Share Market Basics for Beginners | Share Market in Hindi

Summary

This video script offers a comprehensive guide to the stock market, suitable for beginners to experts. It tells the story of Warren Buffett and other billionaires who started investing young, emphasizing the importance of financial literacy. The script explains the purpose of the stock market, the process of investing, dividends, and the impact of stock splits and bonus shares. It also introduces market capitalization and the categorization of companies into large-cap, mid-cap, and small-cap, using relatable examples and encouraging viewers to deepen their understanding through the series.

Takeaways

• 😀 The video is designed to educate viewers from all backgrounds about the stock market, with the goal of making them among the 2% who understand investments and the stock market well.
• 🎓 It covers the stock market from beginner to expert levels, ensuring a comprehensive understanding for viewers at any stage of their financial literacy journey.
• 👦 The script introduces Warren Buffett's early financial endeavors, emphasizing the importance of starting investments at a young age and the potential for significant returns.
• 💼 It highlights the role of the stock market as a platform for businesses to raise capital by issuing shares to the public, making them shareholders in the company.
• 📈 The video uses the example of Wipro and Infosys to illustrate the potential for substantial returns on investment, including dividends and the growth of initial investments over time.
• 📊 The concept of dividends is explained as a share of company profits distributed to shareholders, with the decision to distribute dividends being at the discretion of the company's Board of Directors.
• 📚 The script provides a brief history of the stock market, including the transition from physical share certificates to Demat accounts and the online trading that is prevalent today.
• 💻 It explains the necessity of a Demat account for investing in the stock market and mentions Upstox as an example of a brokerage firm that offers such accounts.
• 🔄 The video introduces the concepts of stock splits and bonus shares, which are mechanisms used by companies to increase the accessibility of their shares to a broader range of investors.
• 🏆 Market capitalization is presented as the key indicator of a company's size, rather than the share price alone, and is calculated by multiplying the share price by the total number of shares.
• 🏦 The script categorizes companies into large-cap, mid-cap, and small-cap based on their market capitalization, with examples provided to illustrate the differences.

Q & A

What is the main purpose of the stock market according to the video?

The main purpose of the stock market, as described in the video, is to provide a platform for businesses to expand by raising capital from the public, who in turn become shareholders in the company.

Who is the 11-year-old boy mentioned in the video who started earning and investing at a very young age?

The 11-year-old boy mentioned in the video is Warren Buffett, who later became the world's 4th richest person with a net worth of $100 billion.

What is the significance of the story of Dhirubhai Ambani in the context of the stock market?

The story of Dhirubhai Ambani is significant as it illustrates how he went from city to city convincing people to invest in stocks, which eventually led to investors making substantial profits and the expansion of his business.

What is a Demat account and why is it necessary for investing in the stock market?

A Demat account is an account used to hold shares in electronic form. It is necessary for investing in the stock market because it allows investors to buy and sell shares online, replacing the need for physical share certificates.

How does the video explain the concept of dividends?

The video explains dividends as a part of a company's profit that is shared with its shareholders. It clarifies that the decision to give dividends depends on the company's Board of Directors and is not compulsory for any company.

What is the difference between a stock split and a bonus share according to the video?

A stock split is when a company divides its shares into smaller units to make them more affordable for common investors, while a bonus share is when a company gives additional shares to its shareholders without charging them, usually out of its profits.

Why did Wipro and Infosys split their stocks multiple times?

Wipro and Infosys split their stocks multiple times to increase the total number of shares, making them more accessible to common investors and allowing for broader ownership of the company.

How does the video explain the concept of market capitalization?

The video explains market capitalization as the product of a company's share price and the total number of shares it has issued. It indicates the size of the company and is used to classify companies as large-cap, mid-cap, or small-cap.

What is the significance of the investment story involving Wipro and Infosys mentioned in the video?

The investment story is significant as it demonstrates the potential long-term gains from investing in the stock market. It shows how an initial investment of ₹10,000 in Wipro and Infosys could have grown to hundreds of crores over time.

