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Frequently Asked Questions
Equity shares represent ownership in a company. When you purchase equity shares, you become a part-owner of that business and are entitled to a portion of its profits and assets.
Equity is the broader term representing ownership interest in any asset, whereas stocks specifically refer to shares of individual companies traded on exchanges. Equity includes stocks but also encompasses other ownership interests like mutual funds and ETFs.
Stocks represent ownership (equity) in a company, while bonds represent debt. Stock investors share in company profits and losses, while bondholders receive fixed interest payments regardless of company performance. Stocks offer higher potential returns but carry greater risk than bonds.
Common Stock: Provides voting rights and dividend eligibility. Most retail investors buy common stock.
Preferred Stock: Usually offers fixed dividends and priority over common shareholders but typically no voting rights.
Growth Stocks: Companies with earnings growing faster than market average, rarely paying dividends.
Value Stocks: Stocks trading below their intrinsic value, often with low P/E ratios.
Blue-chip Stocks: Shares in large, established companies with solid track records.
Dividend Stocks: Companies that regularly distribute profits to shareholders.
The Securities and Exchange Board of India (SEBI) governs stock markets in India. SEBI protects investor interests, regulates exchanges like BSE and NSE, and oversees intermediaries such as brokers and mutual funds.
Step 1: Set clear investment goals and determine your risk tolerance.
Step 2: Visit www.centrumgalaxc.com and open a Demat + Trading account.
Step 3: Complete KYC (Know Your Customer) verification with required documents.
Step 4: Fund your trading account and start with small amounts.
Step 5: Thoroughly research companies before investing, you can explore our curated list of pre‑researched stocks compiled by our expert research team.
Requirements include PAN card, Aadhaar (or passport for NRIs), address proof, bank account proof, photograph, and specimen of signature.
Primary Market: Where companies issue new shares through IPOs to raise capital. You buy directly from the company.
Secondary Market: Where existing shares are traded between investors. The stock exchanges (BSE/NSE) facilitate these transactions.
Stock prices fluctuate based on supply and demand. Key factors include company performance, earnings reports, economic conditions, market sentiment, political events, and industry trends. When more people want to buy (demand exceeds supply), prices rise, and similarly, when more want to sell, prices fall.
Pre-market: 9:00 AM - 9:07 AM
Regular trading: 9:15 AM - 3:30 PM
Post-market: 3:40 PM - 4:00 PM
Dividends are portions of company profits distributed to shareholders. They're usually paid quarterly and expressed as either a fixed amount per share or as a percentage of face value. Dividends provide passive income and are credited directly to your bank account.
Record Date: The date you must be registered as a shareholder to receive dividends.
Ex-Dividend Date: Usually one business day before record date (or same day if record date falls on weekend). If you buy shares on or after ex-date, you won't receive the upcoming dividend.
Bonus Issue: Free additional shares given to existing shareholders from company reserves. No payment required.
Rights Issue: Opportunity to buy additional shares at discounted price. You must pay to exercise these rights, but it helps raise fresh capital for the company.
Stock splits increase the number of shares while reducing the face value proportionally. For example, in a 2:1 split, you get 2 shares for every 1 shares held, but each share's price splits in the same ratio which makes your total investment value remains unchanged.
A buyback occurs when a company repurchases its own shares from shareholders, usually at a premium to market price. This reduces the number of outstanding shares and can increase the value of remaining shares. Buybacks can happen through tender offers or open market purchases.
Price-to-Earnings (P/E) ratio = Stock Price ÷ Earnings per Share. It shows how much investors are willing to pay for each rupee of company earnings. A P/E of 20 means investors pay ₹20 for every ₹1 of annual earnings.
Trailing P/E: Based on past 12 months' earnings.
Forward P/E: Based on expected future earnings.
Forward P/E helps assess whether current stock price reflects growth expectations.
Market Cap = Current Share Price × Total Outstanding Shares. It represents the total market value of all company shares. For example, if a company has 1 crore shares trading at ₹100 each, market cap = ₹100 crores.
