another investor, one should select securities that they believe that someone else will value at a higher level at some point in the future, without regard to the basis for that other party's willingness to pay a higher price. Thus, even a rational investor may bank on others' irrationality.

hi nilu,
i assume you are very new to this. and you donot know any thing about equity shares.
investing in equity shares canbe done in basically three ways.
1. through mutulfund way. hope u know about mutual funds. you can ask your bankers.
2. through ipos. that is apply for shares as offered by companies. you apply for the required shares (minimum/ in multiples mentioned by the companies in their application form) you can ask your bankers.
3.buy equity shares from the capital market exanges nse ,bse, etc. you cannot buy company equity shares directly from the market. you can do it only through brokers /subbrokers who are registered members of the exchanges. first
you apply for a pan card
then you can approach any bank or authorised brokers for opening an demat account. then you can open an trading account by remitting afee along with margin money according to your capacity.first you start with amount which you can afford to keep aside. sometime for a long,long time or some time you may have to book losses. if you open a trading account only you can buy/sell on daily basis.
4. you can open an online trading account also if u are comfortable with computer. the broker with whom you are having account will guide you. according to the sebi guidelines brokers are supposed to guide their clients. also there are somany websites which will teach you ,give tips about which company shares you can buy.
first you can buy shares which are included in sensex of bse and nifty of nse. ask your broker
which company shares you can buy . you may think the rate is very high. but you can buy one share also.
money management.
you devide your capital in to five parts. to start with buy shares with three parts. two parts keep as reserve.
There are so many books available for guidance.you can read- intelligent stock market investing by n.j.yasasway, bussinesline- sunday edition etc. bye i am getting sleepy . further if you want to know anything you can contact me
at marthandanpillai@yahoo.co.in.you can also freely comment about my write up.
bye.
kumar.

To begin with study a good profile of a few companies and select a sizable no of co's.
2) consult a trustworthy broker who can be trusted for his adv
3) on our best judgement invest convenient amount in equity shares.

Hello

First you have to open a Demat account and then a trading account with any of the stock brokers registered with NSE / BSE.

Thanks

Raghav

1st u have to open demat account in any recognised stock exchange which is most leading and invest in any share which has good return in the last year otherwise contact recognised stock broker and sub broker how have good name in recognised stock exchange

The simplest way is to go to many of the broking sites. If you are in the US then you just go to Yahoo.com and search for brokerages. Pick the best broker based on pricing, research and features you need.

The most important thing is stock selection (buy timing and sell timing) unless you are a 10 year+ investor. This will determine if you are an investor or trader. Both have pros and cons.

Then deposit the funds, and start buying and selling, or investing. It is best to start small. I do mutual funds, ETFs, CEFs, Stocks (aggressive and long term buy and hold), and finally some options.

It is fun, exciting and is a hobby that makes money. Bottomline is that this is something will continue until the last day on earth.

Take care.

KKP_Investor

Enter Your Message or Comment

User Name:
User Email:
Post a comment:

Archive: Forum -Forum -Finance - Links - 1 - 2 - RSS - All RSS Feeds
The Causes and the Results. 0.004
Copyright (c) 2011 Financial Crisis Monday, May 28, 2012 - Terms of use - Privacy Policy