Equity represents the residual interest in the assets of a company after deducting liabilities, essentially the amount shareholders would receive if all assets were liquidated and debts paid off. Companies can raise funds for business operations and working capital needs through both debt and equity instruments. Equity is raised by issuing shares through Initial Public Offerings (IPOs), while debt can be raised by issuing debentures, which are loan instruments with fixed interest rates.

Investing in a company’s equity means becoming a partial owner of the company. Once a company is listed, its shares can be traded on stock exchanges such as the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Equity investments are popular due to their potential for high returns. However, they also come with inherent risks. Therefore, it is crucial to assess these risks before investing in equity stocks.