What is the video's stance on the relationship between a high share price and the size of a company?

The video clarifies that a high share price does not necessarily mean a company is large. The size of a company is determined by its market capitalization, which takes into account both the share price and the total number of shares.

What is the importance of the 'Telegram' group mentioned in the video?

The 'Telegram' group is important as it serves as a community where members can share and receive interesting information related to investment, enhancing their financial knowledge and awareness.

Outlines

00:00

📈 Introduction to Stock Market for Beginners

This paragraph introduces the video series aimed at educating viewers on the stock market, from basic to advanced levels. It emphasizes that even without a finance background, the series will provide a solid understanding of investments and the stock market. The story of Warren Buffett is highlighted as an example of early investment success, showing that financial literacy can lead to significant wealth. The video also addresses the lack of financial awareness in India, as reported by S&P, and the goal of the series is to increase this awareness. The host, Prasad, invites viewers to subscribe for free education on finance, stock markets, mutual funds, and investments.

05:06

💼 The Evolution of Stock Market Investments

This paragraph delves into the history of stock market investments, using the examples of Wipro and Reliance Industries to illustrate how companies raise funds for expansion. It explains the concept of Demat accounts, which are essential for investing in the share market, and compares them to savings accounts in a bank. The paragraph also discusses the transition from physical shares to online trading and the ease of buying and selling shares through brokerage firms. The video promotes Upstox as a brokerage firm with no delivery brokerage charges and offers an incentive for opening a Demat account through a provided link.

10:07

🏆 Understanding Dividends and Stock Splits

The paragraph explains the concept of dividends, which are profits shared by companies with their shareholders, and clarifies that the distribution of dividends is at the discretion of a company's Board of Directors. It also introduces the idea of stock splits and bonus shares, using the example of Eicher Motors to illustrate how stock splits can make shares more accessible to a broader range of investors. The paragraph dispels the myth that a high share price equates to a large company, emphasizing that market capitalization, calculated by multiplying the share price by the total number of shares, is the true indicator of a company's size.

15:12

🚀 The Impact of Stock Splits and Bonus Shares on Investment Growth

This paragraph continues the discussion on stock splits and bonus shares, using Wipro and Infosys as examples of companies that have significantly increased their total number of shares through stock splits and bonus issues. It explains the potential for substantial investment growth over time, as demonstrated by the hypothetical investments in Wipro and Infosys, which have multiplied many times in value. The paragraph sets the stage for the next episode, where the reasons behind the increase in share prices and the concept of achieving success in the stock market with a 10% success rate will be explored.

Keywords

💡Stock Market

The stock market is a platform where shares of publicly traded companies are issued, bought, and sold. It serves as a means for businesses to raise capital by selling ownership stakes in the form of shares. In the video, the stock market is central to the discussion of investment and wealth generation, exemplified by the story of Wipro and Dhirubhai Ambani's efforts to raise funds for business expansion.

💡Investment

Investment refers to the commitment of money or capital with the expectation of generating income or profit. In the context of the video, investment in the stock market is highlighted as a pathway to financial growth, as illustrated by the early investments of Warren Buffett and the potential returns from investing in companies like Wipro and Infosys.

💡Shareholder

A shareholder is an individual or entity that legally owns one or more shares in a corporation, thereby holding a claim on part of the company's assets and earnings. The video emphasizes the role of shareholders in the success of businesses, as seen in the historical account of Dhirubhai Ambani's interactions with Reliance shareholders.

💡Demat Account

A Demat account is an account that holds shares in electronic form, rather than in the form of physical certificates. The video explains that to invest in the stock market today, one needs a Demat account, which is used for buying and selling shares online, replacing the older system of share certificates.

💡Dividend

A dividend is a payment made by a corporation to its shareholders, typically as a distribution of profits. The script mentions Wipro's distribution of profits to shareholders as an example of dividend payments, which are not mandatory but are a way for companies to share their success with investors.

💡Stock Split

A stock split is a corporate action in which a company increases the number of its outstanding shares by issuing more shares to current shareholders. The video uses the example of Eicher Motors' 1:10 stock split to illustrate how this can make shares more accessible to a broader range of investors by reducing the share price.

