ABC of Investment

          Before investing in any stock, we should be very clear about our Financial Goal, Expectation of Return and Risk Appetite. Understanding of Market Capitalisation of stock or share is very much essential.  What is Market Capitalisation ? It is the value of a company that is traded on stock market and calculated by multiplying the total number of shares by the present share price. Stocks are classified according to their Market Capitalisation ( or cap) as given below.. Large Cap Stocks Mid Cap Stocks Small Cap stocks Large Cap stocks : Stocks which have market cap of more than roughly 20 Thousand Crore are Large Cap stocks. These stocks are generally from large companies which are well-established in market. These are are generally safe to invest as the risk factor is minimum. Return on investment is generally lower in this type of stocks. Large Cap stocks which has market cap of more than roughly 75 Thousand Crore, are called Giant of the market.

         We have already discussed in previous blog about opening Dmat & Trading account, which are required to invest in stock market. Stock, which is actually ownership of a company, can be traded only if the company is enlisted in stock market. Indian stock market is open from 09:30 Hrs to 15:30 Hrs from Monday to Friday except holiday. Anyone, having Dmat & Trading account, can Buy or Sell  stock and should be well aware of the following terminologies ....   Market Order :  If we place Market Order (Buy or Sell), the order will be executed at market price. For example, If you want to buy a stock "X" which has a current price of 200, the market order will be executed at 200. The executed price may not be same as the price which we see during placing order. For example, while placing market order on "X" company, we saw market price of 200. But executed price is 201. This is because of fluctuating stock price which is changing every moment.

Common people in India used to say following things about Stock Market.... Stock market is a place for people only to do gambling. People make money in stock market only due to good luck. Stock market is an earthly Hell where people get ruined. Stock market is not differnt from Lottery ticket. No wise person engage in stock market.  But frankly speaking, none of the above informations is correct. People who do not have any idea about stock market used to say things like that. Knowledge of stock market is very much essential in todays perspective. Otherwise, we will be involved only in old-fashioned investment vehicle which will face break-down in the long run. The following term is essential to learn for beginers in stock market.........  PAN (Permanent Account Number): PAN is a primary requirement for investing in Share Market. Hence, it is required to get first. Aadhaar is mandatory for stock market investment. Broker: We cannot buy or sell shares d