The stock market is the platform to carry out regular activities of buying, selling and issuance of shares of companies. In other words, the stock market or share market or equity market is the place where one can buy and sell securities of companies.
The stock markets provide a secure and controlled environment for the exchange of various securities. India has two popular stock exchanges NSE and BSE.
A company’s stocks can trade in a stock exchange after a company issues its shares to the public in the primary market through a process called Initial Public Offerings (IPO). Through this step, the company offers a division in the number of shares it holds and opens it for public purchase for the very first time.
Further, the play of the secondary market begins where the entire trading of stocks is done between buyers and sellers. Investing in shares of these companies implies that you are buying a part of the company.
How much to invest?
From the perspective of investors, it is difficult to determine how much money one should invest. There isn’t any specific limitation on the amount of money to be invested in the stock market. Largely, the price of the stocks is determined by the demand for shares of that specific company.
Beginning from the face value of ₹10, the stocks are available for sale, although the market value can be much higher for that specific company. At times, the famous companies have their stocks priced below hundred rupees.
Spot the trends
Apart from the price of the stocks, it is important to understand the trends in the stock markets and the growth history of the company that you would like to invest in. We all are aware of the fact that the stock market is extremely volatile in nature.
So, it is essential for an investor to keep a vigilant eye on the rise and fall in prices of stocks of a particular company that they would like to invest in.
Additionally, one must also look at the growth of that company over the past years i.e., the current market value the company holds as this factor determines the value of its stocks.
Having said that there isn’t any straight answer to how much has to be invested in the stock markets. But it is vital to focus on factors like the company in which one must invest and the right time to do so. Right amount of carefulness with respect to these factors can yield great benefits to the investors.