The Equity market is a place where a company finds a way to increase its capital by issuing an Initial Public Offer (IPO). Often the equity market is referred to as the stock market or share market. The term stock or share is the true meaning of equity.
Traders and investors use this market to buy and sell securities like stocks of a company, etc. Trade in equity market in India has the same principle as an auction house where buyers and sellers make their best bid to own a security.
Investing in the equity market means that the investor owns that part of that company and they may get some voting rights.
There are two types of markets for trading in the equity market. These are the primary market and the secondary market.
The primary equity market is all about the listing of new shares of a company through an Initial Public Offer (IPO). When a company plans to raise its capital through IPO, they offer a part of its equity to the public. Once the IPO procedure is complete the stock is listed on the stock exchange. This entire process, i.e., the opening of an IPO subscription until the listing of the shares is done in the primary market. The primary market is only known for the introduction of an investment.
When the shares are listed on the exchange the trading then takes place in the secondary market. In this market, the investors who made the initial investment have the opportunity to book a profit on the stock and exit the market. While the investors who did not buy the stocks in the initial investment have a chance to do so here in the secondary market.
The securities in the secondary market are not limited to shares only, but also include corporate bonds, convertible bonds, etc. Trading in the secondary market is done through stockbrokers. Lakshmishree Investments is a stockbroking company.
The equity market is known for connecting a buyer and seller that have expectations of a stock price the same. When a company is established, they are a private organization. Then when they wish to go public, they issue an Initial Public Offer (IPO) which makes the company in the eye of the public who check on the stock exchanges in which they are listed.
To start trading in equity you need to have a Demat account which can be opened easily with us at Lakshmishree Investment. Before making any trade, it is important to have fundamental and technical knowledge of the stock in which you want to invest and also know the factors that may affect the stock prices. Having this understanding of the stock you will be able to book profits easily and can become a successful trader and investor.
The equity market of India is regulated by the Securities Exchange Board of India (SEBI). It was constituted in 1988 and was given its statutory powers in 1992. The main aim of SEBI is to safeguard investors from fraudulent and unethical practices in the Indian stock markets.
Trade in the equity market is done in two main stock exchanges in India under SEBI which are: the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). All brokers, companies, etc. must get approval from the Securities Exchange Board of India (SEBI) before starting to operate.
There are various benefits that investors get when they trade in the equity market. Some of them are:
The consolidation period is when the price of the share is trading within a range. This range is the support and resistance level. When the price goes up from this range it is known as a breakout and if the price goes down from this range it is known as the breakdown of stock.
Trading in the equity market is very easy if you have the right knowledge which is important to be successful in it. The equity market carries a high risk as the price of a share can change at any time due to unforeseen factors that may result in the trader losing its capital money. In India, equity trade takes place in NSE and BSE the two main stock exchanges under the supervision of SEBI.
To trade in the equity market the trader must have a Demat account and a company who wants to list must meet the guidelines set by SEBI.
If you don’t have a Demat account contact us at Lakshmishree Investments to open your account.
The timings to trade in the equity market on trading days are between 9:15 am to 3:30 pm. While the pre-open market is open between 9:00 am to 9:08 am and the post-closing market is between 3:30 pm to 3:40 pm.
There is no definitive age set to start trading, but a person needs to have a Demat account which can be opened after turning 18.
The main difference between equity trading and trading on equity is that the former is all about buying and selling the stocks while the latter increases the earnings of the shareholder. We have described Trading on Equity in our previous blog.
The first equity market was the Amsterdam Stock Exchange which was established in 1611 after the Dutch East India Company raised funds from the public in exchange for equity and dividends.
