Equities

The equity market is the market in which shares are issued and traded either through exchanges or over-the-counter markets. Equity is a financial security used for financing business and its gains are based on future earnings. It helps companies to procure capital from the investors with a slice of ownership in the company and the prospect of making profit based on the company's future performance.

Benefits are awarded to the equity shareholders in the form of dividend, rights and bonus and variety of others. These are normally given to those investors who invest in a company after the opening date of its public offer of shares.

No one likes to invest money in an instrument if he cannot discern any prospects of growth in it or expect any returns from it. So, it is bit natural that people invest money in financial instruments either for appreciation in value or for the fixed or variable returns they provide. Investments are made in selected companies which have stable growth, prospects for long-term profit and an attractive stock valuation. The exposure to equity markets, i.e. the proportion of equity investments, can range from a minimum of 67% to a maximum of 100% of the fund's assets. Major chunk of investments are allocated to those selected companies who have a better-than-average performance outlook.

Presently, if we follow the market trend in investment we might see that emerging market economies are increasingly drawing more investments. These markets are supposed to grow faster and bring in high returns. Investors are now recognizing the emergence of globally competitive companies in the developing world and thus contributing to the growth of several emerging markets. Cyclical forces remain an important driver of emerging markets, but secular changes are helping to reshape perceptions too.

But one cannot deny the risk factor in the market under any circumstances. Equity investments always involve risks due to fluctuations in the market value due to variation in share prices. Equity markets occasionally experience quite heavy fluctuations in share prices and there it is advisable to enter the market only after a detail and in depth study of the market forces.

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