What Is A Share or Stock?
A share or stock represents a unit of ownership in a company. When you buy a share of a company, you own a piece of that business. This ownership entitles you to a portion of the company’s profits and assets.
Quick Tip: The terms "stock" and "share" are often used interchangeably, but "stock" refers to ownership in one or more companies, while "share" refers to ownership in a specific company.
Why Do Companies Issue Shares?
Companies issue shares to raise capital for various purposes such as:
- Business expansion
- Research and development
- Paying off debt
- Launching new products
Types of Shares
There are mainly two types of shares:
- Equity Shares: Also known as common shares. Gives voting rights and dividends.
- Preference Shares: Fixed dividends but limited voting rights.
Benefits of Owning Shares
- Capital appreciation (stock price increases over time)
- Dividends (profit sharing)
- Ownership rights in the company
- Liquidity (can be bought or sold anytime)
How to Buy Shares?
You can start investing in shares by:
- Opening a Demat and trading account with a registered broker
- Funding your trading account
- Selecting the right stocks based on your goals
- Placing a buy order on the exchange (like NSE or BSE)
Recommended: Read our guide How to Buy Your First Stock.
What Influences Share Prices?
- Company earnings and performance
- Market sentiment
- Economic factors and interest rates
- News and global events
Final Thoughts
Understanding shares is the foundation of stock market investing. Whether you're aiming for long-term wealth or short-term gains, shares play a central role. Check out our Beginner's Course on Stock Market to learn how to analyze and invest smartly.
Explore more: What Is a Stock Market?, Fundamental vs Technical Analysis, Top 5 Investing Strategies for Beginners