What is stock market and how does it work? (Share Market Guide in English)

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What is stock market and how does it work


  1. What is the stock market?
  2. What are shares?
  3. How does the stock exchange work?
  4. How do companies issue shares?
  5. How do the prices of shares change?
  6. Other sorts of securities
  7. Bond | What are Debentures?
  8. What are Mutual Funds?
  9. What is a SIP?
  10. What are derivatives?
  11. How to invest in the shares market?
  12. What is a Demat Account?
  13. What is a Trading Account?
  14. How to open a Demat account?

On today's date, it's more important than earning and saving money where you invest it.

Because if you are doing not know where your money goes, then it can convince be the most important mistake for you.

Talking about the investment, Share Market, or stock exchange is taken into account to be the most important way of investment within the world.

So today we'll know that -

  1. What is Share Market?
  2. How does the stock exchange work? And
  3. How to Invest available Market?

What is the Stock Market?

What is Share Market?

Stock Market or Share Market is where Shares, Debentures, Mutual Funds, Derivatives, and other sorts of Securities are bought and sold.

Stocks are bought and sold through the stock market and BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) are the 2 main stock exchanges in India.

What are Shares?

Share means "share" and within the language of the stock exchange, "share" means "Share in Companies". once you buy shares of a corporation, you become a shareholder of the corporate.

For example, if a corporation has issued a complete of 1 lakh shares and you've got bought 10 thousand shares out of that, then you become a tenth shareholder of that company. you'll sell these shares within the stock exchange whenever you would like.

How does the Stock Exchange Work

How Share Market Works?

See it depends on many things, such as -

  1. Listed companies
  2. Shareholders
  3. Demand and provide
  4. Market conditions etc.

Let's know it simple one by one >>>

How do companies issue shares?

First of all, companies get IPO (Initial Public Offering) by listing their shares on the stock market and issue their shares to the general public at the worth fixed by them.

As soon as the IPO is completed, the stocks input the marketplace and are bought and bought via investors thru stock exchanges and agents.

How do the prices of shares change?

The company decides the worth of shares while bringing the IPO, but once the IPO is completed, the worth of the shares varies counting on the market demand and provide.

This demand and provide companies to change from time to time supported important information.

You can know it like this -

If the amount of individuals buying shares is quite those selling shares, then the worth of shares will increase -

Buyers ^ Sellers

And if the other happens, that is, the amount of individuals selling is quite those that buy, then the worth is going to be less -

Sellers ^ Buyers

What is Sensex?

Sensex is that the index of the Bombay stock market and Sensex is decided to support the market capitalization (total value of companies) of the highest 30 companies listed within the BSE.

If the Sensex increases, it means most of the businesses registered within the BSE have performed well.

And similarly, if the Sensex falls, it means the performance of most companies is deteriorating.

What is nifty?

Nifty is an index of the National stock market and is decided on the idea of the market capitalization of the highest 50 companies listed on the NSE.

If Nifty increases then it means companies registered in NSE have performed well and if Nifty decreases then it means companies of NSE have performed poorly.

Other Types of Securities

Different Types of Secretaries

Most people think that only the shares are bought and sold within the stock exchange, but this is often not the case.

Like shares, there are many other securities that are traded within the stock exchange.

Bond | What are Debentures?

Bond / Debenture is analogous to a loan.

When the corporate needs money for a project, either they will take a loan from the bank or take a loan from the general public and issue Bonds / Debentures to the general public.

Whose repayment they need to try to within the given time.

Companies pay interest at the speed fixed on Bonds / Debentures and after the completion of the bond period, they repatriate the bonds back.

Bonds / Debenture may be a Secure Investment Option for any investor compared to Shares.

Because its interest is paid from time to time at the speed fixed by the corporate and repayment is completed on maturity (completion of the bond period).

What are Mutual Funds?

Mutual Funds are Indirect Investment in one sort of Shares and Bonds.

Mutual funds are a kind of institution or trust that issues its own shares, which individuals buy and invest in mutual funds.

The invested funds are invested during a sort of shares and other securities by the professional managers of mutual funds supported their knowledge, experience, understanding, and analysis.

The advantage of Investment in Mutual Funds is that Professional Fund Manager tries to take a position all the collected funds within the best way supported their knowledge, reciprocally they charge some fees.

What is a SIP?

SIP stands for - Systematic Investment Plan. SIPs are the sole thanks to investing in mutual funds.

In this, a particular amount is invested in open-end funds monthly rather than payment investment.

The checking account of the investor is linked to the SIP Scheme, in order that a particular amount is transferred from the checking account to the open-end fund monthly and therefore the open-end fund units adequate to that quantity get into the account of the investor.

SIP is extremely popular nowadays thanks to its simple and automatic.

What are derivatives?

  1. Derivatives mean to work out future transactions today.
  2. Which are done by Options and Futures available Market.
  3. Under futures trading, you'll execute future transactions today at a hard and fast price.
  4. And the most vital thing is that Actual Delivery isn't given in it and Settlement is completed on the idea of the price difference.

How to Invest in the Share Market?

How to Invest in Share Market

Keeping these rules in mind, once you plan to invest within the stock exchange, then your next step is often to start out the investment process within the stock exchange.

For this, first, you've got to open a Trading and Demat Account with a Stock Broker.

What is a Demat Account?

Just as banks can deposit money in an account, all the securities associated with your investment in Demat Account like Share, Bonds, Government Securities, Mutual Funds, etc. are stored in electronic form.

What is a Trading Account?

Trading Account is employed for Share Sell and buy in your share business.

You can open this account with an honest broker and thanks to the web facility, you'll buy and sell shares anytime with the assistance of this account.

How to open a Demat account?

To open a trading and Demat account, it's necessary that you simply open your account within the Best Demat Account.

For this, you would like to urge KYC done from your bank.

In a way, this account manages your funds, which contains all the knowledge associated with the acquisition of shares and fund units, etc.

You can open this account from the bank within the same way as you open a traditional account from a bank.

Documents you'll get to open a Demat and Trading Account >>>

  1. PAN Card
  2. Address Proof
  3. Income proof
  4. Cancel check
  5. 2 Passport Size Photo

While submitting these documents, confine in mind that your name should be correctly and clearly written altogether these certificates and written within the same manner.

Apart from this, while opening the account, you set a Photostat Copy of these documents.

Read Also

But keep your original copy with you, which may be looked for verification at any time.

While opening a Demat Account or Trading Account, you want to carefully read the principles and directions written on the papers you sign.

Note: ->

I hope that you simply have gotten knowledge of all the items associated with what's Share Market and the way it works.

If you've got any questions associated with this, then we will invite the Comment Box.

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