💡Bonus Shares

Bonus shares are additional shares that a company may issue to its shareholders without requiring further payment, usually as a way to reward investors or to adjust the share price. The video script alludes to bonus shares as a concept that will be explained in more detail in subsequent episodes, relating to the growth of an initial investment in Wipro and Infosys.

💡Market Capitalization

Market capitalization is the total market value of a company's outstanding shares of stock. It is calculated by multiplying the share price by the number of outstanding shares. The video explains that a company's size is determined by its market capitalization, not just its share price, using examples like Reliance Industries and MRF Limited to illustrate the concept.

💡Large-cap, Mid-cap, and Small-cap Companies

These terms refer to classifications of companies based on their market capitalization. Large-cap companies are those with a market cap above a certain threshold (often around ₹1 lakh crores in the script's context), mid-cap companies fall between ₹20,000 Crore to ₹1 lakh crore, and small-cap companies are below ₹20,000 crores. The video uses these classifications to discuss the relative stability and growth potential of different types of companies.

💡Compounded Interest Return

Compounded interest return refers to the interest on a principal sum that is calculated and added to the principal, then itself earns interest. The video mentions Warren Buffett's 21% compounded interest return on his stock market investments, emphasizing the power of compounding as a strategy for wealth accumulation.

Highlights

The video guarantees to teach viewers about the Stock Market, even if they have no prior knowledge.

The series covers both beginner and expert levels of understanding the Stock Market.

The story of an 11-year-old boy who started earning and investing at a young age, inspiring viewers to start early.

The boy's early investments led to him becoming a millionaire by 30, showcasing the power of early and smart investing.

Warren Buffett's journey from a young investor to becoming the world's 4th richest person.

The importance of financial awareness, as 76% of Indian adults lack it according to S&P's report.

The purpose of the stock market is to provide a platform for businesses to expand by taking money from the public.

Investors become part-owners of a company when they buy shares, sharing in its profits and growth.

The historical context of Wipro and Reliance Industries using the stock market to raise funds for business expansion.

The shift from physical share certificates to Demat accounts and online trading since 1996.

How to open a Demat account and start investing in the stock market with the help of a brokerage firm.

The potential returns from long-term investments in companies like Wipro and Infosys, with examples of dividends received.

Understanding dividends as a share of company profits distributed to shareholders.

The concept of stock splits, making shares more affordable for common investors.

The difference between high share prices and company size, emphasizing market capitalization as a true measure of a company's size.

Market capitalization formulas and how they classify companies into large-cap, mid-cap, and small-cap.

The story of Wipro's growth and how an initial investment could have turned into a significant profit over time.

The upcoming discussion on how share prices fluctuate and the factors influencing their increase or decrease.

The assertion that even a 10% success rate in the stock market can lead to substantial profits.

Transcripts

If you are from a non-finance background or, if you don't know anything about stock market

Either way, it's okay. I guarantee that once you finish watching this video

You will be able to understand the Stock Market.

And after watching the whole series you will be among 2% of the people

Who have a good understanding about Investments and the Stock Market.

In this series, we will discuss Stock Market from the beginner to the expert level.

That means, from the basic level to the advanced level.

Before we begin, I have a question for you.

When you were in 5th or 6th grade, what did you usually do?

You probably would study and wait for a break or, watch WWE and try some moves on your siblings.

But today I will tell you about an 11-year-old boy, who had completely different interests.

This boy, at 11 years of age, used to deliver newspapers, collect Coke bottles, and

Do other odd jobs and business. He started earning very young.

With that money, he began setting up other small businesses.

For example, he installed penny weighing machines in barbershops.

He got the idea from a book named, "One Thousand ways to make $1000."

Ever since he was a kid, he enjoyed running his own business and investing his money.

As a kid, he even bought himself some land and started investing in Bonds and Stock market.

He also told his sister that by the time he was 30 that, he would be a millionaire.

