What is Equity Market? Equity Market Introduction, Benefits & Types of Equity Market (2024)


  • What Is Equity Market ?
  • How Is Equity Market In India ?
  • What is 'Growth' in Equity Market ?
  • How Do Equity Markets Work ?
  • What Are the Timings of Equity Market ?
  • What Are Equity Trading Holidays ?
  • What Is Difference Between Stock And Equity ?
  • What Is Equity in NSE ?
  • How Can I Trade In Equity ?
  • How To Do Online Equity Trading ?
  • What Are The Things To Know Before You Trade In Equity ?

12 Things About Equity Market You Must Know

Every market is a meeting point of buyers and sellers. Markets are all about transactions. Somebody buys, somebody sells. In the equity market, trading keeps on happening at an incredible speed. Investors are able to deal in shares in a fraction of a second. Every day, thousands of crores worth of equities are transacted in the equity market in India. If you are new to markets, you should gain some knowledge before you venture into the equity market. Plus, there are different types of equity market and so you know about them as well. In the following sections, you will know about 12 important things related to Indian equity market. Read on.

What Is Equity Market ?

Equity market is a place where stocks and shares of companies are traded. The equities that are traded in an equity market are either over the counter or at stock exchanges. Often called as stock market or share market, an equity market allows sellers and buyers to deal in equity or shares in the same platform.

First things first, it is important to begin with a good understanding of what is equity market in the Indian context. Equity market, often called as stock market or share market, is a place where shares of companies or entities are traded. The market allows sellers and buyers to deal in equity or shares in the same platform.

In the global context, equities are traded either over the counter or at stock exchanges. There are multiple buyers and sellers of the same equity/share. Hence, you stand a good chance to strike a nice deal at the equity market. If you want to begin online equity trading in India, you have to get a demat account. Open a demat account in simple steps.

Equities are mostly traded on the stock exchanges in India. In the Indian stock market, equities are available for trading at the National Stock Exchange (NSE) , the Bombay Stock Exchange (BSE) and the latest entrant, Metropolitan Stock Exchange of India (MSE). Shares of stock market listed companies are bought/sold.

Equity share trading is roughly in two forms - spot/cash market and futures market. These are the different types of equity market in India. The spot market or cash market is a public financial market in which stocks are traded for immediate delivery. The futures market is a place where the shares' delivery is due at a later date. With the help of an equity trading account, a trustworthy broker like Nirmal Bang and online equity trading systems, investors can utilize the indian equity market..

What is 'Growth' in Equity Market ?

Shares/stocks traded in the equity market belong to companies that show growth. Investors typically invest in 'growth' stocks, which belong to small companies showing potential for high growth rates. The growth stocks are those where investors are ready to make big bids in the live equity market, be it in India or global equity market. With the help of online equity trading, investors aim to accumulate growth stocks today so that they can them off after incredibly low prices.

How Do Equity Markets Work ?

The concept behind how the stock market works is simple. Think of an auction house where buyers and sellers negotiate prices and make trades. Now, substitute the auction house and items with equity market and shares. Companies list their shares on an exchange. Investors can buy shares in the primary market i.e. IPOs, and secondary market.

The stock market is regulated by a financial watchdog. The equity market is maintained by stock exchanges, and various stakeholders like brokers, dealers, clearing corporations etc. It is an extended family of institutions and this is the true equity market meaning.

What Are the Timings of Equity Market ?

There is no 24 hour stock trading system yet. The normal trading time for equity market is between 9:15 am to 03:30 pm, Monday to Friday. On Saturday and Sunday, trading does not happen unless there are special circ*mstances.

What Are Equity Trading Holidays ?

Trading on the equities segment is open on the weekdays from Monday to Friday and is closed on Saturday and Sunday, except for any special trading sessions that are announced. You can check for the list of holidays on the NSE website.

What Is Difference Between Stock And Equity ?

There is virtually no difference between stock and equity. These two words are commonly used to mean shares. Stock and equity are just synonyms. Equity share trading is done via online equity trading systems.

What Is Equity in NSE ?

Equity in NSE refers to stock market. The securities market has two segments, the new issues (primary) market and the stock (secondary) market. Currently more than 1300 securities or stocks are available for trading on the NSE.

