Stock Market: What is stock market?

Free stock market image, public domain economics CC0 photo.


Share means share. Market is the place where you can buy and sell.

In a literal sense, the stock market is a place to buy and sell a stake in a listed company. There are two major stock exchanges in India named Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

In BSE or NSE itself, shares of a listed company are bought and sold through a broker. However, bonds, mutual funds and derivatives are also traded in the stock market.

Domestic as well as foreign investors (FIIs or FPIs) invest a lot in the stock market or stock market with the expectation of big returns.

What does it mean to buy shares?

Suppose a company listed on NSE has issued a total of 10 lakh shares. According to the offer of that company, you buy as many shares as you have ownership of that share in that company. You can sell your share of shares to any other buyer whenever you want.

When the company issues shares, the number of shares to be given to any individual or group is at its discretion. To buy/sell shares from the stock market, you have to take the help of a broker.

Brokers charge commission from their clients for buying and selling shares.

The value of shares of a listed company is recorded in BSE/NSE. The value of the shares of all listed companies fluctuates according to their profit making capacity. The control of all stock markets is in the hands of the Securities and Exchange Board of India (SEBI or SEBI).

Only after the permission of SEBI, a company can issue its initial issue issue (IPO or IPO) by listing in the stock market.

On every quarter/half yearly or yearly basis the companies pay dividend to the shareholders on making profits. Information about the activities of the company is also available on the website of SEBI and BSE/NSE.

How does a company get listed in BSE/NSE?
To get listed in the stock market, the company has to enter into a written agreement with the stock market. After this, the company submits all its necessary documents to the capital market regulator SEBI. In the investigation of SEBI, as soon as the information is correct and all the conditions are fulfilled, the company gets listed in BSE / NSE.

After this, the company keeps giving information about its every activity to the stock market from time to time. These typically include such information, which affects the interests of investors.

Why do stock prices fluctuate?

The valuation of a company is done on the basis of information such as the performance of a company, orders received or snatched, better results, increase / decrease in profits. Since the listed company trades on a daily basis and there is some change in its positions every day, the price of its shares keeps on fluctuating due to fluctuations in demand based on this valuation.

If a company does not comply with the condition attached to the listing agreement, then SEBI delists it from BSE / NSE.

Perhaps you do not know, Warren Buffet, one of the richest people in the world, has also become a billionaire by investing in the stock market.