Definition of Stock Market
Definition: It is a place where shares of public listed companies are traded. The primary market is where companies float shares to the general public in an initial public offering(IPO) to raise capital.
Description: Once new securities have been sold in the primary market, they are traded in the secondary market where one investor buys shares from another investor at the prevailing market price or whatever price both the buyer and seller agree upon. The secondary market or the stock exchanges are regulated by the regulatory authority. In India, the secondary and primary markets are governed by the Security and Exchange Board of India(SEBI).
A stock exchange facilitates stock brokers to trade company stocks and other securities. A stock may be bought or sold only if it is listed on an exchange. Thus, it is the meeting place of the stock buyers and sellers. Indi’s premier stock exchanges are the Bombay Stock Exchange and the National Stock Exchange.
What is Share Market?
New to the stock market? I will take you through the world of the share market in this article. Firstly, let us learn what is share market? Share market is where buying and selling of share happens. A share represents a unit of ownership of the company from where you bought it. For example, you bought 10 shares of Rs.200 each of ABC company, then you become a shareholder of ABC. This allows you to sell ABC share anytime you want. investing in shares allows you to fulfill your dreams like higher education, buying a car, building a home, etc. if you start investing at a young age and stay invested for a long time, the rate of return will be high. you can plan your investment strategy based on the time you need money.
|Share Market analysis|
By buying a share, you are investing money in the company. As the company grows, the price of your share too will increase. You can get a profit by selling the shares in the market. Various factors affect the price of a share. Sometimes the price can rise and sometimes it can fall. Long term investment will nullify the fall in price.
Why at all a company sells its shares to the public? A company requires capital or money for its expansion, development, etc. and for this reason, it raises money from the public. The process by which company issues shares is called an Initial Public Offer(IPO). We will read more about IPO under the primary Market.
You would have always heard people talking about the bull market and a bear market. What are they? A bull market is one where the prices of stocks keep rising and a bear market is where the prices keep falling. Where do all this buying and selling happen? NSE(National Stock Exchange) and BSE(Bombay Stock Exchange). These are the two major stock exchanges in India and are regulated by SEBI(Securities and Exchange Board of India). Brokers act as an intermediary between the stock exchange and the investors. So to start investing or tranding, you have to open a demat account and trading account with a broker. You can open Demat account online easily through a simple process. After Linking your bank account with these accounts, you can start your investment journey.
Who kinds of Share Market :
Share market is categorized into two namely:
Primary Market :
- A company or government raises money by issuing shares in the primary market by the process of IPO.
- The issue can be either through public or private placement.
- The issue is public when the allotment of shares is made to more than 200 persons: The issue is private when the allotment is made to less than 200 persons.
- The price of a share can be based on a Fixed price or Book building issue; a Fixed price is decided by the issuer and mentioned in the offer document; Book building is where the price of an issue is found out based on the demand from the investors.
Secondary Market :
Why is Share Market important?