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Equity

A Complete Guide To Everything About Equities

What are Equities?

Equities, also known as stocks, are a part of a company. When you buy the equity shares you are actually a small owner of that company. Investors buy the equities of a company when they expect the company to profit.

What are Common Shares and Preference Shares?

"Both public and private companies issue common shares. The shareholders are the owners of the company. They provide the capital that is required to run the business. Investors benefit from capital appreciation, dividends as well as voting rights. However, the drawback of common shares is that they have a preference on the asset of the company only after the bondholders and the preference shareholders.Preference shareholders, on the other hand, get a fixed dividend from the company. They rank above the common shareholders and are better protected than them. Preference share is somewhere in between debt and equity. The only shortcoming of preference shareholders is that they do not have any voting rights."

Investing in the Indian equity market

Investing in the Indian equity market has its own share of rewards. It helps you maximise your gains and the return from the equity market is much higher than investing in fixed deposit or bonds. The percentage return in the equity market is higher than most other forms of investments. The equity market also gives you return that helps beat inflation.

Risks involved in trading inequities

On the flip side, trading on equity is risky. Short-term traders may tend to panic by the volatile equity market. It is thus required that you trade in the equity market only after thorough analysis and under the proper guidance of a technical or a fundamental analyst.Fundamental analysts read company reports and actively study various internal and external factors that might affect the equity price. Technical analysts, also known as chartists, read the candlestick charts and find out the support and resistance levels from where there is a likelihood of trend reversal. They also study candlestick patterns and use indicators to find high probability trades.