Why Invest In Equities ?

Introduction to Equity Investing
Many investors go about their investing in an irrational way:
1. They are tipped of a 'news'/'rumor' in a 'hot stock' from their broker.
2. They impulsively buy the scrip.
3. And after the purchase wonder why they bought the stock.
He is a fool to act in such an irrational manner. We suggest a three-step approach to investing in equities.
The moment you get a tip on any stock, get the first hand news immediately. You'll find information on the following sites:
www.nseindia.com
www.bseindia.com
The news, if any, will be on the sites. Be it announcements earnings, dividend payoffs, corporate move to buy another company, flight of top management to another company, these sites should be your first stop.
Do some number crunching. Check out the growth rate of the stock's earnings, as shown in a percentage and analyze those graphs shown on your broker’s site. You will learn to do it in under the module named ‘Technical Analysis’. Learn more about the P/E ratio (price-to-earnings ratio), earning per share (EPS), market capitalization to sales ratio, projected earnings growth for the next quarter and some historical data, which will tell what the company has done in the past. Get the current status of the stock movement such as real-time quote, average trades per day, total number of shares outstanding, dividend, high and low for the day and for the last 52 weeks. This information should give you an indication of the nature of the company’s performance and stock movement. Also its ideal that you be aware of the following terms:-

High (high)	: The highest price for the stock in the trading day.
Low (low)	: The lowest price for the stock in the trading day.
Close (close)	: The price of the stock at the time the stock market closes for the day.
Chg (Change)	: The difference between two successive days' closing price of the stock.
Yld (Yield)	: Dividend divided by price

Bid and Ask(Offer) Price
When you enter an order to buy or sell a stock, you will essentially see the “Bid” and “Ask” for a stock and some numbers. What does this mean?
The ‘Bid’ is the buyer’s price. It is this price that you need to know when you have to sell a stock. Bid is the rate/price at which there is a ready buyer for the stock, which you intend to sell.
The ‘Ask’ (or offer) is what you need to know when you're buying i.e. this is the rate/ price at which there is seller ready to sell his stock. The seller will sell his stock if he gets the quoted “Ask’ price.
Bid size and Ask (Offer) size
If an investor looks at a computer screen for a quote on the stock of say ABC Ltd, it might look something like this:

Bid Price	: 3550
Offer Price	: 3595
Bid Qty	: 40T
Offer Qty	: 20T

What this means is that there is total demand for 40,000 shares of company ABC at Rs 3550 per share. Whereas the supply is only of 20,000 shares, which are available for sale at a price of Rs 3595 per share. The law of demand and supply is a major factor, which will determine which way the stock is headed.
Armed with this information, you've got a great chance to pick up a winning stock. Again don’t be in a hurry, ferret out some more facts, try to find out as to who is picking up the stock (FIIs, mutual funds, big industrial houses? ). Watch for the daily volume in a day: is it more/less than the average daily volume? If it's more, maybe some fund is accumulating the stock.
Next time you hear or read a 'hot tip': do some research; try to know all you can about the stock and then shoot your investing power into the stock. With practice, you'll be hitting a bull’s eye more often than not.