To be a successful share market investor, you need to understand various investment options available to you like shares, bonds, debentures, etc. Of these, shares offer an opportunity to earn good returns on your investments. However, before you start your journey as a share market investor, it is important to understand what you are investing in.
Published on 01 March 2023
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In this article, we will answer some fundamental questions that every investor in the share market should ask, like what are shares? What are the types of shares? This will help you understand the share market better and make informed decisions.
What are Shares?
One of the most basic questions that every share market investor should know an answer for is: what is the meaning of Share?
When a private limited company wants to raise funds for any business purpose, it can either opt for a loan or raise funds through the public by issuing shares or bonds. When it issues shares, it accepts money from the public and makes them a shareholder (a kind of partner) in the company with predefined rights. Shareholders are partners in profits and also face the impacts of losses made by the company.
So, the simple answer is that a Share is a unit of ownership in a company that is purchased by the shareholder.
Types of Shares
Shares can be broadly divided into two types. These are:
Equity shares
Preference shares
Equity Shares
Equity shares are commonly referred to as ordinary shares. They are usually the bulk of the shares issued by a company. Equity shareholders have a right to receive a share of the profits made by the company in the form of dividends. They also have voting rights in the company. However, the company can choose to reinvest its profits into the business and not declare dividends.
Equity shares can be further classified into various kinds of shares as described below:
Rights Shares – Before a company floats new shares in the market, it offers them to its existing shareholders. These are called Rights shares.
Bonus Shares – A company can issue shares instead of dividends. These are called Bonus shares.
Non-voting shares – While ordinary shares having voting rights, there can be shares where the company issues differential or no voting rights with equity shares.
Employee Stock Option Plan (ESOP) – A company can offer its shares to its employees at a price lower than the market price for a specific period. This is known as an ESOP.
Sweat Equity Shares – Not to be confused with ESOPs, Sweat Equity Shares are issued to the employees of an organization as a reward for their contribution. These can be allotted free or for a small consideration.
Dividend shares – These shares belong to companies that have a track record of declaring regular dividends.
Growth shares – These shares belong to companies that generate profit but don’t declare dividends. Instead, they invest the profits in the business for exponential growth in the future.
Value shares – Since the price of a share is determined by its perceived value by investors, there are some shares that are traded below their intrinsic value. These stocks are called value stocks since they are likely to have a higher long-term return potential.
Preference Shares
As the name suggests, preference shareholders get preference in receiving profits from the company compared to ordinary shareholders. They also receive preference if the company liquidates.
Preference shares can be further classified into various kinds of shares as described below:
Convertible and Non-convertible – Some companies allow preference shareholders to convert their shares into equity shares provided they meet certain stipulations. These are convertible preference shares. Non-convertible preference shares have no such option.
Participating and Non-participating – Participating preference shareholders have the right to receive profits over and above dividends from the company. Non-participating preference shareholders have no such rights.
Cumulative and Non-Cumulative – If a company does not declare a dividend during a financial year, then for cumulative preference shareholders, the benefit is carried forward to the next year. This benefit is not available to non-cumulative preference shareholders.
Sensex and Nifty are two words that have become synonymous with stock markets in India. Even people who are not active stock investors are aware of Sensex and Nifty as stock market indices.
When you start investing in the stock market, you come across various terms and jargon that can seem overwhelming. Two of the most basic terms used are the BSE Sensex and Nifty. While a quick online search will tell you that these are stock market indices, in this article, we will attempt to decode them for you to help you gain a comprehensive understanding. Let’s begin with some basics.
Trend analysis is a technique that focuses on predicting future stock price movements according to recently observed trend data. Trend analysis revolves around using historical data like trade volume and price movements to forecast the long-term direction of the market.
Equity shares are also called ordinary shares and usually confer voting right on the shareholder while providing the right to profits made by the company. These are usually the most common types of shares issued by a company. A preference shareholder has preferential rights over profits and even at the time of liquidation of the company.
Broadly speaking, there are two types of shares – Equity and Preference. Equity shares are the most common types of shares issued by companies and traded on stock exchanges.
There are multiple factors to consider when investing in the U.S. stock exchange or market, such as volatility risk, economic risk, foreign exchange fluctuations, country risk, etc. It is equally crucial that you evaluate your comfort zone and are careful when making heavy investment decisions. Also, keeping an emergency fund and maintaining it in times of need is essential.
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Difference Between Nifty and Sensex
Sensex and Nifty are two words that have become synonymous with stock markets in India. Even people who are not active stock investors are aware of Sensex and Nifty as stock market indices.
