Share means part. 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 called Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
In BSE or NSE, shares of a listed company are bought and sold through a broker. Bonds, mutual funds and derivatives are also traded in the stock market.
Domestic as well as foreign investors (FII or FPI) also invest a lot in the stock market or stock market with the hope of large returns.
What does it mean to buy shares?
Suppose a company listed in the NSE has issued a total of 10 lakh shares. According to the proposal of that company, the number of shares you buy, you own that share in that company. You can sell your share shares to any other buyer whenever you want.
The number of shares to be given to a person or group at the time the company issues shares is up to its discretion. To buy / sell shares from the stock market, you have to take the help of a broker. Brokers charge commissions from their customers in 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 potential. All the stock markets are controlled by the Securities and Exchange Board of India (SEBI or SEBI).
Only after Sebi’s permission, a company can issue its initial issue issue (IPO or IPO) by listing on the stock market.
Every quarter / half yearly or yearly basis, companies pay dividends to shareholders on earning profit. Information about the company’s activities is also available on SEBI and BSE / NSE website.
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 SEBI investigation, the company gets listed in BSE / NSE as soon as the information is correct and fulfills all the conditions.
After this, the company keeps giving information about its activities to the stock market from time to time. These specifically include such information, which affects the interests of investors.
Why do stock prices fluctuate?
The valuation of that company is done on the basis of information such as the functioning of a company, getting orders or snatching, results being better, profits increasing / decreasing. Since the listed company keeps on trading every day and its conditions change every day, based on this valuation, the price of its shares fluctuates due to the decrease and increase in demand.
If a company does not comply with the condition attached to the listing agreement, then it is delisted from SEBI 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.
How can you start investing in the stock market?
First of all, you have to open a demat account with the help of a broker. After this, you have to link the demat account to your bank account.
You transfer funds from the bank account to your demat account and buy shares of a company by logging in from the broker’s website yourself or placing an order. After that, those shares will be transferred to your demat account. You can sell it on a working day only through a broker whenever you want.