Share Market: What It Is and How It Functions

Posted by Karan Sharma on December 6th, 2022

The four main foundations of financial security are earning, saving, investing, and protecting. Of the four, stock market investment can be a little frightening. There are several hard-to-understand terminology. The stock market will surely undergo ups and downs because it is prone to volatility.

What Is the Stock Exchange?

The share market, to put it simply, is a place where investors can buy and sell shares of, or ownership in, certain businesses as well as exchange-traded funds (ETFs). The equity market has the most public exposure, even if bonds and treasuries are also exchanged utilising the market idea. The stock market, which is made up of a network of stock exchanges, is regulated by legislation and follows a set of rules.

Stock exchanges are the venues used for trading stocks. The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are two of the country's most important exchanges.

Consumer of the market

The main participants in the stock market include businesses, people, institutional investors, and stock brokers (including large financial institutions that offer a variety of stock broking capabilities).

Primary Market

Direct stock sales to investors are made by companies on the primary market. When a business makes its initial public offering (IPO), something happens. It might also happen if the company later decides to raise more money by selling more shares at a predetermined price during a new round of investment.

Secondary Market

Only investors are involved in the secondary market; businesses are not. Stock investments are made on the secondary market.

How the stock market operates

A stock market is a collection of stock exchanges where companies list their shares for trading. Investors buy the shares after that and sell them for cash. Private investors can purchase and sell using a broker like despite the fact that many of the investors are enormous funds with significant financial resources.

Why Stocks Increase And Decline

A stock's price movement can be influenced by a variety of underlying factors. The most significant and essential concept is, however, the law of supply and demand. When there is a large demand for a stock and few owners are prepared to sell it, the price of that stock rises. In contrast, if there is a large supply and little demand, the price of a stock will fall. Demand is influenced by news, a company's performance and profits, among other things. If it is believed that a company will shortly unveil a hotly anticipated new product, the price of its shares may rise. Businesses, on the other hand, may experience economic setbacks that are beyond their control. The stock market is therefore a very dynamic phenomenon.

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Karan Sharma

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Karan Sharma
Joined: May 29th, 2021
Articles Posted: 9

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