Equity Investment

Equity or Stock Investing is nothing but, purchasing (or) selling of equity shares. Usually, companies sell a portion of their ownership to the public in exchange for money.

Equity investment is, investors purchase a share of the ownership by buying shares of the company. Then, they become a shareholder of the company. Company stocks are called equities/equity shares.

Equity investing plays a tremendous role in Stock market investing. Equity shares are traded on the stock market/Exchange. The investor can invest in Equity share market through primary or secondary market. In the primary market, companies get listed through an Initial Public Offering. Thus, new securities are available in the primary market. In the secondary market, investors buy or sell securities, which have already been issued. Currently, more than 1300 securities are available for equity investing on the National Stock Exchange (NSE) and over 6000 on Bombay Stock Exchange (BSE).

CATEGORISE OF EQUITY INVESTMENT ON BASIS OF DURATION

LONG TERM

Long Term Investments in equity are done by investing in companies with sound fundamentals having a history of consistent growth in income & profits, rewarding their investors through dividends & bonus. These investments are done for a period of 3-5-10 years & have potential to generate higher returns.

SHORT TERM

Short Term Investments are categorized into positional investing (1-2 weeks), intraday investing (squaring off the same day) & derivatives investing through futures & options (1-3 months). Short term means, holding of equity shares not more than 1 year.

 TAXATION OF EQUITY SHARES/ INVESTMENT

LONG TERM CAPITAL GAIN ( LTCG ):

For LTCG, a flat rate of 12.5% has been announced. ( If gains exceed 1 Lakh & Without Indexation benefit )

SHORT TERM CAPITAL GAIN ( STCG):

Tax rate for STCG arising from equity investments is set at 20% (up from the previous rate of 15%)