What is Share Market? All stock market information

You all must know about the share market. But very few people have the right information about the share market. In today's time every person wants to earn second income through some side business or any investment.

Many of us invest in the stock market to get rich quickly and many under long term investment planning. But before investing in the stock market, you must have a good knowledge of the stock market.

Through this article, I will give you the answers to all the questions related to the stock market, what is the stock market, how to invest in the stock market, so that you can get started in the stock market in a right way.

What is share market?

If understood in easy language, Share Market or Stock Market is called the place where shares are bought and sold.

A stock market is a market where shares of listed companies are bought and sold through a stock exchange. These buying and selling are done through a stockbroker. Listed companies are those which are listed on a stock exchange to trade their shares.

It is not that only shares are traded in the stock market. Apart from this, bonds, mutual funds, derivative contracts are also traded in the stock market.

At present, there are two stock exchanges operating in India –

  1. NSE – National Stock Exchange
  2. BSE – Bombay Stock Exchange
Companies listed in the share market invite the general public to buy their shares. By buying shares of any company, any person becomes the owner in proportion to his share in that company.

Why do companies issue their shares to the public?

After all, you must be thinking that why does a company issue its shares to the public or why does it take out to sell in the market?

Any company needs capital for its expansion, growth and business expansion. Instead of taking loans, the company tries to raise the required capital by selling its shares to the public. The process through which companies issue shares for the first time is called IPO (Initial Public Offer).

What is Share?

After understanding what is share market, it is also necessary to know the meaning of share.

Share means "share". Suppose the value of XYZ Company is ₹ 1 lakh. That company issues 1 lakh shares in the market at the rate of ₹ 1.00. Now suppose you bought 5,000 shares of XYZ Company. Now you have become the owner of 5% shares of that company. As the value of the company increases, the value of your shares will also increase. The poor performance of the company can also lead to a fall in the share price.

How many types of shares are there?

Shares can be divided into two parts.

(i) Equity Share – Equity share holders are partners in the profit and loss of the company. In addition, the equity shareholder also has the right to vote in the company's AGM.

(ii) Preference Share – Preference share holders do not have any voting rights. Preference Shareholder receives a dividend income as profit.

Share Market Basic/About Share Market

There are many investment options available in the market nowadays. But most of those investment options do not even beat inflation or stay ahead by a small margin. Investing in the same stock market gives us the option to increase our capital rapidly.

But in India, the stock market is considered a road to ruin. In fact, the stock market becomes a road to ruin if you have invested just by following someone's tip or have invested in any stock or stock without thinking.

You will be in profit from the stock market only if you invest in stocks after doing your research and research.

What is demat account?

Demat account is used to store our shares. A Demat Account is used to hold shares and securities in electronic form.

In earlier times, shares were in physical form in the form of paper. But in 1996 the option of demat account was introduced. It is like a bank account. In which the account is credited on buying shares and debited on selling.

All demat accounts in India are maintained by NSDL and CDSL.

If you also want to open a demat account for investment or IPO, then you can open a free demat account for yourself in Upstox by visiting this link.

What is a Trading Account?

Most of the investors consider trading and demat account to be the same but it is not so. Trading account is used to buy or sell shares in the share market.

This is an electronic account of the stock market, in which the sale and purchase of shares takes place through the online system. Once the trading account is in place, the buyer-seller does not have to be present on the stock exchange himself to buy and sell shares.

How does stock market work?

Most of us are intimidated by the stock market and find it very difficult to understand it. But when you gradually start expanding your knowledge, then your knowledge of stock market will increase.

  • In the stock market, stock brokers act as an intermediary or intermediary between the investor and the exchange. As an investor, we place buy or sell orders through our stockbroker.
  • The stock broker sends our order to the exchange.
  • The exchange finds for us the buyer or seller as the case may be. The exchange then confirms the order to the stockbroker.
  • With this our order is completed and money is exchanged between buyer and seller.

What are the types of market?

Market can be mainly divided into two parts – Primary Market and Secondary Market.

(i) Primary Market – Primary market is the market where shares come into existence. In the primary market, the company decides its own share price and offers it to the public for purchase. Under this, the public or investors buy shares directly from the company. Whenever shares are put out for sale to the public for the first time by a company, it is called IPO.

(ii) Secondary Market – After the shares are sold in the primary market, those shares become available for trading in the secondary market. In the secondary market, shares are bought and sold without a first issuer.

For example, if you want to buy SBI shares, then you will not go directly to SBI. You will place your bid through your stockbroker. Whenever a seller is found at your bid price, you will get the shares. There is no interference of the company on the share or stock price in the secondary market.

What are Sensex?