When you start investing in the stock market, you come across various terms and jargon that can seem overwhelming. Two of the most basic terms used are the BSE Sensex and Nifty. While a quick online search will tell you that these are stock market indices, in this article, we will attempt to decode them for you to help you gain a comprehensive understanding. Let’s begin with some basics.
Trend analysis is a technique that focuses on predicting future stock price movements according to recently observed trend data. Trend analysis revolves around using historical data like trade volume and price movements to forecast the long-term direction of the market.
Equity shares are also called ordinary shares and usually confer voting right on the shareholder while providing the right to profits made by the company. These are usually the most common types of shares issued by a company. A preference shareholder has preferential rights over profits and even at the time of liquidation of the company.
Broadly speaking, there are two types of shares – Equity and Preference. Equity shares are the most common types of shares issued by companies and traded on stock exchanges.
There are multiple factors to consider when investing in the U.S. stock exchange or market, such as volatility risk, economic risk, foreign exchange fluctuations, country risk, etc. It is equally crucial that you evaluate your comfort zone and are careful when making heavy investment decisions. Also, keeping an emergency fund and maintaining it in times of need is essential.
Sharekhan Comtrade Private Limited (TM) operates the web site accessible from the URL www.myespresso.com (the “web site”').
Sharekhan Comtrade Private Limited is committed to protecting your privacy and utilising technology that gives you the most powerful, safe, online experience that you can get anywhere else.
Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.
Sharekhan Comtrade Private Limited requests the minimum information it believes necessary to achieve this goal.
The following discloses Sharekhan Comtrade Private Limited's information gathering and dissemination practices for the Web Site:
System Data:
Sharekhan Comtrade Private Limited uses your IP address to help diagnose problems with our server and to administer the web site. Your IP address is used to identify you and your shopping cart and to gather broad demographic information.
Registration Data:
The Web Site's registration form may require users to give us contact information (like their name, phone number and e-mail address), unique identifiers (like their PAN Number) and demographic information (like their pin code, age or income level). The Web Site uses customer contact information from the registration form to send the users information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Comtrade Private Limited's partners. The customer's contact information is also used to contact the visitor when necessary. Unique identifiers (such as PAN numbers) are collected to verify the user's identity. Demographic and profile data is also collected at the Web Site. We use this data to tailor the visitor's experience at the Web Site, showing them contents that we think they might be interested in, and displaying the contents according to their preferences. This information is shared with advertisers on an aggregate basis.
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This site contains links to other Web Sites which are not necessarily been screened or reviewed by www.myespresso.com. Sharekhan Comtrade Private Limited is neither responsible for the privacy practices or the contents of such Web Sites nor shall be held answerable for the inaccurate, inappropriate or offensive data, material, information, products and services that may be viewed on those sites.
Sharekhan Comtrade Private Limited may operate a number of co-branded sites. Policies regarding information collection and sharing may differ on some of these co-branded sites. If you have any particular questions, you should check the privacy statement that appears on each co-branded site.
Order Forms:
The Web Site uses an order form for customers to request information, products and services. The Web Site collects visitors' contact information (like their mobile number or e-mail address), unique identifiers (like their PAN number) financial information (like their account or credit card numbers) and demographic information (like their pin code, age or income level). Contact information from the order form is used to send orders, information about Sharekhan Comtrade Private Limited, and promotional material from some of Sharekhan Comtrade Private Limited's partners to the visitors of the Web Site. The visitor's contact information is also used to get in touch with the visitor when necessary. Financial information that is collected is used to check the users' qualifications and bill the user for products and services. Unique identifiers (such as PAN numbers) are collected from Web Site visitors to verify the user's identity.
Surveys and Contests:
The Web Site's online surveys ask visitors for contact information (like their mobile number or e-mail address) and demographic information (like their pin code, gender, age or income level). The Web Site uses contact data from its surveys to send the user information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Ltd.'s partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below. Demographic and profile data is also collected at the Web Site. The Web Site use this data to tailor its visitor's experience at the Web Site, showing them content that it thinks they might be interested in, and displaying the content according to their preferences. This information is shared with advertisers on an aggregate basis.
Sharekhan Comtrade Private Ltd run contests on the Web Site in which we ask visitors for contact information (like their e-mail address). Sharekhan Comtrade Private Limited uses contact data from its contests to send users information about Sharekhan Comtrade Private Ltd. and promotional material from some of our partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below.
