Before we learn about share market we have to know what is share? Share or stock is a piece of investment(ownership of company), share holder means who owns one share of company's stock. Share holders are part of the company or owner of company. Equity share holders have voting power in company, Share holder can attend companies general and board meeting.
What is Share Market?
Share market is a platform for investors, traders and companies to issue securities and buy and sell shares. Trading deals in Stock Exchange. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are major stock exchanges in India. Stock Exchanges controlled by Security and Exchange Board of India (SEBI). Many large companies have listed their stocks in Stock Exchange to raise the capital. Stock Exchange helps for traders and investors to buy and sell their shares and securities. Which is also helps to companies and brokers to offer the financial instrument to public.
They are two types of share market in India
1. Primary Share Market
2. Secondary Share Market
Primary Share Market (IPO)
In primary share market companies issue new share to public or investor. In case companies planning to raise their capital they will issue share or securities to the buyers and collect the funds from public. it is called as IPO (Initial Public offering). Companies issuing share though market Private limited companies convert as public ltd.
For Example: ABC company started the business in small investment after some years company plan to establish branch to enhance business, so its need investment ABC company issue the share to public in different type of allotment and collected funds from public and established branches . After some years ABC company get profit, it is distribute dividends to share holders.
Secondary Share Market
In secondary market is place, previously or first time issue the financial instrument traded in secondary market depend on company performance. Secondary market is a platform to exchange the financial instrument. Its is helps to investors and traders buy and sell the shares in stock exchange they already brought shares from primary market (IPO). If the investor decide sell their share before they brought from primary market they can sell in secondary market. If they willing to buy shares from other companies, they can buy the shares. Companies not receive funds from secondary market ,Here security or shares exchange between investor and traders, through registered share brokers
For Example: Mr. A brought ABC Ltd. company 100 shares in IPO or primary market. Later he has decide sell the ABC company share. Secondary market helps him to sell shares which is he brought in primary market. Then he sell the ABC company shares in stock exchange.
How does share market works
After we learnt about what is share market?. Now we have to learn how it's really or practically work. As above said stock market working as intermediary for companies, brokers investors, and trades. Primary market issues the financial instruments trading in secondary market. Here the question is how its work really? let's us try to how it is work
Shares price in share market depend on company performance and the demand and supply on particular shares if the more buyers willing to buy shares it price increase when its price go up it will crate demand so if its got lot supply share price go down, Between this up and down price moment we have to buy or sell shares and book profit.
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