Selling shares in the share market can be a daunting task, especially for beginners. However, with the right knowledge and guidance, it can be a profitable venture. This article will provide you with a comprehensive guide on how selling shares works in the share market.
What is Share Market?
The share market, also known as the stock market, is a platform where publicly traded companies issue shares to raise capital from the public. These shares represent ownership in the company and are traded among investors. The share market provides a platform for investors to buy and sell shares in these companies.
Types of Shares
There are two types of shares that can be sold in the share market: common shares and preferred shares. Common shares represent ownership in the company and provide investors with voting rights and a share in the company's profits. Preferred shares, on the other hand, provide investors with a fixed dividend payment and priority over common shareholders in case of liquidation.
How to Sell Shares?
To sell shares in the share market, you need to have a demat account, which is a digital account that holds your shares. The first step is to place a sell order with your broker, specifying the number of shares you want to sell and the price at which you want to sell them. Once the order is executed, the shares are transferred from your demat account to the buyer's demat account, and the proceeds are credited to your bank account.
Important Points to Remember:
Ensure that you have the necessary documents, such as the share certificate, before placing a sell order.
Make sure that you have a clear understanding of the brokerage charges and other fees associated with selling shares.
Keep an eye on the market conditions and sell your shares when the price is favourable.
When to Sell Shares?
Knowing when to sell shares is crucial to making a profit in the share market. Here are some factors to consider:
Market conditions: Keep an eye on the overall market conditions and sell your shares when the market is bullish.
Company performance: If the company's performance is declining, it may be a good time to sell your shares.
Personal goals: If you need money for a specific purpose, you may consider selling your shares.
Tax Implications on Selling Shares
Selling shares in the share market attracts capital gains tax. The tax rate depends on the holding period of the shares. If the shares are held for less than a year, they are considered short-term capital gains and are taxed at the applicable income tax rate. If the shares are held for more than a year, they are considered long-term capital gains and are taxed at a lower rate.
Conclusion
Selling shares in the share market can be a profitable venture if done correctly. It is essential to have a clear understanding of the market conditions, company performance, and tax implications before selling shares. With the right knowledge and guidance, you can make a profit in the share market.