Share
A share is a single unit of ownership in a company, representing an investor's proportionate stake in that company's equity capital. Shares of Indian companies are held in electronic form through a demat account regulated by SEBI-registered depositories.
The word 'share' and 'stock' are often used interchangeably in everyday conversation, but technically a share refers to a specific unit within a company's total stock. If a company has issued 10 crore shares and you own 1 lakh of them, you own exactly 0.1% of that company. This proportional ownership entitles you to a corresponding fraction of declared dividends, voting rights at annual general meetings, and residual assets in the event of liquidation.
In India, shares are categorised primarily as equity shares and preference shares. Equity shares carry voting rights and variable dividends, while preference shares carry preferential rights to dividends and capital repayment but usually lack voting rights. Companies listed on NSE or BSE issue equity shares to the general public, and these are the shares most retail investors interact with daily. For instance, when Infosys announced a buyback, it was equity shareholders who were eligible to tender their shares back to the company.
From a practical standpoint, Indian retail investors hold shares in dematerialised form through depositories such as NSDL or CDSL. A Depository Participant (DP) — typically your broker or bank — acts as an intermediary. This electronic format eliminated the risks of physical share certificates being lost, forged, or damaged, a significant improvement from the pre-1996 era when paper certificates were the norm.
One important caveat is that owning shares does not guarantee returns. Share prices fluctuate based on company performance, macroeconomic conditions, and investor sentiment. The face value of a share (often Rs 1 or Rs 10) is distinct from its market price, which can be several hundred or thousand rupees higher. New investors sometimes confuse a high share price with overvaluation — but price alone without context of earnings and growth means very little.