WHAT IS EQUITY TRADING
Equity Trading is nothing but, purchasing(or)selling of equity shares.Usually, companies sell a portion of their ownership to the public in exchange for money. Equity investment is,investors purchase a share of the ownership by buying shares of the company. Then, they become a shareholder of the company. Company stocks are called equities/equity shares.Equity trading plays an tremendous role in Stock market trading.
Equity shares are traded on the stock market/Exchange.The investor can invest in Equity share market through primary or secondary market. In the primary market, companies get listed through an Initial Public Offering. Thus, new securities are available in the primary market. In the secondary market, investors buy or sell securities, which have already been issued. Currently, more than 1300 securities are available for equity trading on the National Stock Exchange (NSE) and over 6000 on Bombay Stock Exchange (BSE).
CATEGORISE OF EQUITY INVESTMENT ON BASIS OF DURATION
Long Term
Long Term Investments in equity are done by investing in companies with sound fundamentals having a history of consistent growth in income & profits, rewarding their investors through dividends & bonus. These investments are done for a period of 3-5-10 years & have potential to generate higher returns.
Short Term
Short Term Investments are categorized into positional trading (1-2 weeks), intraday trading (squaring off the same day) & derivatives trading through futures & options (1-3 months). Short term means ,holding of equity shares not more than 1 year.
Advantages of Equity-Trading
---> Capital appreciation
---> Dividend
---> Bonus shares
---> Right shares
TAXATION OF EQUITY SHARES/ INVESTMENT
| LONG TERM CAPITAL GAIN ( LTCG ): | 10% ( If gains exceeds 1 Lakh & Without Indexation benefit ) |
|---|---|
| SHORT TERM CAPITAL GAIN ( STCG): | 15% |
Why invest in equities
Equity investments can provide excellent long-term returns, illustrated by the chart below
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