At 30 years, the boy became a millionaire. Till today, on his stock market investments,

He has earned a compounded interest return of 21%.

He is the world's 4th Richest Person and, his net worth is $100 Bn, which is ₹ 7,40,000 crores.

I'm sure you by now you know who I am talking about, it is Mr Warren Buffett.

Peter Lynch, Carlos Slim Helu, Ray Dalio also started investing when they were young,

And today, they are billionaires.

We don't usually get such success stories from India and, the reason behind it is that,

According to S&P's report, 76% of the Indian Adults are not financially aware.

Our attempt through this beginner to expert level series and other investment series is,

To make all of India more financially aware.

Hello, I am Prasad. Welcome to today's video. To learn about finance, stock markets,

Mutual funds and investments for free, subscribe to the channel.

And click on the bell icon so that you get notifications for all our videos.

To learn about the stock market, you have to watch the entire series.

Because having half knowledge is dangerous.

I will tell you a story now, listen carefully as I will explain the stock market in it.

So in the story, we will talk about 'Wipro.'

Wipro started in Maharashtra's Amalner district by Mohamed Hashem Premji in 1945.

When he needed money to expand the business, he raised it through stock market.

Similarly, when Dhirubhai Ambani needed money for his business in 1977

He thought about raising money from stocks. Back then, few people invested in stocks,

So Dhirubhai Ambani went from city to city, convincing people to invest their money.

With the business performance 'Reliance' had, investors made lakhs and crores worth of profits.

If the stock market didn't exist then, people like Dhirubhai Ambani and Hashem Premji

And many such Businessmen would have found it difficult to expand their business.

And because investors, (public) helped businessmen like Dhirubhai Ambani

By investing in their business, that is why Businessmen respect their investors.

Dhirubhai Ambani used to book huge grounds to organize meetings with his ShareHolders

and he always treated them with special respect.

So the question is, What is stock market and what is its purpose?

As we've seen, when Dhirubhai Ambani and Mohamed Hashem Premji

Needed money to expand their business they had taken money from the stock market.

In simple terms, the stock market is a platform to expand the businesses.

Companies take money from the people and, in turn, make them a shareholder in the company.

In 1946, when Wipro took money from the stock market, they took money directly from the public

and in turn, gave them shares in the company.

This way, they got money to expand and, investors got shares in Wipro, making them part owners.

The stock market helped companies get money to run and expand their businesses

And the common public got an opportunity to invest in the company.

Otherwise, if you think about it, if the stock market wasn't there

Then the public today would not have been able to invest in these companies.

The stock market has given people this profitable opportunity.

Now let's talk about those investors who had invested in these companies.

Until 1980, Wipro was in the Non-IT business. In 1980, they decided to move to the IT sector.

Let's assume you like this decision of theirs and after doing a complete analysis of the company

You think Wipro will do well in the coming years. Because of this, let us think that in 1980,

you invest 10k in Wipro. That era is not the same as today's online era so,

There used to be share certificates and, to buy shares, you would have to go to the Stock Exchange.

If we talk about today, everything is online. In 1996, physical shares got replaced by Demat accounts.

Since then, everything has been online.

Like how you need a savings account to keep money in a bank, similarly,

To invest in the share market, you will need a Demat account.

In India, there are more than 300 SEBI registered stock brokerage firms.

In any one of those, you will have to open a Demat Account.

After opening a Demat account, the brokerage firm will provide you with a user ID and password.

You can then go to the brokerage firm's app or website and easily buy or sell shares.

You can open a Demat account with Upstox and start your investment journey.

Upstox has no delivery brokerage charges and their remaining brokerage charges are less too.

To open a free Demat account in this Ratan Tata funded company,

Click on the link given in the description and the comment section and start the process.

If you use the link in the comments and description to create a free account,

You will get an Amazon Gift Card voucher worth ₹150 to buy anything from Amazon.

So we are assuming here that, in 1980 you invested 10k in Wipro.

Infosys also started around the 1980s and, it raised money from the stock market in 1993.

Let's assume you also invested 10k in 1993 in Infosys.

