What is Share Market? Types, Trading & Exchange

The stock market or share market is the place where shares of any publicly traded company is bought and sold. A purchaser holds equity in the company after making the transaction.

One of the very important pillars of the financial system is the stock market as it allows companies to raise capital and investors to build some wealth from the business success.

The share market is where companies which go for a public issue of shares are listed and traded. There are several points about the share market here, but also possible are:

raises capital for corporate expansion
creates investors wealth
provides an opportunity for the best price discovery based on fundamental and technical analysis multiplied by market sentiments

The share prices rise and fall with the groundwork of the company, economy, and the sentiments of the market.

Basically, there are two broad division of share market:

1. Primary Market

It is the market where companies issue shares for the very first time during an IPO phase to the public.

Shares are directly bought from the company by the investors.
The company gets capital from the capital raised.

2. Secondary Market

Secondary market is where shares are traded among investors after listing or it is sold on the exchange.

Illustration: After you have purchased the share from a new stock, you are now free to detach from the stockbroker, an act that has no effect for the company that originally issued the stock.

Also, in response to dislodging from a stockbroker, one day trade is only on the secondary market.

Stock Exchange

A stock exchange is a regulated platform for trading in securities electronically. Here, transparency, fair pricing and settlement of trades are ensured.

In India, the major stock exchanges are:

Let us look at the major stock exchanges in India; directing daily trading and stock operations:
National Stock Exchange (NSE) and Bombay Stock Exchange (BSE)

Features of the stock exchange include:

Trading system
Price-control mechanism
Settlement machinery
Clearing

The electronic share market operates through the brokers and exchanges.

Overview of how it works:

a company lists its shares on a stock exchange.
Investors should open a Demat and trading account with a registered broker.
Investors place buy or sell orders.
Internet-based automated trading systems match the shares.
Once prices are agreed upon, the buyer pays the money and receives the share.

A rise in stock price happens when demand exceeds supply and demand decreases when sell-off pressure heightens.

What is Stock Trading?

Stock Trading refers to either buying stocks or trading them immediately to make a profit.

This is to say that:

Intraday Trading: Trading for the former class should be the total share allotment for that particular day.

Delivery Trading: The shares are bought and obtained later over a long period.

Short-Term Trading: The share trading is about holding shares for a number of days or weeks to his benefit.

Historically speaking, the lusty growth happens only on stock markets and long-term growth by investors.

The business has numerous invaluable features that comprise:

Wealth Creation: The shares had been richly rewarding over the long term compared to the returns given by savings instruments provided for the global banking industry.

Liquidity: Shares can be bought or sold at the click of a button during trading hours.

Ownership in Companies: An investor buys equity in companies and may receive dividends.

Economic Participation: However, business growth and economic advancement are stimulated through investment.

The prices of shares may be influenced by:

Company earnings and overall performance
Economic growth
Interest rates
Industry trends
Government policies
Global occurrences
Stock demand and supply

This information is essential for investors to make informed decisions.

To get started with share market investing, you will need:

PAN Card
Bank Account
Demat Account
Trading Account

Then follow these steps:

Choose one of the companies.
Complete all required KYC formalities.
Open an area of Demat and trading.
Earn funds.
Invest and research.

Beginners should start small and focus on disciplined investing.

Conclusion

By the issuance of new equity, the primary market gives officers and board members leverage to control the business because they get either less diluted minority ownership or a completely new stake. The stock market, on the other hand, offers existing shareholders a platform for liquidating their stakes. There are two common ways that share trading occurs: over the counter (OTC) trading, where there is no physical trading floor, and face-to-face trading-on a real-world physical stock exchange.

It's not specified. Investments with smaller even token amounts usually get started.

Frequently Asked Questions

What is the Stock Market?

The stock market is a platform for an investor to sell and purchase shares for the shares of publicly traded companies.

Yes, share prices are liable to fluctuate. Though if one can acquire quality stocks here and hold it for the long term, they can let the risk decrease.

What is the difference between the primary market and secondary market?

The primary market is where new shares are issued. The secondary market is where investors trade shares among themselves.

How much money do I need to start?

There is no fixed minimum amount. You can start your investment with small amounts.

What is the Stock Exchange?

It is a regulated marketplace where securities are electronically traded.

Are beginners allowed to invest in the stock market?

Yes, beginners, too, can invest in the stock market after opening a Demat account and a trading account.

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Share Market – Definition, Types, How It Works & Stock Trading

What is the Share Market?

Types of Share Market