Large-cap: Top 100 companies by market capitalization as per regulator. Generally stable with established track records.
Mid-cap: Companies ranked 101-250 by market cap. Higher growth potential but more volatile than large-caps.
Small-cap: Companies beyond 250 ranking. Highest growth potential but also highest risk.
Fundamental analysis involves evaluating a company's financial health, management quality, competitive position, industry trends, and intrinsic value. Key metrics include revenue growth, profit margins, debt levels, return on equity, and cash flow. It helps determine if a stock is overvalued or undervalued.
High Return Potential: Historically outperforms other asset classes over long term.
Dividend Income: Regular income stream from profitable companies.
Ownership Rights: Voting rights in company matters.
Liquidity: Easy to buy/sell on stock exchanges.
Inflation Protection: Potential to maintain purchasing power over time.
Capital Appreciation: Share prices can grow with company success
Market Risk: Overall market volatility affecting all stocks.
Company-Specific Risk: Individual company performance issues.
Liquidity Risk: Difficulty selling shares quickly at fair prices.
Inflation Risk: Risk that returns won't keep pace with inflation.
Volatility Risk: Frequent price fluctuations causing short-term losses.
Diversification: Spread investments across different sectors and companies.
Research: Thoroughly analyze companies before investing.
Long-term Approach: Stay invested through market cycles.
Regular Investment: Use SIP-like approach to average out purchase costs.
Stop-loss Orders: Limit potential losses on individual stocks.
Trading: Short-term buying/selling (minutes to months) to profit from price movements. Requires active monitoring and technical analysis.
Investing: Long-term wealth building (years to decades) by holding quality companies. Focus on company fundamentals and patience.
Long-term investing is generally better for beginners because it:
- Requires less daily monitoring
- Benefits from compounding over time
- Reduces impact of short-term volatility
- Needs less specialized knowledge initially
- Has lower transaction costs
Intraday trading involves buying and selling shares on the same day. All positions must be squared off before market close, or they're automatically settled. It requires active monitoring and carries higher risks but offers potential for quick profits.
Short-term Capital Gains (holding period ≤ 1 year): Taxed at 15%.
Long-term Capital Gains (holding period > 1 year): Taxed at 10% if gains exceed ₹1 lakh per year.
Long-term investments generally have more favorable tax treatment, please consult your financial advisor for detailed clarification.
Convertible bonds are debt securities that can be converted into a predetermined number of company shares. They offer fixed interest payments like regular bonds but provide upside potential if the stock price rises. The conversion ratio specifies how many shares you get per bond.
Consolidation (reverse stock split) reduces the number of outstanding shares while increasing their face value. For example, in a 1:5 consolidation, every 5 shares become 1 share with 5x higher face value and Total investment value remains the same.
ISIN (International Securities Identification Number) is a 12-character global identifier for securities.
Market Capitalization is what investors currently value the company at (stock price × shares).
Book Value is a company's accounting value (assets minus liabilities).
Market cap reflects investor sentiment while book value shows accounting worth.
Equity warrants give holders the right to buy company shares at a predetermined price within a specific time period. Unlike stock options, warrants are issued directly by companies and typically have longer expiration periods.
You can start with as little as ₹500 - ₹1,000.
Yes, research should be conducted before purchasing any stock, focusing on key areas such as: Financial statements (revenue, profit, debt levels), Business model and competitive advantages, Management quality and track record, Industry trends and growth prospects, Valuation metrics (P/E, P/B ratios), Recent news and developments.
Buy and Hold: Invest in quality companies and hold for years.
Systematic Investment: Invest regularly regardless of market conditions.
Diversification: Spread risk across sectors and company sizes.
Reinvest Dividends: Use dividend income to buy more shares.
Stay Disciplined: Avoid emotional decisions during market volatility.
For long-term investors, quarterly or semi-annual reviews are sufficient. Focus on company fundamentals rather than daily price movements. Rebalance only when significant changes occur in company prospects or your financial situation.
