You have to first understand the market capitalization of a stock. Companies are divided on the basis of small caps, large caps and mid caps. Market cap is consequent of the current stock price per share times the total number of shares outstanding. It is a temporary indication of the value of the company.

There are many newsletters and other financial newspapers that give an indication of the stock idea to the investors. To get the best news of the stock market trend it is best to watch the financial news and be update. It is essential get current news in the stock market. This latest news can also be got through websites, newspapers and books. You can find a large number of books that will help you to get inside knowledge about the stock market and the tips on investing in stock market. There is no dearth of information on stock market and this information helps to invest properly and gainfully.
One has to keep in mind that the investors should only invest that amount in stock, which if lost won’t affect them. If they invest from their income and can’t afford to lose money, then it will be better if they don’t invest. If they lose money it should not affect their other part of expenses.

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Step 3: Selling the shares.
At the time of selling your shares, you have to bear brokerage, Securities Transaction Tax (STT), stamp duty, service tax and turnover tax. This will reduce sale proceeds…
In the above example, suppose you sell 100 shares at Rs. 12000, them again you will have to pay brokerage (Rs. 60), STT (Rs. 15), stamp duty (Rs. 0.30), service tax (Rs. 7.42) and turnover tax (Rs. 0.42). Thus your sale proceeds will be deducted by this amount of Rs. 83.14 and your net proceeds will be Rs. 11916.86.

Step 4: Impact of the holding period.
The gains that you make on your equity and stock investment are termed as ‘capital gains’ and attract tax depending on the investment term… If the investment term is greater than 12 months, the gains are termed as ‘long term capital gains’ and attract no tax. If the investment term is less than 12 months, the gains are termed as ‘short term capital gains’ and attract tax at the rate of 16.995 per cent (inclusive of surcharge and education cess 3 per cent).

Step 5: The tax liability
If the gains are short-term, you will have a tax liability of 16.995 per cent of the gains (inclusive of surcharge and education cess 3 per cent)…

If the gains are long-term, there is no tax liability…
If as per above example, you hold 100 shares for a period more than 12 months, gains made by you i.e. 1847.58 (Rs. 11916.86- 10069.28) will be exempt from tax. If however you sell within 12 months, your short term tax liability will work out to be Rs. 314 (1847.58X16.995/100).

Step 6: Absolute and Annualised returns
Absolute returns are returns wherein the investment term is not taken into account.
It also pays to consider absolute and annualized returns for the purpose of computation of your total returns. Suppose you buy 100 shares of company ABC Limited for Rs. 15000 on January 01, 2008 and sell all your holdings on March 31, 2008 for Rs. 18000. In this case you make a profit of Rs. 3000 on an investment of Rs. 15000. Hence your absolute returns expressed in terms of percentage is 20% (3000”100/15000).

In case of annualised returns, the investment term is taken into account, and then annualised to arrive at the correct picture…
As per the above example, as you have made these returns over a period of just 3 months, your annualized returns are a 80% (3000×100x12/15000×3).

Step 1: Arrive at the total purchase cost
When you purchase your shares, you must make a note of the cost of the shares and the number of shares that you have purchased. You must add to this amount the Securities Transaction Tax (STT), stamp duty, service tax, turnover tax and brokerage that is paid on these shares and stock. Suppose you buy 100 shares of ABC Limited at a cost of Rs. 10000. Apart from this cost, you will have to pay brokerage. If brokerage rate is 0.5%, it will work out to be Rs. 50. STT at the rate of 0.125%, will work out to be Rs. 12.50, stamp duty and turnover tax will work out to be Rs. 0.25 and 0.35 respectively. Service tax on brokerage will amount to Rs. 6.18. Thus for arriving at your total cost, all these elements will be added up.
Your total acquisition cost will hence be Rs 10069.28 and per share cost Rs. 100.69.

