Stock market is a group of securities in the market where shares and bonds are bought and sold in India.(What Is the Stock Market?) “The share market” and “Dalal street” can refer to word of security trading share of public companies are listed and sold on stock exchanges.
What Is the Stock Market?
There are two stock exchange in India, Bombay Stock Exchange or National Stock Exchange.
- Bombay Stock Exchange: – Bombay Stock Exchange is the oldest stock exchange in Asia, hence it is located in Mumbai. It was established in 1875. Bombay Stock Exchange is two major stock exchange in India. It is spread across 417 cities. There are 4700 companies listed in the BSE.
- National Stock Exchange: – National Stock Exchange is India’s largest stock exchange. It is located in Mumbai and was established in 1992. This is the first exchange to offer screen-based trading. This has spread to 320 cities in India. This is the world’s third largest stock exchange for trading. There are 2266 companies listed in NSE.
How Does the Market Work?
People like to invest stock market. People want to earn profit by investing in share market but along with profit, they have to face some risk. Therefore, before investing in share market, it is important to know how the stock market works.
It would be interesting to know that selling stock shares helps in maintain wealth for the individual investor. To raise capital in stock market, individual investors can raise funds by selling shares of stocks and expand their business without any loan. The right to sell the public requires corporations to share information about how their companies are run.
Investors are able to exchange their funds for share in the stock market. When a company invest in expanding its business, the value of stock also increases with time, which gives in profit. The business also pays dividends on its shares. The performance of companies may very over time, but the pure stock market has historically provided investors with annual returns close to 10%. This is one of the most reliable ways to protect your money.
There are tow types of brokers, full time broker or discount broker.
- Full time broker: – A full time broker provides traditional stock buying and selling, investment advice, financial planning, portfolio update, share market research and analysis and also provides other types of services that we get in trading.
- Discount broker: – Discount brokers offer online trading account that provide essential trading features at low coast.
on the stock exchange both individual and institutional investors join together to buy or sell shares on the stock exchange. Buying and selling of stocks is done through exchange. Market Maker intermediate between buyers and sellers and ensures that settlement will occur.
The Market Maker provides quotations at the time of buying and selling shares. Bid price is the highest price for buying any share. Ask price is the lowest price of buying a share.
What Is the Ipo?
Initial Public Offering (IPO)
when a company bring its company shares to the public for the first time, it is called IPO or Initial Public Offering. Most of the small and medium companies launch IPO but some big companies also launch their IPO as they want capital to expand their business.
Investing in IPO can be a risky activity. It will be difficult for investors to predict how much a share will rise from its listing days because no exact data is available to analyze the shares. Most of the companies apply for IPO. Who is going through a period of temporary growth or who are need of money
Types Of Markets (Share Market)
Share market is shown on market or exchange. Where derivatives, stocks, equity and securities are traded.
There is a separate market for each type of financial assets.
- Forward Contract or Over the Counter Contract: – OTC contract is made between two parties which decide on the future price. In this each other as a counterparty reacts, hence the counterparty risk also remains.
There is flexibility in OTC making as the buyer and seller decide the terms and conditions themselves and also include the expiry date.
- Commodities Market: – In the commodity market, raw Goods are bought and sold like wheat, rice and coffee. Goods obtained from mines like Gold, Coal, Raw oil etc. are traded.
- Derivatives Market: – A derivative is a contract or product whose value is derived from an underlying asset. These are traded in exchange, there are four types of derivative market like Forward, Future, Option and Swap. There are many underlying assets in derivatives market such as:
- Metals: Gold, Silver, Zinc etc.
- Energy Resource: Oil, Crude oil, coal etc.
- Agri Commodities: Sugar, pulse, grains etc.
- Financial Assets: Shares, bonds, currency etc.
- Foreign Exchange Market: – The foreign exchange market is a very large market in which traders make profits from the fluctuations in the currencies of different countries. It provides liquidity in international market.
- Cryptocurrency: – Cryptocurrency is a digital currency which is used alternative form of payment creation. Bitcoin, Ethereum and any other type of cryptocurrency are traded through different exchange.
Visit Home Page