The stock exchange's automated screen based trading allows investors across the length and breadth of India to trade and invest. The NSE trading system is called 'National Exchange for Automated Trading' (NEAT). The equity space in NSE comprises of cash/spot trading and also trading in equity derivatives.

How Can I Trade In Equity ?

To trade in equity share market, you will need to have the proper tools - open a demat and trading account, have funds to buy stocks and a good broker platform to execute the trades. Thanks to technological advancements, you can do online equity trading, at your home, office or even while on the move.

To begin trading, you need to select the right stocks. Follow the live equity market to some worthy stock ideas and do some research. This will help you fine-tune equity market growth & investment strategies.

How To Do Online Equity Trading ?

Today, carrying out online equity trading in India is an easy process. Every user with an online account has a user/customer ID and password. These credentials will help you do equity share trading on the equity market live.

Do always remember that brokers take professional-grade IT security, thus ensuring high quality online equity trading that is completely safe. Here is a step by step process. Don't forget to open a free demat account to begin investing.

  • Login to the online broker platform.
  • Enter the ID and password to access your account.
  • Your customized page opens and thus the opportunity to trade is open. Ensure you access the online platform during market/trading hours.
  • Select the stock to trade and buy/sell them on the stock exchange at your preferred rate. Once the order goes through, your trade is completed.
  • In the evening, you will get an SMS notification of the trade order specifics, along with confirmation of the ledger balance.

What Are The Things To Know Before You Trade In Equity ?

The equity share market, be it the equity market in india or asian equity market, is full of traders and investors wanting to make a profitable deal. It can sometimes be a lot of information to process. Also, there are different types of equity market. Hence, it is always good to have some ground rules before you trade in equity.

  • Never go against the sentiment of the equity market today - The trend is your friend. Unless you are 100% sure, do not try to take totally contrarian bets. When you go against the tide, the risk factor increases.
  • Buy low, sell high - You should try to buy stocks that are trading at historically low prices and cheap valuations. When you buy such stocks, you can gain when the equity makes the next up move.
  • Think long term - In the short term, nobody can predict what the equity market live will see next. So, it's important to have a long term view on trades that you do.
  • Know-how about intraday trading - Before you jump into the stock market bandwagon by listening to random tips, it would be better to know how to do intraday trading for better results with your trades and investments.
  • A Rs 1000 stock is not expensive and a Rs 5 stock is not cheap - Some investors approach equity investing in the same way they buy clothes or vegetables. They seem to think if a stock is priced at Rs 1000 is it costly than a stock that is Rs 100. Use valuations to understand exactly what is cheap and what is expensive.

There are advantages and disadvantages to trading equity market. The outcome of any situation is dependent on the way we behave. Let us look at the benefits first.

Pros of Equity Market
  • Great wealth creation
  • The biggest benefit of the equity market is the opportunity to make huge profit. Many investors have experienced big returns that can never be given by any other financial investment.
  • Enter and exit easily
  • In case of equity market, you can easily enter and exit a stock. This should be compared to when you want to sell a house, where you cannot sell it on your own will always.
  • Lower taxes
  • When an equity is sold for profit after holding for more than 1 year, the profit attracts 10% tax. In case of fixed deposits, the tax rate is as per the individual's tax rate i.e up to 30%.

There are some downsides in equity trading too.

Cons of Equity Market
  • Lack of understanding can be costly
  • If you do not properly do research or invest in bad stocks, your chances of making losses are high in a equity market live type situation. So, be careful.
  • Equity market can be volatile
  • Equity investment return does not move in a straight line. There are upswings and downswings in the live equity market.
  • There is risk of capital erosion
  • Equity share trading involves a chance of capital erosion.
What is Equity Market? Equity Market Introduction, Benefits & Types of Equity Market (2024)


What is Equity Market? Equity Market Introduction, Benefits & Types of Equity Market? ›

Equity markets are meeting points for issuers and buyers of stocks in a market economy. Equity markets are a method for companies to raise capital and investors to own a piece of a company. Stocks can be issued in public markets or private markets. Depending on the type of issue, the venue for trading changes.

What are the benefits of equity market? ›

It is a crucial component of the financial system, facilitating capital formation and wealth creation. Equity markets enable companies to raise funds by issuing shares to investors, thereby allowing investors to become partial owners of those companies.