Step 2: Account for all the corporate actions
While holding on to shares, you may receive:

a. Dividend
Dividends are tax free in the hands of the investor and accordingly, you must consider the whole amount as part of your returns. Suppose the company declares a dividend at the rate of 20%. The total amount to be received by you will work out to be Rs. 200 (assuming the face value of each share bought by you is Rs. 10). Here 200=100×10x20/100.

b. Bonus shares
Since bonus shares attract no purchase cost, post bonus, your holding will increase without any increase in the corresponding purchase cost. You are holding 100 shares of Company ABC. The company issues a bonus of 1:2. This means that for every two shares that you hold, you are allotted one bonus share. This means that post bonus, your holding will rise to 150 shares (100 original shares + 50 bonus shares)…
Now, assume that your purchase cost was Rs 10,000 for the original 100 shares. Post the bonus your holding has risen to 150 shares. However, your purchase cost remains the same i.e. Rs 10,000. Therefore, your cost of purchase per share from the earlier Rs 100 (Rs 10,000 / 100 shares) stands reduced to Rs 67 (Rs 10,000 / 150 shares).

c. Rights
Since rights, give you an option to buy additional shares of the company at a price lower than the market price, subscribing to rights will allow you increase your holding with a limited increase in the purchase cost. You hold 100 shares of Company ABC and the current market price of each share is Rs 150. The company announces a rights issue of 1:5 at Rs 60. This means that for every 5 shares that you hold you are entitled to receive one share and you will have to pay the discounted price of Rs 80 per share. Since you hold 100 shares, if you opt for the rights you will receive 20 shares (1 x 100/5) at a total cost of Rs 1200 (Rs 60 x 20 shares). If the acquisition cost of original 100 shares was Rs. 10000, your total cost of 120 shares will be Rs. 11200 and cost per share will reduce to Rs. 93.33.

1. AMO (After Market Orders)
Stock Markets are open for normal trading during 09:55 A.M to 03:30 P.M. However it is possible that you may not be able to place your buy or sell order during this period. AMO (After Market Order) facility offered by certain brokerage houses allows you to place your order even after the market closes for the day. These orders can be placed as share market orders, meaning that they will be executed at the best counter bid or ask. These orders can also be placed as limit order within a range of +/-5% of the close price of today. Thus if the close price of the scrip is Rs. 100, you can place AMO anywhere between Rs. 95 to 105. These orders will be placed in the order book of the exchange once the market opens tomorrow and then get executed based on normal price time priority criteria as is the case with other orders.

AMO allows you to place orders based on any event which has taken place after the market closes. Thus instead of waiting for the next morning for market to open, you may place the order today itself, which will get executed tomorrow.

2. Lien
Lien is the security interest created over an asset to secure the payment of a debt or loan. The term lien in securities markets would constitute creating an interest in shares under your ownership so as to secure the repayment of loan granted to you. Thus you can use your investments in shares to obtain loans backed by lien created on investments in favor of lender. Lien is an effective way of raising resources needed by you to meet your financial obligations.

3. Exposure on Cash and Stocks
If you are sitting on cash, you are having an exposure in terms of opportunity cost of gainful employment of such cash. Thus idle cash or cash lying in saving account and earning peanuts is not a good proposition for your finances. On the other hand, if you have invested in shares of a company, you have an exposure to potential fall in value of your investments. You are also subject to liquidity risk, meaning thereby that you will not be able to exit especially if stock and share is thinly traded. Thus you must make a careful assessment of your exposure on cash and stocks.

Stock market news today forms the very basis for trading of companies and their market prices. Technology has made it possible that any news good or bad is integrated and reflected in the market price of company on almost real time basis. Thus you can benefit if you act fast and remain clued. Charting, technicals, fundamental performance and number, ticker information all form stock market news which may be considered by the prospective investors. Most of the information is available through click of the mouse and that is what makes the whole process pretty simple.

With the advent of internet and popularity of online trading, life has never been so easy for investors. There was a time when information about performance and profitability of a company was difficult to come by. You were dependent only on companies to dish out what they want you to hear about them. Most of times, the information was hyped and only positive. Today you are faced with the prospect of overflow of information. Analysts’ reports, recommendations, tips, deep research and directors’ analysis are all available to prospective investors over internet.

You can also go through news papers and business magazines to have a grip over the subject. Start with the basic and try to learn the ropes as you go along the curve. Pink papers are a must if you want to be a savvy investor. Pore over all the news items and rumors floating in the market about a company. Look for potential mergers and acquisition targets and suitors. These companies are the ones which see substantial increase in price the moment rumors gain momentum. Look for abnormal rise in price in particular scrip. Try to look for reasons behind such a rise. You might be in for a pleasant surprise if you get in well in time.

Stock market news need careful analysis and going beyond what is stated and is obvious. A large number of companies try to build hype around them to woo investors. Investors need to study in detail past performance and prospective future of the company before making an investment decision. It is worth the efforts as serious money is involved in the process.