Since then, from the 10k investment in Wipro, you would have got a dividend worth ₹175 crores.

And on your Infosys investment of 10k, you would have got a dividend worth lakhs.

Now the question arises, What is a dividend?

A lot of times, companies share a part of their profit with their shareholders,

Which is known as a dividend.

Wipro, in the financial year of 2019-20, had a profit worth ₹9,722 crores, out of which

₹571 Crores worth of profits were shared with the shareholders.

That means they gave their shareholders a dividend worth ₹571 Crores.

Some companies give dividends once a year, some of them give it 2-3 times a year.

Giving a dividend is not compulsory for any company.

To give a dividend or not depends on the company's Board of Directors.

If the company's Board of Directors decides to give the dividend, then investors will get it.

If the Board of Directors decide that, instead of giving dividends,

The money will be re-invested into the company then, the investors will not get a dividend.

For example, Infosys, Wipro, Reliance Industries and such companies have a record of giving dividends.

On the other hand, Avenue Supermart or what we know as DMart, has never given dividends.

Giving dividends does not make a company good, not giving them does not make a company bad.

After understanding dividends, let us move ahead in our story.

In 1980, when you invested 10k in Wipro, you got 100 shares for that investment.

And those are now equal to around 2 Crore shares of Wipro

Similarly, in 1993 when you invested in Infosys, the share price was ₹95,

So for your 10k investment, you got 105 shares of Wipro.

Those shares have turned into 17,604 shares.

Now the question here is if the share prices go up or down, it's understandable.

But here, the shares that you bought are going up.

That happened because since 1980, Wipro and since 1993, Infosys have

Split their stocks multiple times and have given bonus shares as well.

So let us understand this interesting concept of stock split and bonus share,

Which will resolve a lot of your queries about the stock market.

First, let us understand Stock Split.

When a company's share price goes up rapidly, common investors can no longer afford them.

At such a time, some companies split the stocks so common investors can buy the shares too.

For example, Eicher Motors, which manufactures Royal Enfield Motorcycles,

Its share price in 2002 was around ₹100-200. Now until August 2020, it was ₹22,190.

In this case, Eicher Motors thought that with the share prices going up,

many investors may not be able to buy their shares and, that is why,

the company split their stocks 1:10, so one share of ₹22190 splits into ten shares of ₹2219.

So whoever had Eicher Motor shares worth ₹22190, they would get ten shares worth ₹2219.

It's the same thing but, the stock split makes it easier for those

investors to invest in the company who could not buy one share worth ₹22190.

It is not necessary that every company will split its stocks if the prices are high.

There are many companies whose share prices are high but, they still don't stock split.

Such as MRF Limited. Many of you must know of this company since you were kids.

Many of you, just like me, must have bought an MRF bat as a child.

Because we used see MRF written on Sachin Tendulkar's bat.

MRF is one of India's largest tyre manufacturing companies.

MRF's share prices in 2021 are around ₹82000.

According to the prices, MRF is India's most expensive share.

MRF has never split its stocks. In 1993, the share price of one stock was ₹11.

And today, it is ₹82000. Similarly, Mr Warren Buffett's holding company, Berkshire Hathaway's

Class A-shares have never split. Today, the price of each share is $395000.

When converted to Indian Rupee, it comes up to ₹2.8 Crores.

That means if you want to buy Berkshire Hathaway's one class A-share, you will have to pay ₹2.8 Crores.

So this way, some companies never stock split.

Some people have misunderstandings here they think if a company's share price is high,

the company is big and, if the share price is low then, the company is small.

But this is not the case. MRFs share prices are the highest in India but,

that does not mean MRF is the biggest company in India.

Right now, in 2021, Reliance Industries is India's biggest company.

But Reliance Industries price for a share is ₹2000, which is less than MRFs.

So how is Reliance Industries India's biggest company?

The company size, whether it is big or not, doesn't depend on its share price,

It depends on the company's market capitalization and, the formula for that is,

Share price multiplied by the total number of shares.

Just having a high share price doesn't work, the company's total shares should be high too.