What is the aim of the equity market? ›

Equity markets facilitate the raising of equity capital. This is important for entrepreneurs who have a business idea but do not have the capital on-hand to start the business themselves. Banks are debt investors who are unlikely to provide a loan to these businesses without collateral or an abnormally high return.

What is the introduction of equity? ›

Equity represents the value that would be returned to a company's shareholders if all of the assets were liquidated and all of the company's debts were paid off. We can also think of equity as a degree of residual ownership in a firm or asset after subtracting all debts associated with that asset.

What is equity and types of equity? ›

In finance, equity refers to the ownership interest in a company or property in the form of shares, stocks, or ownership certificates. Investors can invest in equity by buying stocks or shares issued by publicly traded companies through the stock market.

What are two benefits of equity? ›

Advantages of equity finance

Investors only realise their investment if the business is doing well, eg through stock market flotation or a sale to new investors. You will not have to keep up with costs of servicing bank loans or debt finance, allowing you to use the capital for business activities.

What are the advantages and disadvantages of equity? ›

Pros & Cons of Equity Financing
  • Pro: You Don't Have to Pay Back the Money. ...
  • Con: You're Giving up Part of Your Company. ...
  • Pro: You're Not Adding Any Financial Burden to the Business. ...
  • Con: You Going to Lose Some of Your Profits. ...
  • Pro: You Might Be Able to Expand Your Network. ...
  • Con: Your Tax Shields Are Down.

What is equity market in simple words? ›

Equity market is a place where stocks and shares of companies are traded. The equities that are traded in an equity market are either over the counter or at stock exchanges. Often called as stock market or share market, an equity market allows sellers and buyers to deal in equity or shares in the same platform.

How does the equity market work? ›

The equity market platform enables companies to raise any funds from different investors. Therefore, a business issues stocks that traders or investors buy to make money from the stock's future sales. Equities are traded on India's Metropolitan Stock Exchange, Bombay Stock Exchange, and National Stock Exchange.

How do you trade in equity market? ›

Four steps to start online trading in India
  1. Choose an online broker. The first step will be to find an online stockbroker. ...
  2. Open demat and trading account. ...
  3. Login to your Demat/ trading account and add money. ...
  4. View stock details and start trading.

Is equity money in your pocket? ›

It's important to remember equity isn't free money. You are increasing the principal loan balance against your property, and you still have to repay this over the agreed loan term.

What is equity short answer? ›

Equity is the amount of capital invested or owned by the owner of a company. The equity is evaluated by the difference between liabilities and assets recorded on the balance sheet of a company.

What is an equity example? ›

Equity can be calculated by subtracting liabilities from assets and can be applied to a single asset, such as real estate property, or to a business. For example, if someone owns a house worth $400,000 and owes $300,000 on the mortgage, that means the owner has $100,000 in equity.

How is equity paid out? ›

Each company pays out equity differently. The two main types of equity are vested equity and granted stock. With vested equity, payments are made over a predetermined number of installments delineated by a contract. Granted stock is provided at the beginning of a contract.

Is it safe to invest in equity? ›

While there are many potential benefits to investing in equities, like all investments, there are risks as well. Market risks impact equity investments directly. Stocks will often rise or fall in value based on market forces. As a result, investors can lose some or all of their investment due to market risk.

Why is equity important? ›

Thinking about equity can help us decide how to distribute goods and services across society, holding the state responsible for its influence over how goods and services are distributed in a society, and using this influence to ensure fair treatment for all citizens.

What is the introduction of equity and equality? ›

Equality simply means everyone is treated the same exact way, regardless of need or any other individual difference. Equity, on the other hand, means everyone is provided with what they need to succeed.

What led to the introduction of the principle of equity? ›

It can be seen from the above that equity was introduced to fill the void that was lacking in common law. Under the old system of common law from the 13th century until the courts combined there was no leeway for the courts to order specific performance or injunctions[37].

What is equity and its origin? ›

Historically equity emanated from the Crown assuming powers to remedy in- justice. In due course the grant of equitable relief was assigned to the Lord Chancellor who in turn set up courts endowed with jurisdiction to administer equity.

What is equity and why did it develop? ›

Equity is a body of principles and procedures which developed side by side with the common law and statute law. Early common law was rigid and could produce arbitrary and unjust results in many cases. Equity originated with the Courts of Chancery, which sought to mitigate the harshness of the early common law.

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