Stocks

In the very first episode of Groww Academy, we will touch upon the basics. We will understand what do we mean by stocks and how did the stock market came into being? Finally, we also cover the various benefits of owning stocks of a company.

What is a stock and what is stock market?

This episode is all about the stock market. Here, we explain the concepts of primary market and secondary market, and how they are different from one another.

Primary and secondary stock markets

In this episode, we explain the entire stock market ecosystem and its' key players. From exchanges like BSE and NSE to brokers and SEBI, we will cover everything you need to know. We also touch upon the details of demat account, depository participants, and clearing houses.

Key players in the stock market

This episode will see us clarifying all your doubts about the various charges and taxes involved in the stock market. Account charges, brokerage and transactional charges are some of the many charges we will cover. Moreover, we will also cover LTCG and STCG taxes.

Costs of investing in the stock market

In this episode, we cover the most fundamental questions about IPOs. What is an IPO in the first place, and the whole process a company needs to go through before coming out with an IPO. Finally, we also understand why do companies issue an IPO.

What is an IPO and why companies go public?

This module answers question like what is a stock, what are primary and secondary markets, who are the key players in the stock market and what are the various charges involved in a stock market transaction

Basics to know before investing in stock markets

INTRODUCTIONHello and welcome to Groww Academy!Did you just start your investing journey?Congratulations! You&rsquo;ve taken that firststep. The journey from here is a long one but we&rsquo;re here to make it exciting for you.On Groww Academy, we&rsquo;ll break down even the most complex topics about stocks to make it simple and easy for you.Let&rsquo;s begin? OVERVIEWThis video is all about building your foundation because everything else we&rsquo;ll talk about later will be based on these basic concepts.<ul><li style="font-weight: 400;">What are stocks?</li><li style="font-weight: 400;">And, what are the benefits of owning a stock?</li></ul>You might want to note that the term &lsquo;shares&rsquo; is often used instead of &lsquo;stocks&rsquo; in many places. These two words mean the same thing. However, throughout this course, I will be using the term &lsquo;stocks&rsquo;. STORY - HISTORY OF STOCKSNow, before we begin, let me ask you a question.Can you guess which is the first company which publicly traded in stocks?Let me give you a hint. It&rsquo;s known for being involved in the colonization of many countries including ours. Another hint? It has Indiain its name.Yes, you guessed it right! We&rsquo;re talking about the East India Company.Now, how did East India Company become the first to publicly trade in stocks?The answer is simple. Risk.Around 1600 AD, India and Southeast Asia were very popular for trading opportunities. We had spices, cotton, sugar, salt. Traders from all around the world wanted to benefit from it and they sent ships and voyages to export these goods.But, it was quite risky. Many times, these ships would get lost or get seized by pirates on the way.So, the traders realised that it didn&rsquo;t make sense to put all their eggs in one basket. That time, they would invest in one voyage or one company at a time, which meant they could lose all their money at once if anything happened. They hadto do something to lower their risk.This dilemma gave birth to the East India Company. Now, they could buy stocks in multiple companies. Even if one ship was lost, the trader could still make a profit from the ships of the other 2 or 3 companies. This system became very popular.In 1602, the Dutch East India Company officially released stocks on the Amsterdam Stock Exchange, which is known as the oldest &ldquo;modern&rdquo; stock market. Any investor could buy stocks and bonds and get a percentage of the East India Company&rsquo;s profitsthrough this.Interesting, right? We talk about risk all the time in the stock market. And, that turns out is the sole reason behind the first company to publicly trade in stocks.What the East India Company did beyond this, we all know it from our history books. This story was just to talk about its connection to the origin of the stock market.While the East India Company was created for trades that were exported from India and SouthEast Asia, stock trading in India started much later. In the mid 1800s, 22 stockbrokers stood under a Banyan Tree opposite the Town Hall of Bombay and started trading. More stock brokers joined in and they finally settled in Dalal Street in 1874and organized themselves as the Bombay Stock Exchange. Now, it&rsquo;s popularly known as BSE and is one of the largest stock exchanges in the world!&nbsp;WHAT ARE STOCKSSo, what are stocks? If I put it simply, one stock is one unit of ownership in a company.When you buy a stock of a company, you become a shareholder. You basically own 1 stock of the company and thatmeans you benefit from the profits that the company makesor even the growth of its stock pricein the market.How does that happen? Let me explain with an example.Suppose you bought 10 stocks of ITC at 200rupees each.If ITC has a good year of profits, they may decide to distribute these profits as dividends to all shareholders like you. If ITC continues to do well in the future, more investors would want to buy ITC stocks and demand will increase. That increases their stock price from 200to maybe 250 rupees. At this point, your invested value increases by 50 rupees per stock, which is 500 rupees profit for 10 stocks that you bought.&nbsp;You might ask, why do companies sell their stocks? To raise money for different reasons. They need that capital to maybe invest in a new project or they want to expand their business.Now, a lot of people often get confused between stocks and equity.&nbsp;What is equity?It&rsquo;s quite simple honestly.Let&rsquo;s say. a company has 100 stocks in total. And, you went and bought 10 of those stocks.You&rsquo;ll say you own 10 stocks, correct?In terms of equity, you&rsquo;ll say that you own 10 out of the 100 stocks, which is 10% equity in that company.So, equity is nothing but your total ownership stake in a company.&nbsp;BENEFITS OF OWNING A STOCKA lot is said about the extremes of investing in stocks. Either about someone earning a lot of money through it or losing some. But, owning a stock means much more. Let&rsquo;s talk about that!So, what are the benefits of owning a stock?&nbsp;<ul><li style="font-weight: 400;">Number 1, dividends.This is a part of the profit that a company makes and then gives to their shareholders. That&rsquo;s you.</li></ul><ul><li style="font-weight: 400;">Number 2, capital gains. Let&rsquo;s say, you buy a stock of a company for 100 rupees. If the company is doing well, more people will want to buy their stocks, right? So, the demand increases&hellip; and that probably increases the stock price as well. At this point, you can sell your stock at a higher price and earn a return on your investment. That&rsquo;s your capital gain.</li></ul><ul><li style="font-weight: 400;">Number 3, claim on the company&rsquo;s assets. Let&rsquo;s assume you invested in a company a while ago. Due to some reason, the company is shutting down. What now? First, all the assets of the company are liquidated. Then, anyone who has lent money to the company gets paid. After that, you, the shareholder, get paid with what&rsquo;s left.</li></ul>You might have heard that equity or stocks are riskier than debt. This is why. Because creditors will always get paid before equity holders in these kinds of scenarios.<ul><li style="font-weight: 400;">Number 4, voting rights. Every year, companies hold annual meetings to discuss important issues like management changes or electing the board of directors, etc. In this meeting, you also get to hear about the overallcompany performance, future plans, and management decisions. As a shareholder, you actually get to cast votes during this meeting!</li></ul><ul><li style="font-weight: 400;">Number 5, no liability. Being a shareholder in a company gives you all the benefits without the liability. If the company declares profits, you gain dividends. If the company goes bankrupt, you are not held liable for any loss, beyond the value of your stocks.</li></ul> CLOSING STATEMENTNow, all the buying and selling of these stocks. Where does it happen and how?That&rsquo;s our topic for the next video.

Costs of investing in the stock market

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