Knowledge for share market

Basics of Share Market Explained The share market is really important for a country's economy. It's where companies, big and small, offer parts of their business to people who want to invest. It's not just about the famous Bombay Stock Exchange; anyone can get involved. In this article, we'll break down the complications of the Indian share market to confidently explore the world of investing. What is a share market? A stock market, which is also sometimes called a share market, is like a big money place where people trade different things, like stocks, bonds, mutual funds, and more. The main difference between them is what you can trade. In a stock market, you can trade lots of different financial stuff, making it a big hub for investments. It's a place where regular people and big organisations can buy and sell parts of companies, government bonds, and other money-related things to help with investing and moving money around in the economy. But when we talk about a share market, we're talking about a smaller part of the stock market. In a share market, it's all about buying and selling parts of companies, which we call shares or stocks. These shares represent a piece of a company, and people can buy or sell them to have a share in that company's money and profits. So, while we sometimes use the words "stock market" and "share market" the real difference is that a stock market has more things to trade, while a share market is all about trading pieces of companies. How does a share market work? The share market is a network of exchanges, clearing companies, and brokerage firms. The share market works in two main parts. They are as follows: Primary Market: It is the marketplace where the companies issue their shares for the first time. This process is called as the IPO (Initial public offering). The companies enter the share market when they launch the IPO and list themselves on the stock exchanges. Secondary Market: It is the marketplace where investors buy and sell shares of the companies listed on stock exchanges via IPOs. Stock exchanges are platforms that facilitate the buying and selling of financial securities. The working process of the share market involves the following process. First, the companies issue the shares in the primary market. The interested investors can apply for the IPO and buy the shares. The company receives the funds generated from the sale of shares. After the IPO, these shares are listed on the stock exchanges. The listed shares are now available in the secondary market, where trading takes place. The investors who purchased the shares in the IPO can sell the shares in the secondary market. Brokerage firms are financial institutions that facilitate the buying and selling of shares. They work with the stock exchanges to offer these services. The broker receives the buy or sell order placed by an individual. Then he will find a suitable match for the order. Once the right match is available, the broker executes the transaction. The broker provides the necessary information regarding the transaction to the stock exchange, buyer, and the seller. Nowadays, the entire process is carried out electronically. The stock exchange authorises and completes the transaction. The buyer shall receive the shares of the stock he purchased. The seller receives due funds equal to the present market value of the shares. In this way, the process continues in the share market. The share market keeps working to facilitate the trading of shares. Why invest in the share market? We buy shares in companies to help our money grow over time. Some people worry that investing in shares is risky, but lots of research has proved that if you pick the right shares and hang on to them for a while, like five to ten years, they can make your money grow even faster than things like houses or gold, and they can beat the rising cost of living (inflation). So, investing in the right shares for the long run can be a smart way to make your money grow. Stockbrokers used to congregate around Banyan trees to make stock dealings. They had no choice but to move from one location to another as the number of brokers grew. Finally, in 1854, they moved to Dalal Street, which is now home to Asia's oldest stock market, the Bombay Stock Exchange (BSE). It is India's first stock exchange and has played a significant role in the Indian financial markets since then. Even today, the BSE Sensex is one of the benchmarks used to assess the strength of the Indian economy and financial system. The National Stock Exchange, or NSE, was founded in 1993. Trading on both exchanges - NSE and BSE - evolved from an open outcry system to an automated trading environment within a few years. This demonstrates that Indian stock markets have a long and illustrious history. Yet, on the surface, especially when considering investing in the stock market, it might appear to be a maze. However, once you get started, you'll see that the investment principles aren't that difficult. One of the basics of investment fundamentals is financial planning.