What is Stock Market ?
A Stock Market also reffered to as Share Market, is a place where people/institutions buy/sell shares of a company/business. This is done through a broker and a online trading platform.
Stock Exchanges -
Stock exchanges is the most vital part of the market. It is the medium which helps in doing transactions of the buyers and sellers. In India the exchanges follow set of rules set by the SEBI (Securities and Exchange Board of India) who governs all the transactions and all the exchanges. The 2 major exchanges in India are -
- Bombay Stock Exchange (BSE) — This is the oldest stock exchange founded in 1875 in Mumbai Dalal Street. Currently there are 8900+ stocks listed in the exchange out of which 3000+ are traded daily.
- National Stock Exchange (NSE) — This exchange was established in 1992 in Mumbai. Currently 1600+ companies are traded here in daily basis.
Indexes -
A stock index is an index which helps in determining a specific sector or the top companies of a company.There are 4 different types of indexes —
- Benchmark Indexes — Nifty (NSE) and Sensex (BSE)
- Broad Based Index — Nifty 50, Nifty Next 100
- Based On Market Cap — Nifty Midcap,Nifty Smallcap
- Sectoral Indices — Nifty Bank,Nifty IT
So What is Share ?
A Share is a atomic part of a company, if we buy a share of a company (even1 quantity) we become shareholders of that company, and thus are eligible for bonuses,dividends, buybacks and also to be part of different decisions taken by companies, and can vote on the same.
Bonuses,Dividends, Buybacks… What are they?? Dont worry we will discuss all of them in the upcoming articles..
Market Capitalisation-
Commonly known as Market cap, is the market value of a traded company. It is calculated using the formula Price of Share * Number of Shares
Market Capitalisation = (Price of Share * Number of Shares)
So Finally Why stock markets?? Why should i put my money into risk?? why not put in the bank where income is fixed??
Investing in Stock market helps us grow our money not at a fixed rate like FDs or RDs. Also one of the benefits is COMPOUNDING. By this i don’t mean just go and pour in your money on any company. A proper research is needed before investing in any company, which we will discuss in future articles.
