EQUITY MARKETS

                   EQUITY MARKETS

Equity markets are also known as cash markets. In cash markets shares can be  purchased for long term purpose or intraday (Intraday means buying & selling on same day).

In simple words it is like purchasing stakes from regular market, in regular market we buy vegetables, fruits & in share market we buy stakes in companies ownership. In technical terms shares are ownership rights of a business for example 

A company has 100 shares & Mr.y owns 15 shares then he is owner of 15% of net assets of the company.

Now lets see terms of equity market, In equity markets we get ownerships of company therefore investor is required to pay full amount plus brokerage unlike in futures markets where we are required to deposit only margin money.

HOW PRICES ARE DETERMINED IN EQUITY MARKETS ?

In equity markets prices are determined on basis of demand or supply, ie if there are more buyers ie bulls are dominating then price will rise & vice versa. Demand of shares is determined by following factors :

1. FDI & Institutional investor investing in company

2. MARKET SENTIMENTS based on news related to company, sector in which it is operating

3. Quarterly Results

4. Company's vision shared with public (Reliance vision of becoming 0 debt by Mr. Mukesh Ambani)

5. Change in valuation or credit rating by credit rating agencies, etc.

It is not exhaustive list there are other matters which are responsible for price determination.

 How money is invested in share market ?

By this question I want to answer a question that which strategy should be used to invest in market for this you must read my article 

INVESTOR OR TRADER

We will learn about equity markets more in later posts.