What is the stock market?

 What is the stock market?

In common parlance, this market is a place for buying and selling shares of companies. One share of any company is a part of it.

Suppose a company is worth Rs. 100 and you have bought shares of Rs. 50 then you will become the owner of 50% of its shares.

The companies listed here are "listed" public limited companies.

To enter the stock market, these companies have to go through complicated steps and meet certain conditions. At present Pakistan Stock Exchange has 542 registered companies belonging to 35 different sectors.

According to the Pakistan Stock Exchange's website, it has about 400 active members, ie brokers, through whom the buying and selling process in the market is conducted.

Brokers actually act as guarantors on behalf of the investors and in order to invest in market shares you need to have an account with a broker.

Money is also transacted through this account and also buying and selling of shares.

Some of these brokers have their own brokerage houses where different traders are with you to help you with different buying and selling strategies. However, you can buy and sell without the help of a trader.

How to invest in a stock exchange

To invest in the stock market, you must first open an account with an active broker.

In this regard, there is a list of brokers on the website of Pakistan Stock Exchange.

This is similar to opening a bank account, however, it requires different documents depending on the broker and similarly the amount to be deposited initially may also vary depending on the broker.

You also have the option of 'Leverage' after opening the account. Leverage is actually an agreement between the broker and the investor under which you can charge more for the investment based on the amount initially deposited.

However, it has to be repaid with interest and new investors are generally barred from investing on leverage basis.

In addition to Saturdays, Sundays and any other public holidays, you can buy and sell stocks in the market during fixed hours.

Everyday fluctuations in share prices can be seen from other sources besides the website of the stock exchange.

Similarly, on the one hand, there is trading, that is, short-term, on the other hand, investing or long-term investment. Quick stock trading means you buy and sell stocks in days. You can buy and sell multiple stocks in one day.

It is more profitable but also more dangerous.

Similarly, with good strategy, long-term investments or stocks can be 'held', which can lead to future profits.

In addition, long-term buying of stocks of large and profitable companies is expected to yield dividends. Dividends are actually the profits of a company which are either distributed among the shareholders or used for reinvestment in the company which increases the value of the stock.

That is, if the company you bought stocks from makes a profit, you will also make a profit because you are now a part of it, it will either be in the form of dividends, or the price of the stock will rise. In the case of.

The company can pay dividends more than once a year.

Why invest in the stock market?

Jahanzeb Tahir says that when he was advised to invest in the stock market, even though his salary was only Rs 18,000, he thought this was the best option.

"You need a lot of money to invest in real estate, gold, business, etc. While investing in stocks is very easy and can be started with a small amount."

"My strategy right now is to hold stock for a long time and build my portfolio. It's a game of patience, I'm tempted to trade, but I know I'm playing a long game. "

"The stock market gives you another source of income besides a job, and that's my strategy right now," he said.

"Through the stock market, you can invest in areas you can't even think about," said a Karachi-based broker.

"Suppose our analysis shows that the construction sector in Pakistan will grow in the coming days and this will benefit the glass, cement or steel companies," he said. Even if you set up a factory, you will need at least five years to set it up.

"On the contrary, you can invest in any cement or steel company and be a part of this economic growth."

Areeba Shahid, a journalist reporting on economic issues, said that the stock market can be profitable for you if you do not invest in speculation and you can do all this at home.

A broker from Karachi said that the stock market is also a good way to support business and raise capital.

He said that if a business needs capital, it can use the stock market for this purpose and register here.