Tuesday, May 30, 2023

De-materialization and Re-materialization in Stock Investment

De-materialisation is the conversion of a share certificate from its physical form into electronic form having the same number as the one that was credited to your dematerialisation account opened by you through the Depository Participants. De-materialization is a process by which the company withdraws the physical share certificates of an investor and an equivalent number of securities are deposited in electronic form with the depository. A depository is an organization where securities of a shareholder are held in electronic form.

Re-materialisation is the process by which a shareholder can get his holdings converted back into the physical form of share certificates. Benefits of Dematerialisation for Investors: A safe and convenient way of holding securities. The depository system mitigates the risks involved in holding physical certificates such as loss, theft, mutilation, forgery etc. It ensures transfer settlement and minimizes the delay in registration of shares. This ensures faster communication to the investors. This ensures faster payment on sale of shares. It provides greater acceptability and liquidity of securities.

Market correction is a process whereby stock brokers try to correct the price of overpriced stocks. The stock market reacts to both fundamental news and rumors. These two factors can drive the price of the shares to an overpriced level or to an underpriced state. When the market value becomes too high, there will be problems especially for those who borrowed money to buy the shares. Overvalued stocks are stocks that have reached their peak for a period; They either enter a phase of rest or begin to decline in most cases.

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