What is the Direct Equity ?

Understanding equity is essential for commencing an investment journey on Indian stock exchanges. A business requires capital for its operations and to meet its working capital needs. It can use both debt and equity instruments to raise funds. It can provide its shares or securities to investors through Initial Public Offerings (IPOs) to raise capital through equities or offer debentures and loan instruments with fixed interest rates. Understanding the Stock Exchange A stock market is a venue for buying and selling the shares of various publicly traded companies. Various investors purchase and sell a company's stock with the assistance of a stockbroker. The initial step in trading on stock exchanges is establishing a demat and trading account with a reputable stockbroker. What is Equity? From the perspective of a publicly traded company, equity refers to the funds invested by shareholders. From the perspective of an investor, equity is a primary asset. As an investor, you can also choose to invest in derivatives, such as currencies, commodities, and bonds, which provide diversification beyond securities for equities. Advantages of investing in stocks - Equities yield the highest returns, particularly over the longest time horizons. - Investing in stocks can also generate income through a dividend distribution. Dividends are a corporate action in which listed companies distribute a portion of their profits to their existing shareholders. Types of Stock Exchanges - Primary Equity Market: These are the shares offered to the broad public through initial public offerings. Once the IPO is completed, a company's shares are listed on the stock exchange. NSE and BSE are the two main stock exchanges that facilitate stock trading. - Secondary Equity Market: If you do not purchase a company's shares during its initial public offering, you can buy and sell them on the secondary market. Here, you determine an entry and exit point for your investment. Equity Market Operations - Trading Here, stock exchanges offer an open trading platform for purchasing and selling stocks and other securities. This is entirely computerized and automated, traders can view the transactions on a screen before placing orders. - Settlement and removal During the trading session, stock exchanges complete a process known as a settlement cycle to resolve trades. Stock exchanges in India have adopted the T+1 settlement cycle. This means merchants receive their credits or sale proceeds within one business day of the close of each trading day. - Risk management For the prevention of fraudulent activities and the mitigation of investor risk, stock exchanges employ a robust risk management system. like margin requirements, liquid possessions, pay-ins, voluntary shutdown Conclusion Thus, you can trade stocks and securities on equity markets to achieve your investment objectives as an investor. Choose a trustworthy and dependable stockbroker who can assist you in making prudent investment decisions before you start investing in stocks.