As you can see here, Reliance Industries one share is ₹2,000 but the total number of shares

are worth ₹633.92crores, with this the company's market capitalization comes up to ₹12,67,840 crores.

On the other hand, MRFs each share price is ₹82,000 and the total number of shares are worth ₹42,41,143.

If you multiply them both, the company's market capitalization comes to ₹34,777 crores.

So you can see here that Reliance's Market capitalization is thirty-seven times more than MRFs.

As you see here that MRFs share price is much higher than Reliance but Reliance industries

total number of shares is a lot higher than MRFs.

Similarly, if we take Warren Buffett's, Berkshire Hathaway, the price of one of its share is ₹2.8crores.

And Apple's share price as of now is $125, which is around ₹9,000.

But if we look at market capitalization then, Berkshire Hathaway's market capitalization is

$611 billion, which is ₹45 lakh crores. Whereas Apple's market capitalization is $2.23 trillion,

Which in Indian rupee is equivalent to the number on the screen.

Now you try to understand how large this figure is.

So here, Apple's share price is a lot lesser than Berkshire Hathaways

But Apple's market capitalization is almost three times that of Berkshire Hathaway's.

We find out from this that Apple's size is three times greater than Berkshire Hathaway's.

So the company's size is known from its market capitalization.

If a company's market capitalization is high it means it's a big company.

And if the company's market capitalization is less it means it is a small company.

Based on market capitalization, companies are generally divided into three parts.

Large-cap companies, mid-cap companies and small-cap companies.

The big companies are called - large-cap or blue-chip companies.

Such as TCS, Infosys, Reliance Industries, HDFC Bank, Wipro, etc.

Generally, the companies whose market capitalization is more than ₹1 lakh crores

They are called large-cap companies. Most of them have a good financial backup,

Because of which they can easily sustain a recession.

Medium-sized companies are called mid-cap companies.

Such as MRF, Tata power, etc.

Companies whose market capitalization is between ₹20,000 Crore to ₹1 lakh crore

are called Mid-cap companies and, the small companies whose market capitalization is

Below ₹20,000 crores are called small-cap companies.

I will tell you the names of some companies, you have to find out their market capitalization

and accordingly, find out if they are a large-cap, mid-cap or small-cap company.

and you must comment below to tell me the answer.

ICICI Bank, L&T InfoTech and Bandhan Bank.

Find the market capitalization and size of these three companies and answer in the comments.

The criteria I told you for market capitalization that,

Market capitalization above 1 Lakh crore is a large-cap company is not a fixed criterion.

It is for better understanding.

Let's come back to the Wipro and Infosys investment story.

Wipro and Infosys have split their stock multiple times.

Because of which the total number of shares you had in the start have increased.

Wipro, from 1980 to 2021, has split its stock twice.

Similarly, Infosys from 1993 to 2021 has split its stock once.

Both the companies have also given bonus shares mamy times times.

To understand Bonus shares, we must understand face value and some other concepts.

So further in the series, we will understand bonus shares in detail.

I will tell you an interesting thing related to the Wipro story.

If you held those ₹10k shares of Wipro till today, their value would have been ₹750 crores.

Similarly, if you held those Infosys shares worth ₹10K till today, their value would be ₹4.5 crores.

So the question arises, how did the share price of Wipro and Infosys increase so rapidly

And generally how the share prices of companies go up and down?

We will talk about all of this in the next episode.

We will also learn another important thing, which is,

that to get success in stock market you don't have to be 100% accurate

Even with a 10% success rate, you can make a lot of profit from the stock market.

How? We will understand this in detail in the next episode.

and we will also learn about other things related to the stock market.

To know Wipro's full story watch the next episode.

Don't forget to join us on 'Telegram' we upload interesting things related to investment.

You can find the Telegram link in the description and the comment box.

If you find this video valuable, Share it with your friends,

On your WhatsApp groups and all social media platforms.

Tell your friends about the series so they can learn about the stock market for free.

Thank you for watching today's video and, for Joining our Convey family and being a Convey Warrior.

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