Top 7 Different Types Of Stocks In India Equity Markets

What Is An Equity Market?

A market in which company shares are traded and issued either through over-the-counter markets or exchanges is known as an Equity market.

It is also known as the stock market and is one of the most important areas of the market economy.

The Top 7 Types Of Stocks In India

The top seven types of stocks in the Indian Equity Market are:

1. Growth Stocks

If one thinks about purchasing stocks, they won’t be receiving a high amount of dividends only because growth stock companies primarily choose to reinvest their earnings so that they are able to grow quickly and hence why they are considered as growth stocks.

Growth stocks are best for investors who are particularly looking for long-term growth potential and not just a monthly source of income. Nonetheless, investing in growth stocks is quite risky.

2. Income Stocks

These types of stocks provide the shareholder with a much higher amount of dividends in comparison to growth stocks.

The dividends are regular – the ones circulated by these same companies and so the shareholder’s income is also quite higher. That is the reason why it is considered as income stocks. Although these stocks can provide you with some income stability at the same time, they don’t promise higher growth in the stocks’ value.

Preferred stocks are also some under-income stocks. If one is seeking a secondary source of income with low risk, then investing in these types of stocks can be a great opportunity for you.

Additionally, the dividend that you will receive from the companies will not be linked with a deduction of tax, and thus it is also a great investment for the long term.

3. Beta Stocks

Beta Stock’s associated risks are obtained by measuring the price fluctuation of the stocks. Measurement risk or Beta can be either negative or positive, which will determine whether it is in sync with the stock market or not.

If the beta is high, then the risk percentage of these stocks will also become potentially high. In case, the value of Beta is greater than 1, then it will represent that the share is more active than the market.

A lot of experienced investors use Beta measurement in order to come to an investment decision.

4. Cyclical Stocks

The cyclical stocks are among those whose performance may be significantly impacted by the state of the economy. These equities consequently experience market changes and substantial price volatility.

These equities expand rapidly while the stock market is booming, but their growth slows down when the economy is struggling. Stocks of automakers fall into this group. As an illustration, consider Hyundai Motor India, Maruti Suzuki, Honda Cars, and Tata Motors.

5. Common and Preferred Stocks

Preferred stock owners get a set amount of dividends each year. Preferred stocks are also not unstable.

However, despite their volatility, common stocks have the advantage of being paid first when a firm has extra cash to distribute.

Additionally, debenture holders, creditors, and bondholders have stronger rights over preferred stockholders after liquidation. Voting rights are also granted to common stockholders, a benefit not granted to holders of preferred stocks.

6. Hybrid Stocks

On the Indian stock market, there are also businesses that sell preferred shares with the possibility of eventually converting them into common shares (within a stipulated period of time).

Read Also: Clean Energy Stocks , BLUE GAS STOCKS .

These equities are classified as convertible preferred shares or hybrid stocks, and they may or may not provide you with voting rights.

7. Blue Chip Stocks

Blue chip stocks are those of businesses with very little debt, a reliable source of income, and a history of paying out dividends to shareholders.

These are well-established, sizable businesses with a long track record of sound financial performance. For the most part, blue chip stocks are a secure investment for both investors and shareholders. Take Apple Inc., Meta, Google, Amazon, etc., as examples.

Read Also: Most Undervalued Stocks , 10 Best Stocks For Self Driving Cars

To Wrap It Up!

The equity market gives companies an opportunity to grow their business by giving access to capital, and the investors, in turn, get a piece of ownership with a promising potential to recognize gains.

Thank you for reading up till here! I hope you find this information useful. Let me know in the comments your thoughts on the same.

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