Introduction : What is stock Market and how to learn it ? You must have heard about the stock market at some point. Let’s explain in simple terms what the stock market is and how it works. Most people invest in the stock market to earn good returns. However, the stock market can be risky for new investors. In simple terms, the stock market is a place where people buy and sell shares of companies. When a company needs money for business growth or future projects by selling its shares, it lists itself on the stock market and raises funds. After which, trading and investing in company shares can be done in the stock market. Here you will learn what the Indian stock market is and how it works. Before investing in the stock market, it is very important to have knowledge about it. This will help you in making the right investment. So let’s learn the stock market in an easy and best way. This stock market knowledge will help you in making your investment decisions more correct and effective.
What is Stock market ?
Definition of stock market: Share market is a place where companies get listed and raise funds by selling their shares, and public and companies buy and sell the shares of these companies and earn profit. In fact, whoever buys shares of a company is a small owner of that company, as the company grows, your stock price will also grow. Investors earn profit from the returns they get from the growth of the stock and the dividends they get from the company. In this process, from listing of the company to buying and selling of the stock, many bodies are involved. Like Stock exchanges, Brokers, depositories etc.
Overview of Indian Stock Market: The Indian stock market is the fastest growing market in the world. The growth of the Indian stock market reflects the growth of the Indian economy, the interest of foreign investors in India, and the performance of Indian companies. The Indian stock market also provides an opportunity for companies to raise funds and for investors to make profits by investing in companies.
What is stock exchange ?
Friend, stock exchanges are platforms where company shares are bought and sold. There are two main stock exchanges in India.
The first is the Bombay Stock Exchange.BSE is the oldest stock exchange in India, which started in 1875.
The second is the NSE, the National Stock Exchange.NSE is a leading and modern electronic stock exchange of India, which was started in 1992 from Mumbai.
After an IPO, trading of company shares occurs on these two stock exchanges. Companies can launch their IPO on both stock exchanges or on one of them. After which, trading, i.e., buying and selling of their shares, begins on the stock exchange. Almost 2,000+ companies are listed on the NSE, and almost 5,000+ companies are listed on the NSE. People trade the shares of these companies every day.
The stock market is mainly divided into two parts, the primary market and the secondary market. Let us understand in simple language what the two parts of the stock market, called the primary market and the secondary market, are and how they work.
What is the primary market?
The primary market is the market where securities are sold for the first time. In this market, companies offer a portion of their shares for sale as securities (shares) for the first time, raising funds, and becoming a company listed on the stock market for the first time. The primary market is a direct way for a new company to raise capital for future projects and expenses without taking on debt, either by selling its shares or by acquiring an investor as its partner. This is where retailers, corporations, and the government invest directly in a company for the first time. The process of raising capital by selling shares in the primary market is called an IPO (initial public offering). Here the company launches its IPO on both the stock exchanges NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) or can launch it on any one of the two.
In the primary market, the deal (buying and selling) of shares takes place between two parties, which we know as issuers and investors. 1. Issuers: A company that raises capital by issuing equity shares or a company or government that raises funds by issuing bonds through debt financing, i.e., issuing bonds, in which investors get fixed returns on their invested amount. Here, issuers can be corporations, governments, or other entities that need capital. 2. Investors: An investor is one who buys or invests in new securities in the primary market to earn returns on his or her principal capital. These investors can be individuals, institutional investors, mutual funds, and other entities.
What is the secondary market?
When an existing shareholder wants to get money by selling his shares to someone else at the market price, he approaches the market and the market in which this deal is done is called the secondary market. In the secondary market, buying and selling of already listed shares, bonds and securities takes place. In the secondary market, transactions take place between the buyer and the seller; the issuing company has no role here. In the secondary market, people and companies trade and invest in already listed securities. Both stock exchanges, BSE (Bombay Stock Exchange) and NSE (National Stock Exchange), are directly involved in the secondary market. The purpose of the secondary market is to provide liquidity to investors in the stock market so that they can buy and sell easily.
The secondary market plays a key role in the Indian stock market. Security prices in the secondary market are determined by demand and supply. High trading volume indicates a strong stock market. This ensures liquidity, stable prices, and low uncertainty in the stock market. News, company results, and government policies have a direct impact on prices in the secondary market. In simple words, the secondary market’s purpose is to provide a platform for trading listed securities and increase liquidity, trust, and trust in the financial markets.
