The Indian share market has the great potential to generate handsome returns. Many people park their savings in the stock market with the hope of capital appreciation. With wise decision making, the stock market can make fortunes for you. There is no denying that sometimes the stock market can be risky, but the amount of returns that can be made here is unmatched. And as right said, ‘no risk, no returns’, same is the case with stock market.
In this article, we will list down few of the ways through which you can earn money by trading and investing in the share market.
Capital Appreciation
When you invest in the share market by purchasing stocks, there is a good probability of capital appreciation. Capital appreciation or capital gains means the price of stock purchased going high and above your purchase price. The stocks have the potential to give manifold returns and in many instances, the returns are as high as 100 percent or more. However, there are equal chances of the stock falling down from your purchase price. Therefore, always purchase stocks after doing good research.
Dividends
When the company decides to share its profits with the shareholders it is done in the form of dividends. You can earn good money by investing in profit-making companies and earn dividends out of it. The declaration of divided is done on per share basis. In the long term, dividends act as a consistent source of income from the share market.
Invest in IPO
IPO means Initial Public Offer i.e. a company deciding to list itself on the stock exchange by issuing shares to the public. You can apply for shares in the primary market through IPOs and earn good returns. In the recent years, IPOs have given handsome listing gains and long term profits to the shareholders. However, it is always advisable to study the company profile, prospectus and issue price before investing in the IPO.
Diversified Portfolio
Since stock market is perceived as a risky investment avenue, you can reduce the risk by diversifying your portfolio. A diversified portfolio is one that has stocks belonging to many sectors. By purchasing stocks of various sectors you protect your portfolio from the loss in one sector with profit in another sector. Long term investors can make good money in the stock market by making a well-diversified portfolio.
Intraday Trade
Intraday trading is one of the most popular ways of making money through the stock market. Intraday trading is purchasing and selling the stocks on the same day. The aim of the intraday trading is to earn profits and close the position in the same trading session.
Follow the Market Trend
You can make money in the share market by following the market trend. During the bull phase of the market, you can purchase the stock for the long term and book profits at the right levels. While during the bear phase of the market you can short sell the stocks in the future market and timely book short term gains.
Technical Analysis
Technical analysis involves reading the long term and short term charts of the stocks. For long term investors, technical analysis helps in determining the long term price of the stock. While for the short term investors like intraday traders, technical charts of the stock predict the short term price movement. Therefore, with the help of technical analysis, you can make money in the stock market.
With the help of the above points, you can make handsome profits in the stock market. If you are a beginner in the share market and need assistance with trading, you may open a demat account with Kotak Securities and grow your money.