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Stocks in India - A Brief Overview

April 24, 2012 | Comments: 0 | Views: 157

Shares are the right to own a portion of the organization whose shares have been purchased. The share market is the physical entity that facilitates the buying and selling of company shares or stocks. In India, the share market's transactions are carried out across the stock exchanges - National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Companies that have been included in the share markets are those that are said to have gone "public" or those that have become "listed".

Like in the case of every other traded commodity, stock trading is considered profitable when shares are bought at lower prices and sold at higher ones. The progress of the stock markets is described by rising or falling "stock index". Index is the name given to a group of shares that can collectively determine the overall performance of the market. In India there are two stock indices - Nifty (a group of 50 shares listed in the NSE) and Sensex (a group of 30 shares listed in the BSE). Stocks are classified as Mid-Cap and Large-Cap. While "mid-cap" shares are offered by organizations that have a market capitalization of over 2 billion dollars and fewer than 10 billion dollars, the shares that are issued by organizations with market capitalization over 10 billion dollars is referred to as "large-cap" shares.

Stock is further categorized into "blue chip" and "penny" categories. Blue chip companies are those that have robust performance standards and those that have displayed considerable stability during market lows and highs. These organizations enjoy investor trust and assure traders of profits for long term investments. Blue Chip stocks in India include Reliance Industries Ltd., HDFC Ltd., Infosys Technologies Ltd., Bharti Airtel Ltd., Larsen & Toubro Ltd. and ICICI Bank Ltd, to name a few.

Penny stocks in India are those that trade below INR 10/- or in some cases below INR 20/-. Market caps of parent organizations are usually lower than INR 75 crores. These shares trade at low values but promise a surge of profit when invested in them with care. These shares are associated with high risks but are also indicators of profits when marginal increases are multiplied across a large volume of investment. Popularly recommended penny stock names include Aluflouride, Avon Corporation, Basant Agro Tech (India), Daikaffil Chemicals India, Kohinoor Techno Engineers and Sam Industries, to name a few.

It is common knowledge that stock trading in India requires an individual to own a demat account and a trading account. Trading is mediated by an authorized brokerage firm that helps investors and traders to buy or sell selected stocks. The growing popularity of stock trading has paved the way for trading in commodities, company shares, Forex and market indices as well.

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Source: EzineArticles
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