Zebu blog

Tag: Share Market

  • Share Market Myths Vs Reality

    When someone enters the share market as an investor or trader, they will come in after listening to several myths about the share market. Here, we bust a few myths about trading and investing.

    Myth 1: Buying stocks is the same as gambling.
    People often think that trading is like betting, where you either win or lose.

    Myth Shot Down

    Investing is more like a science than an art because it requires thorough research into the technical and fundamental aspects of the assets, as well as the market’s current trends and the company’s growth potential.

    Myth 2: Past results show what will happen in the future
    When making an investment decision, investors look at how the stock has done in the past or how it has been rated.

    Myth Shot Down

    Investing decisions are made based on the company’s future, not just on what has happened in the past. Some of the most important macroeconomic factors that affect the performance of stocks are the interest rate, GDP, exchange rate, etc. Investors must also look at the company’s quarterly results, how much competition there is, how much it costs to make a product, if a new product is coming out, if there are changes in the top management, etc.

    Myth 3: Stocks that go down will go back up, or vice versa.
    Most people think that a stock that is going down will go up again at some point. In a similar way, they don’t buy stocks that are at all-time highs because they think the price will drop quickly.

    Myth Shot Down

    Investors should look into why a stock is going down. Is the collapse just because of the mood of the market, which could change, or is it because of something big that could hurt the company’s finances? Also, a stock’s recent rapid rise does not always mean that it can’t go up more.

    Myth 4: To be successful, you have to spend a lot of money.

    Myth Shot Down

    In reality, all the investors need to do is be disciplined and do thorough research. The power of compounding can be unlocked by making small investments over a long period of time. This can turn regular investors into millionaires.

    Myth 5: You have to trade a lot in order to be successful.
    A second thing that keeps people from investing is the idea that they will have to trade a lot to make good money.

    Myth Shot Down

    In reality, quality trades do better than lots of trades. If you don’t do your research, you might make a lot of trades but not get the results you want. On the other hand, you may make good money if you invest wisely and make good trades.

    Myth 6: Trading stocks with low P/E (Price-to-Earnings) ratios is smart and safe.
    The price-to-earnings ratio (P/E) can be used to tell if a stock is overvalued or undervalued. Most people think that the better the deal, the lower the price is compared to the earnings (P/E ratio).

    Myth Shot Down

    There may be a good reason why the stock is so cheap. Considerations must be made for the company’s growth prospects, operating revenue, product launch (if any), debt structure, peer comparison, management, etc.

  • How The Price Structure Of The Share Market Works

    Stock prices on the market are affected by how much demand there is and how much supply there is. The market capitalization of a company affects part of its share price. This is the sum of the stock price times the number of outstanding shares. The most recent sale price is used to set the current asking price on the market. Let’s say that the last closing price of 100 shares of company XYZ was Rs 50, and you want to buy them. The fair market value of the share is (50 x 100), or Rs. 5,000.

    The discounted cash flow method is another way to figure out what the fair price is. The fair price, according to the hypothesis, is equal to the sum of all future dividend payments discounted to the present value.

    The stock market is a network of exchanges, brokerage firms, and brokers that connects businesses and investors. IPOs, which stand for “Initial Public Offerings,” is how companies get listed on the market before investors can buy their shares. An initial public offering (IPO) can tell what a company’s market capitalization is, and investors can choose shares from separate lists of large-cap, middle-cap, and small-cap companies on the stock markets.

    Indexes are also used by stock exchanges. The Indian exchanges NSE and BSE use two different indices: Nifty and Sensex. These indices are made up of the best large-cap firms based on their market size and how popular their shares are. Most investors use these indicators to figure out where the market is going.

    The bid-ask spread is another important term to know when you want to talk about how the stock market works. “Bid” is the amount that buyers are willing to pay for an underlying, which is often less than the “ask” price set by the seller. This difference in prices is called the bid-ask spread. For a deal to happen, the seller must lower the price they want and the buyer must raise the price they are willing to pay.

    How to invest on the Indian Stock Exchange

    Companies send SEBI a draught offer document that has information about the company. After getting approval, the company does an initial public offering (IPO) on the primary market to sell investors’ shares. The Company offers and gives shares to some or all of the investors who bid during the IPO. The shares are then listed on the secondary market, or the stock market, so that they can be bought and sold. After getting orders from their clients, brokers put those orders on the market. When a buyer and a seller are found, the trade goes well.

  • How Are Commodities Priced On The Share Market?

    On the financial market, commodities are treated as a separate type of asset. The commodities market is a place where people buy and sell basic goods. On commodity exchanges in India and other countries, people buy and sell things like natural gas, corn, soybeans, gold, silver, and copper.

    If you want to trade on the stock market, you need an online trading stock broker who will help you make the best trades. Contact us to learn more about Zebu and the services it offers.

    India has six commodity exchanges, but the Multi Commodity Exchange is the best-known one.

    On the Indian commodity market, traders can buy and sell complex financial products such as derivatives, swaps, futures, and options. So, no one institution is in charge of setting the prices of the goods that are traded on the markets. Several economic factors affect the price of a product.

    In finance terms, commodities are basic goods that can be bought and sold in large quantities on the open market. When commodities are traded, they may be an important asset class for traders. Hard commodities and soft commodities are the two main types of commodities. These goods are traded for business reasons on the global commodity market.

    Types of Commodities
    There are three types of commodities that are traded on the Indian markets.

    Metals: This group includes both precious metals and metals used for other things, like nickel, copper, zinc, and gold.
    Energy – Natural gas and crude oil are energy sources traded on the market
    Agriculture – Rubber, black pepper, cardamom, castor seeds, cotton, and crude palm oil are all products of agriculture and livestock

    Factors that affect how much commodities cost
    Just like stock prices, commodity prices change all the time because of internal and external market factors. Let’s look at the factors that affect the price of commodities on the market.

    Global politics and macroeconomics
    Changes in global politics often have an effect on the prices of goods. For example, the price of crude oil on the global market is affected by changes in the political and economic situations of OPEC members.

    Supply and demand
    Demand and supply have a direct effect on the prices of commodities. When demand is higher than supply, prices go up in the market. On the other hand, prices go down when the economy has less supply than it needs.

    Speculators
    These are traders who buy and sell commodities with the goal of making money from price changes. The prices of goods on the market are affected by what they do.

    What do the prices of goods in the share market look like?
    The price of a good is set by what buyers and sellers do on the market. Prices for goods can be given in two different ways. The first way is to use the market futures price, which is the price that is reported in market news. The second is the “spot price,” which is the cash price of the item. If you want to buy the item today, you will have to pay the price listed.

    Trading commodities is a great way to add another asset class to your portfolio of investments. You can invest in commodities as an asset class if you understand the basics and know how much risk you can handle. Trading in commodities is risky, but it can also bring in a lot of money. Before putting a lot of your hard-earned money into something, you should do a lot of research and learn about every part of the goods market. Open a demat account with Zebu to start trading commodities.

    If you are looking to trade in the stock market, you need an online trading stock broker who will help you make the best trades. Get in touch with us to know more about Zebu and its services.