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What are stocks?

Stocks or shares as they are popularly called in India, signifies ownership of a company. Even if you own a single share or stock you are called a shareholder and can claim certain rights and entitlements.

In India once the IPO or Initial Public Offering is complete the shares are than listed on the stock exchanges and you have trading that takes place. These stocks or shares are than listed on the NSE and the BSE.

Different types of stocks or shares In India

In India, there are different types of shares that are traded. For a moment, let us talk of shares and not of stocks. There are preference shares for an example and than there are equity shares. The latter are the ones that are traded in the stock markets.

There is also a new types of shares or stocks that are called shares with Differential Voting Rights. These are popularly called DVRs. In India, you have companies like Tata Motors, that have issued shares with differential voting rights.

How shares or stocks trade in the Indian market?

Once you come-up with an IPO, your stocks are traded on the Bombay Stock Exchange or the National Stock Exchange. There is also the MCX where stocks and shares are traded, though one must admit that it is more renowned for trading in commodities.

When and where to buy shares and stocks in India?

Trading in shares and stocks is a complicated process in itself You need to be aware of the finer things, or else you could end-up with making losses on the exchanges. What we suggest, is that if you are a beginner, you spend sometime in understanding how the markets work. Until then you may need to seek help to make money in shares and stocks.

Why to buy shares and stocks?

You have many options of investing, including real estate and fixed interest yielding instruments. You can make a choice. But, the reason to invest in shares and stocks is that you can beat inflation.

Let us give you an example. Let us say that fixed instruments give you a return of 8 per cent, whereas inflation is running at 7 per cent. What you gain is a real rate of return of only 1 per cent. By investing in shares and stocks you can make much more money, thus boosting your real rate of returns. However, as we have mentioned that stocks are a risky proposition and unless you have the knowledge, you should refrain from investing.

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