The financial capital of India and the city of dreams, Mumbai, is a vast metro that appeals to people from all over the country. Hailing from a smaller city and looking for growth opportunities, Mohan came to Mumbai to pursue his MBA in Operations Management. Here, he came in contact with Akshay, a stock broker and part-time lecturer who introduced him to the concept of equities and stock trading. Mohan was awe-stuck by the tales of the market and found himself allured by the potential inherent in equity investing. Once considered the playground of aggressive investors and high-risk traders, the stock market is no longer a mythical entity but a tangible reality for many Indians. With stocks worth billions being traded on a daily basis, the equity market is one of the most liquid and attractive markets in the country.
What is the market all about? It is a simple enough concept – the stocks of companies are listed on the stock exchange and traded on a daily basis. Stock market traders and investors buy and sell the stocks of these companies in the expectation that they will make money from the movement in the prices of stocks. Let us consider a simple example. In a practice session with his mentor, Mohan noticed that the price of company X, which manufactured cars, had dropped 30% due to poor earnings. He did some further research and gathered that the drop in earnings was due to a temporary shut-down in one of its key markets. The situation in that market was already improving and Mohan expected that it would be back to normal soon. So, he purchased 50 stocks at Rs. 150 each and waited for the tide to turn. 15 days later, a news article said that the company was being acquired by company Y, an international car manufacturer. This news bolstered the stocks which began rising rapidly. At the end of the day, the stock of the company was trading at Rs. 285 apiece and, upon selling, Mohan made a profit of Rs. 6,750. From then on, there was no looking back for Mohan, He was hooked. The enormous potential in equities can be seen in the rise of the Nifty index between 1996 and 2021. During its 25-year journey, the index rode from 1,107 points to 15K, offering investors 11.1% CAGR. Add to it the fact that India is a growing economy with new companies being listed regularly, and the opportunity in the equity market is nothing short of tremendous.
Participating in the market
Best stock broker for beginners in India
- Do you want a stockbroker who provides you with daily research and statistics updates, along with a proposed buy/sell list?
- Are you looking for a stockbroker who charges minimal fees while keeping you updated about relevant news?
- Or, do you want a stockbroker who acts as your personal mentor and handholds you throughout the process while offering you a curated portfolio and blanket fees for all your trades?
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