Stock Market
Concept
Stock Market is a market where the trading of company stock, both listed securities and unlisted takes place. When the buyers and sellers come together at a single place it is known as the stock market.
Earlier, when the trading of shares and securities were done in the physical form, the buyers and sellers use to stand in a ring to trade. With the introduction of bolt and electronic trading, the dealing of shares and securities is done with the help of brokers.The shares of the different companies are listed on two primary stock exchanges of the country: National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
Investments in the stock market help to overcome the negative effects of inflation, decline in permanent income, etc. Therefore, it would not be wrong to say that stock market gives an opportunity for investors to buy the stocks at a lesser price and sell them at a higher price. To sum up, the investors must carefully select right stocks and put correct strategies in place to make good returns in the share market.
Difference between
Primary and Secondary Markets
When a company decides to list itself on the stock exchange, it comes out with an initial public offer i.e. IPO. So when a trader or investor applies for shares in an IPO, such market is termed as the primarymarket. On the other hand, when the traders and investors are able to purchase and sell the shares of a company after they are listed on the exchange, it is called secondary market.
Frequently Asked Questions
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The share price rises when there is buying in the stock and declines when there is selling. In fact, the buying can be due to good results, improving performance, or any other factor. On the other hand, the fall in the stock price can be due to bad results, some unexpected event, etc. To conclude, the share price is determined depending upon the demand and supply in the market.
Stock Indices
Many companies from different sectors are listed on the exchange. The companies from similar sectors are grouped together to form an index. The classification norms for grouping companies vary from sector to sector. NSE index comprises of 50 stocks and BSE index comprises of 30 stocks.
You have to place a purchase or sale order with the broker after opening a demat account. The brokers will take the order and act accordingly. In return, the investor or trader has to pay brokerage for the purchase or sale of the investment
When shares are purchased and sold in short span of time, it is known as trading. On the other hand, investment means purchasing the shares and holding them for long-term i.e. more than 12 months. The traders sell the shares as soon as he makes profits while the investor waits for the long term gains.
The Securities and Exchange Board of India (SEBI) regulates the Indian stock market. They have the power and responsibility to look after the interest of the investors. They aim to develop the share market and its working.