What is Stock Market in india

WHAT IS STOCK MARKET IN INDIA?

BRIEF HISTORY

Indian stock market has a very long history. It is very Exciting and Energetic. The growth in the last four decades has been phenomenal. In 1983, market capitalization of the shares was mere $7 billion only, which grew to $65 billion in 1992. It grew continuously to $220 billion in year 2000 and then grew to $428 billion in 2010. 

Not just that, in year 2010, more than 4000 companies were quoted on the Bombay Stock Exchange making it one of the largest stock exchange in the world.

So, by the end of year 2018 the total market capitalization is $2.1 trillion.

In the bookThe Money game”, by Adam Smith said,

the market is like a beautiful woman – endlessly fascinating, endlessly complex, always changing, always mystifying.

Many people talks about the Share and Stocks; but they really don’t know the difference between them. Both terms are interchangeably to refer to financial equities.

In simple words, Stock Market is just an accumulation of public markets for selling, buying or issuing the Shares on stock exchange.

SHARE & SHARE MARKET

So, the 1st point comes in our mind is that What is Share?

For any business to start or grow there is a requirement of capital or money in big amount. The company divided themselves into small sections and sell it to the public for raising funds. These small sections are called shares of the company.

For better understanding, let me explain you with an example.

Let’s say, there is a person Mr. J who is the owner of the company OSI. The company has a value of ₹1 Crore. But the company required more ₹40 lacs to grow. In that case the company OSI will sell 4 lacs shares with the face value of ₹10/- each issue to the public. The company will get more 40 lacs fund for growing its business.

STOCK & STOCK MARKET

There is another word called Stock. A stock is referring to the capital raised by the company whereas the shares refer to a single unit of stock. When people say that they own stocks they mean they are talking about their ownership of companies.

Although, Stock Market is where the shares are being transacted. Transact is simple terms which means buying or selling the share. Therefore, nobody can buy or sell the shares of any public limited company without transacting thru Stock Market. If you are a buyer of shares of any public limited company, stock market helps you to meet the seller or vice-versa.

STOCK EXCHANGE & SEBI

The company only raises funds through the primary market and get registered, to issue shares to the public and raise funds. Company generally get listed on Stock Exchange through primary market route & in case company is selling its shares on first time, it is called Initial Public Offerings (IPO) after which company goes public. This is the process of Primary Share Market.

When the investors sells or buys the shares of a company & do transactions through brokerage firm that is Secondary Share Market. The investor can enter or exit by buying or selling all its shares.

There are two main stock exchanges in India that make up stock market – Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

There is a regulatory firm which regulates both the exchanges, the firm isThe Securities and Exchange Board of India” (SEBI)”.

SEBI ensures that the BSE/NSE, stock Brokers/Sub brokers conduct their businesses fairly.

SEBI also ensures:

  • The small retail investor’s interest should be protected.
  • And large Investors huge cash cannot manipulate the market.
  • They also set the legal frame work and regulate all the entities operating in the market.

THE BOTTOM LINES

The stock & shares refers to the same things. The minor difference between the two is usually ignored and it has managed with syntax – financial or legal accuracy.

A share is the smallest unit, into which the company capital is divided. Whereas; a Stock is a collection of shares of a member converted into single fund.

To invest in stocks or share of company’s stock you need to have a brokerage account which is called Demat Account. There are so many firms available for opening Demat accounts. The firms like: Zerodha Broking, Share Khan, 5-Paisa and many more.

Furthermore, for any Investments, Demat Account is the primary route.

If you know more about these firms you can click below link to get more information:

https://tradebrains.in/best-discount-brokers-in-india/

HAPPY INVESTING….!!!!

1 thought on “WHAT IS STOCK MARKET IN INDIA?”

  1. Pingback: HOW TO INVEST MONEY IN YOUR 20’s? | THE TRUE INVESTMENT

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