Your guide to know more about equity share. Understanding and Investing in Stocks with reliancesmartmoney.com
The capital of a company is divided into shares. Each share forms a unit of ownership of a company and is offered for sale to raise capital for the company.
How to raise capital in primary market?
Public Issue (Also Known as IPO) - A company to raise money sells a share of ownership in the form of shares to the public. By issuing stock publicly, this allows the public to own a part of the company, though not be a controlling factor.
Rights Issue- A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. More specifically, this type of issue gives existing shareholders securities called "rights", which give the shareholders the right to purchase new shares at a discount to the market price on a stated future date. The company is offering shareholders a chance to increase their exposure to the stock at a discount price.
Private Placements- Private placements are the sale of stocks, bonds, or securities directly to an individual investor, rather than as part of a public offering. Usually, large banks, mutual funds, insurance companies and pension funds are the investors involved.
Preferential Allotment- For raising funds, it is not always preferable or feasible for a company to issue securities to the public at large as it is time-consuming as well as an expensive option. In such situations, the securities can be offered to a comparatively smaller group of individuals, such as the directors or the existing shareholders. This entire process is known as the preferential allotment.
To buy stocks, you need to open a demat and trading account with us, by submitting you KYC documents like PAN card, Photograph, Address proof, Cancelled bank cheque, Bank statement.
Once you open an account, you need to transfer funds via Online or through a cheque to buy shares.
Now that you have funds in your trading account you can buy share through our trading platforms. These shares will be credited to your Demat account on T+2 days. For example, if you buy stocks on 18th Mar 2017, they will get credited to your account on 20th Mar 2017.
What are Preference Shares?
The preference share is a share that enables an investor to claim a stake at the issuing company with the condition that whenever the company liquefies or decides to pay a dividend, the preference shareholder will be the first to be getting paid after clearing their debt.
What is short sell in equity trading?
In equity trading, the technique of profiting from a falling stock price by borrowing shares of the stock, and selling them at the market price, and then repurchasing them at a lower price to return them to the original lender is referred as a short sell. If you put in a simple word "buy low, sell high".
The negative difference between the buying price of the stock and selling price is referred as a capital loss.
A bull market is a period of rising market prices.
A bear market is a period of declining market prices.
The profit share of the company after tax, which is distributed to its shareholders according to their class and the total number of shares held by them is referred as a dividend.
ROE stands for Return on Equity; it is a measure of profitability that calculates how much profit a company generates with each shareholders equity.
To calculate ROE
ROE = Net Income/ Shareholder Equity