De-materialization and Re-materialization in Stock Investment


De-materialization is the conversion of a share certificate from its physical form to electronic form for the same number of holding which credited to your dematerialization account which you opened through a depository participants. De-materialization is a process by which the company takes the physical share certificates of an investor back and an equivalent number of securities are credited in electronic form to the depository. Depository is an organisation where the securities of a shareholder are held in electronic form.

Re-materialization is a process by which a shareholder can get his holding converted back into physical form of share certificate. Benefits of De-materialization to investors: A safe and convenient way to hold securities. The depository system reduces risks involved in holding physical certificates e.g. Loss, theft, mutilation, forgery, etc. It ensures transfer settlement and reduces delay in registration of shares. It ensures faster communication to investors. It ensures faster payment on sales of shares. It provides more acceptability and liquidity of securities.

Market correction is a process whereby stockbrokers try to correct the value of over priced stocks. The stock market responds to both fundamental news and rumours. These two factors can drive the price of stocks to an over-priced level or an under-priced state. When market is grossly overvalued, there will be problem especially for those who borrowed money to buy shares. Overvalued stocks are stocks that have reached their peak for a period; they either enter into a resting phase or in most cases begin to decline.

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