Shares

When you buy shares of a company, you become a part-owner of that business.

Share price goes up when more people want to buy than sell, and down when more want to sell.

In India, shares trade on NSE and BSE in lots or quantities you choose (minimum 1 share for delivery).

In India, your shares are held in electronic form in a demat account managed by depositories, either NSDL or CDSL. When you buy shares through Zerodha, Groww, or any other broker, the shares are credited to your demat account on T+1 day (one business day after the trade date). This T+1 settlement system was fully implemented by SEBI in 2023, making India one of the fastest-settling markets in the world.

Shares come with certain rights as a part-owner. You are entitled to dividends when the company declares them, you can vote in shareholder meetings, and you benefit from corporate actions like stock splits and bonus issues. For example, when Reliance Industries issued a 1:1 bonus in 2017, every shareholder received one free share for each share they held.

There are different categories of shares in the Indian market. Equity shares are the most common, they give you ownership and voting rights. Some companies also issue preference shares, which give priority in dividend payments but limited voting rights. As a retail investor on NSE and BSE, you will almost always be buying equity shares.

When a company wants to raise money, it issues new shares through an IPO (Initial Public Offering) on NSE or BSE. After the IPO, these shares trade freely in the secondary market. SEBI requires that the public holds at least 25% of a listed company's shares (called 'minimum public shareholding'), ensuring that retail investors like you always have access to buy and sell.