As a new investor, you also need to know about the Sensex. Sensex is primarily an index or index that represents the Bombay Stock Exchange (BSE). Sensex represents the entire BSE market. Sensex came into existence in 1986.

It gives investors an idea of ​​the stock market trend whether the stock market is going up or down. The Sensex is made up of the 30 largest market capitalization companies of the BSE. These companies represent the Indian economy.

What is Nifty 50?

NIFTY 50 is an index like the Sensex. NIFTY 50 represents the 50 largest companies listed on the NSE (National Stock Exchange). The trend of these 50 big companies gives us an idea of the rise and fall of NSE stocks.

Who regulates the stock market in India?

SEBI i.e. Securities Exchange Board of India is the regulator of securities and commodity market in India. SEBI Investor Protection acts as a stock exchange regulator. SEBI was established on 12 April 1988.

SEBI makes rules and regulations related to the stock market and ensures their compliance.


How to invest in share market?

Now the next question comes how to invest in share market? There are two ways to invest in the stock market, one direct and the other in direct. Direct investment is made directly in the share market, such as buying shares of a company.

Whereas indirect investments are not made in the stock market like mutual funds. To invest in the stock market, you need to have a demat and trading account.

You can open a demat account through any online broker or bank. I would suggest you to open a demat account with an online discount broker as their online support is very good and the brokerage and AMC charges are very less as compared to the banks.

You will need the following documents for demat account –

  • pan card
  • bank account
  • Address proof
  • A canceled cheque / bank passbook copy
  • One or two passport size photographs
After opening a demat account, you can transfer money from your bank account to your trading account with the help of online banking. After this you can buy shares from your broker's online terminal or with the help of the broker.

You can also transfer your money back to your bank account after selling the shares.

What is Intraday Trading?

As its name suggests, it is a Buy-Sell deal done in a single trading day. That is, shares are bought and sold on the same day or sold and bought back (in short sell).

Intraday trading is done to take advantage of the volatility in the price of a stock. If you have bought shares in intraday trade and for some reason you forget to sell them, then your shares are automatically squared off before the end of the trading day.

Intraday trading is very risky. So my advice to new investors is to stay away from intraday trading.

Why do share prices fluctuate?

Due to the demand-supply of shares, the price of shares keeps on fluctuating up and down.

If investors are selling a stock in excess, that is, its supply is high. In this case the price of that share will go down.

If the sellers of a stock are less and the buyers are more, in this situation the price of the share will go up due to increase in demand.

The share price is always decided by the bids of the Buyers and Sellers. The valuation of the company, the financial position of the company, the fluctuation of profit and loss keeps on moving the share price up and down.

How to get profit from shares?

People invest in the shares of a company in the hope that the company's business will grow and the company's share price will also increase. Whenever you buy a share and after some time its price increases, then you get profit by selling that share at that time.

Dividend is paid from time to time by the company to the equity shareholders. Sometimes bonus shares, rights shares are also issued by the company.

What is Bull Market and Bear Market?

Bull Market – Bull run in the market is considered when the stock market is growing or is about to grow. In the bull market, the value of the stock/shares increases. Even the share price of bad companies can go up in a bull market.

Bear Market – When the market starts moving towards recession, leaving the bullish, then it is called Bear Market. At this time in most of the stocks, there is a significant decline in Sensex and Nifty. Investing in the bear market can be a good option as stocks are cheap here. Bear markets also indicate the poor condition of the economy.

Conclusion

Friends, the stock market is a good way to make passive income. But wherever it comes to earning money from money, the risk is also very high.

But if you invest in the share market by doing research and getting information properly, then you will definitely benefit. Also, you have to take some time to understand the stock market. If you want to invest in the stock market without giving research and time, then maybe the stock market is not for you.

Today you understood what is share market and share market basics
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FAQ

How to invest money in share market?
To invest money in the share market, you need to have a demat account. You can buy shares through your stockbroker by depositing your money from bank account in demat and trading account?

Indian stock market opens on how many days of the week?
Indian stock market is open on 5 days of the week which is Monday to Friday. The stock market is also closed on public holidays.

What is meant by stock market?
Where shares of listed companies are bought and sold is called stock market. All these transactions are done through computers connected to the stock exchange's network.

Which is the largest stock exchange in the world?
The New York Stock Exchange (NYSE) is the largest stock exchange in the world. It was established on March 8, 1817.

How to learn share market?
There are no fixed rules of the stock market, by which you will become a master of the stock market. To learn share market, you should read good stock market books, magazines, try to understand the financial statements. You have to learn continuously to be successful.

What are NSE?
NSE is a stock exchange of India. These are located in Mumbai. The index or index of NSE is Nifty 50.