Investing in the stock market has become a popular financial tool for individuals looking to grow their wealth. However, many people still feel intimidated by the share market and don’t understand the basics of how it works. In this article, we will provide a simplified version of understating the What is Share Market? Investing Vs Trading. and an overview of the share market & stocks exchange, its history, and the basics of buying and selling shares.

Contents

What is Share Market?

The share market, also known as the stock market or equity market, is a market where investors can buy or sell shares of a company. When someone buys shares of a company, they become a percentage owner of that company. This means that if the company makes a profit, the shareholder will also receive a portion of that profit. Conversely, if the company incurs a loss, the shareholder will also bear a portion of that loss.

History & Purpose of Shares

The origin of share markets dates back around 400 years ago. In the 1600s, there was a Dutch East India Company, which invited people to invest money in their ships for exploration and trade with faraway places. The investors were promised a share of the treasures/money that the ships would bring back. However, as this was a risky affair, investors preferred to invest in multiple ships instead of just one. This led to the creation of somewhat of a share market, where people could invest their money in multiple ships, thus reducing the risk. Gradually, this system became successful, and people got a chance to earn more money.

What is Stock Exchange?

The stock exchange is the physical or virtual marketplace where shares are traded. In India, the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are the two major stock exchanges where shares are traded.

Today, every country has its own stock exchange, and every country has become greatly dependent upon the stock market. The stock exchange is the place where people buy and sell shares of companies. The market can be divided into two types – the primary market and the secondary market. The primary market is where companies sell their shares, and the secondary market is where investors buy and sell shares among themselves.

When companies sell their shares in the share market, it never sells 100% of them. The owner always retains the majority of the shares to keep possession of his decision-making power.

How many Shares are possible?

In the primary market, companies decide what exactly would be their share prices. Although there are some regulations in this too, the companies cannot manoeuvre too much because a lot of it depends on the demand – how much price are people willing to pay for the company’s shares. If the value of the company is 1 lakh rupees, it sells 1 lakh of its shares and offers shares at 1 re per share. If its demand is high and a lot of people want to buy its shares, the company would obviously be able to sell its shares for a higher price.

Indian Stock Exchange

The Indian stock market is one of the largest in the world, with over 5,000 listed companies. The BSE and NSE are the two major stock exchanges in India. The BSE was established in 1875 and is Asia’s oldest stock exchange, while the NSE was established in 1992.

What is Sensex?

The Sensex is a stock market index composed of 30 of the largest and most actively traded stocks on the BSE. It provides a broad snapshot of the Indian stock market’s overall performance and is widely used as a benchmark for portfolio performance.

How to Sell your Company’s Shares?

If you want to sell your company’s shares, you can do so through a broker or online trading platform. The broker will help you find a buyer for your shares and facilitate the transaction. You can sell your shares at the market price or set a limit price for the sale.

How to Buy Shares?

To buy shares, you need to open a demat account with a broker or online trading platform. Once you have opened an account, you can browse through the available stocks and place an order to buy the desired shares. The shares will be credited to your demat account, and you can monitor your investment’s performance through the trading platform.

Investing vs Trading

Investing in the stock market can be done in two ways – investing and trading. Investing is a long-term approach, where investors buy shares and hold them for a considerable period, expecting their value to increase. Trading, on the other hand, is a short-term approach, where investors buy and sell shares quickly to make a profit.

Is Share Market Gambling?

One question that often arises is whether the stock market is a form of gambling. The answer to this question is not straightforward, as it depends on how one approaches the stock market. If one approaches it with a long-term investment strategy, then it is not gambling. However, if one approaches it with a short-term trading strategy, it could be considered as gambling.

Conclusion

In conclusion, understanding the basics of the stock market is crucial for anyone who wants to invest their money in it. The stock market can be a profitable investment option, but it is also essential to be aware of the risks associated with it. As with any investment, it is important to do your research and consult with a financial advisor before investing your hard-earned money.

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