Third-Party Advertisement Servers:
Sharekhan Comtrade Private Limited engages the services of an outside advertisement company to display advertisement on the Web Site. These advertisements may contain cookies. While Sharekhan Comtrade Private Limited uses cookies in other parts of the Web Site, cookies received with banner advertisements are collected by the Advertisement company, and Sharekhan Comtrade Private Limited does not have access to this information.
Protection of your Data and Information:
The privacy and protection of your data and information provided to us is of vital importance. Sharekhan Comtrade Private Limited shall ensure to safeguard the security and confidentiality of any information you share with us. Any personally identifiable information of the customers obtained by us shall not be used or shared other than for the purposes to which the customers consents. However security and confidentiality of information cannot be guaranteed cent percent. Hence despite our utmost efforts to protect your personal information, Sharekhan Comtrade Private Limited and www.myespresso.com cannot warrant the security of any information you transmit to us through our online services. Such transmission of your personal information is done at your own risk.
Disclosure of Customer Information :
Sharekhan Comtrade Private Limited and www.myespresso.com shall not deliberately disclose customer's personally identifiable information to any unauthorized third person, save and except where such information shall be disclosed in good faith and for the purpose of law for the time being in force or to protect the rights and property of Sharekhan Comtrade Private Limited and www.myespresso.com.
Public Forums :
The Web Sites makes chat rooms, forums, message boards and/or news groups available to its users. Please remember that any information that is disclosed in these areas becomes public information and you should exercise caution when deciding to disclose your personal information.
Supplemental Information :
The Web Site supplements the information that you provide with information that is received from third parties.
The Web Site DOES NOT entice by the prospect of a special game, prize or other activity, to divulge more information than is needed to participate in the activity.
Further to the above, in light of the recently notified Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (Hereinafter referred to as the Rules)
The following shall be deemed to be sensitive information :
Password;
Financial information such as Bank account or credit card or debit card or other payment instrument details;
Physical, physiological and mental health condition;
Sexual orientation;
Medical records and history;
Biometric information;
Any detail relating to the above clauses as provided to body corporate for providing service; and
Any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise:
provided that, any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of Rules.
Collection of Information:
Compliance with KYC guidelines as per SEBI / Exchanges / Or any other Act, law or regulation requiring the same and any internal KYC guidelines formulated by Sharekhan Comtrade Private Limited.
In order to provide enhanced trading experience to the client.
In order to provide any further information to be provided to regulators.
Such information may be collected in a manner that the client is always aware of the collection and purported usage of the same. The client shall have an option to withdraw consent to share the information. However such intimation shall be required in writing. Such intimation shall only be taken into account from the date on which the same is received. Sharekhan Comtrade Private Limited may choose to stop services to such a client in case such intimation is received. Such information shall only be used for the purpose it is collected.
Clients would be allowed an option not to disclose any information to be collected, provided the same is in compliance with regulatory requirements.
Disclosure of information:
Disclosure of sensitive information would be as per the terms agreed by the clients. For any change in such terms, the clients would be informed.
Provided no consent may be required in case the same is being shared as per compliance guidelines or as required by regulators.
Any information being disclosed to third parties would be in accordance with the Rules and would be done provided such third party has the same level of compliance guidelines as Sharekhan Comtrade Private Limited.
Sharekhan Comtrade Private Limited shall allow clients to review their personal information and the same shall be allowed to be edited provided exchange guidelines relevant to the same are followed.
Sharekhan Comtrade Private Limited shall maintain reasonable security practices and procedures and maintain a comprehensive documented information security programme. In the event of an information security breach, Sharekhan Comtrade Private Limited or a person on its behalf shall be required to demonstrate as and when called upon to do so by the agency mandated under the law, that there have implemented security control measures as per their documented information security programme and information security policies and information security policies that contain managerial, technical, operational and physical security control measures that are commensurate with the information assets being protected with the nature of business.
KYC Languages
Download Client Registration Documents (Rights & Obligations, Risk Disclosure Document, Do's & Don't's) in Vernacular Language :
Note: "This document is a translated version of the client registration documents in English and is being provided in vernacular language to facilitate better understanding by the investors. In case of any ambiguity, the contents of the English version would prevail."
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By accepting the Terms & Conditions, you authorise Espresso, its representatives and agents to provide information about various products, offers and services provided by Espresso through any mode, including telephone calls, SMSes, emails, letters and any other mode of communication. You also confirm that laws in relation to unsolicited communication referred in "National Do Not Call Registry" as laid down by "Telecom Regulatory Authority of India" will not be applicable for such information/communication.
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