The trading of a company’s equity begins when a company becomes publically listed. This means that the company directors take the step of allowing the sales of stakes in the company to individuals and other companies. These stakes are known as shares. In return for the initial investment that the share-buyer puts into buying the shares, they are entitled to a share of the profits the company makes. How much of the profit goes to each share-holder will depend on how many shares they hold, as each share held will be entitled to an equal share of profit. The act of a company paying out shares of profit to shareholders is called paying dividends. The better the company performs, and the more profit it generates, the higher the dividend payouts per share will become. However the dividends can drop to zero if the company performs poorly.
Why Do Companies Want to be Publically Listed
There are several reasons why a company’s directors may decide to get the company publically listed. It could be that they want to take the next big step into expanding their operations and need a big injection of funding to enable them to do that. It could be that they want to become the biggest company in their sector and plan to make move ahead of their competitors or even buy-out their competitors. It could even be possible that the company is in debt and the only way to settle debts and put it back on the road to recovery is to publically list it.
How to Buy Shares in a Company
Once a company becomes publically listed there are two ways for an individual to purchase shares. The primary market is where shares are sold directly from the company to the individual. This usually occurs shortly after the company becomes publically listed, and sometimes it does not take long for all the shares to be sold. Shares are all sold for a fixed price which may be as low as Rs.10 per share. Once all the shares have been sold on the primary market, the way to purchase them is on the secondary market. This is where individuals (not the company itself) are able to buy and sell shares between themselves by using equity trading services in India. In either case, the share-holder will need a demat account in which to hold the digital proofs of ownership of the shares. In the past these were paper certificates that had to be carefully stored by the share-holder. With the advent of modern technology, we no longer have the problem of protecting paper certificates as demat accounts can be entirely managed online. To help set up your demat account, and get you on the road to trading you will find it easier to enlist the help of an equity trading broker in India.
What is Point of Buying and Selling Shares?
Holding good shares will generate ‘passive income’ that comes from the dividend payments. Eventually it is hoped that the amount received in dividends exceeds the amount invested when buying the shares. Indeed some people who hold a lot of very good shares actually rely on the dividends for the day-to-day living expenses and do not need to work. The purpose of selling shares is also to make a profit. Remember that shares are initially sold on the primary market for a fixed price. However, if a company performs well, the value of those same shares can increase over time, as it reflects the price that other investors are willing to pay for those shares. It is possible to profit by buying shares at a lower price and selling them for higher prices once the demand rises. There are two sides to every coin, and the opposite side of this story is that share prices can also go down if companies perform badly or other factors impact on the market. Investors often choose to sell shares which are performing poorly before the value gets too low, in an attempt to limit their losses.
What is the Best Equity Trading Company in India?
There is no definitive answer to the question of who is the best equity trading company in India. It is not as if only one company does the best equity trading in India and the others do inferior trading. That is not possible. Trading itself is either done by the individual trader or by his designated broker on his behalf. When choosing an equity trading company, you must consider which attributes of one company you prefer over another. The biggest consideration for most will probably be the charges for services rendered. Price plans vary greatly between different equity trading companies in India. Some will charge to open a demat account, some will not. Some will charge a monthly maintenance fee, some will require a minimum balance to be held in the account. Some will charge a per-transaction fee, and so on.
Whatever your circumstances are, it is always best to talk things through with an experienced professional beforehand to get a better idea of what options are available. There will, no doubt, be certain considerations that you will have overlooked or not thought about which only a professional will be able to enlighten you on. GOODWILL INDIA are a well-known discount broker who offer exceptionally low rates for traders. Their friendly and knowledgeable staff are ready to educate you and clear your doubts. Call GOODWILL INDIA on +91 80122 78000 to talk about your investment prospects with equity trading.