InvestorQ : what is equity shares
anoop made post

what is equity shares

2 years ago
A stock market is also generally called equity market or share market. The stock market is the formation of both buyers and sellers. The market wholly observes economic transaction os stocks. Another name for stocks is equity shares.

Equity shares are basically small pieces of the company. These shares distribute ownership of the company. Any individual, company, and mutual funds are eligible to buy equity shares. After buying share the buyer becomes the part-owner of the company. Value of the share varies from company to company. Holder of equity shares is called Equity shareholder.
Equity markets come under the ambit of SEBI regulation.

When you own equity shares, there are two kinds of incomes that are generated. Firstly, there are dividends that are earned by you on a regular basis when the company pays out the dividends. Most profitable companies do pay out dividends to shareholders and they try to maintain a steady dividend payout ratio.

The second source of income from equities comes from capital gains, which is derived only when you sell the shares bought by you. Till the time the gains are notional they are not realized by you and do not constitute income. Capital gains represent the profits made on sale of shares and represent the excess of the sale price less the purchase price. The chart below captures the essence of capital gains and capital losses.