What is Share Market or Stock Market or Equity Market ?

The Share Market, also known as the Stock Market or Equity Market, is a financial marketplace where publicly traded companies and other financial instruments such as Bonds and Derivatives are bought and sold. It provides a platform for individuals and institutions to buy ownership in a company by purchasing shares of its stock.

When a company decides to go public, it offers shares of its ownership to the public through an Initial Public Offering (IPO). After that, these shares can be bought and sold on the stock exchange. Share prices are determined by the forces of supply and demand, with buyers and sellers negotiating the price of the shares based on various factors such as company performance, market conditions, and economic indicators.

The stock market is one of the most volatile yet profitable places of business. Entities such as BSE and NSE possess advanced algorithms to interpret and decide on the price of stocks. It is done on the analysis of volume traded that leads to constant price change at a very high speed.

The first for any company to begin in the stock market is the Initial Public Offering (IPO). Organizations after going through the required procedure set an initial market price while going public. That price is particularly deduced based on valuation and demand from institutional investors.

After that initial offering, the stock trades start. There are buyers and sellers constantly bidding and asking for new prices dominated by their volumes. If there are more buyers than sellers, the price will get bid up. If there are more sellers than buyers, the opposite will happen.

The share market plays a critical role in the economy, as it provides businesses with access to capital to fund their operations and expansion, and offers investors the opportunity to earn a return on their investment. However, investing in the share market can also involve risks and requires careful research and analysis.

What better way to learn about the game than from one of the champions himself? Here is what the billionaire investor Warren Buffett has to say about a stock’s value – “A stock is worth the discounted value of the stream of cash flows it will earn over the life of the business”.

If elaborated further, what this means is that when a stock is evaluated in real-time it needs to be stripped of the monetary value attached to it with regard to the future value of that sum.

There are basically two types of stocks, when categorized as per value variation: What is Share Market or Stock Market or Equity Market ?

1. Undervalued – Many times a certain stock’s value shall vary, if its value depletes than assumed by traders, it is termed as undervalued.
2. Overvalued – If the value of the stock increases than that assumed by the minds of the market it is coined as overvalued.

What is Share Market or Stock Market or Equity Market ? But along the course, the price returns to what the market seems fit as per the earning capacity of the firm associated with the stock.

Thus, this makes stock valuation an asset for precise trading decisions. In simpler words, it is the method of determining a company’s stock’s value. It gives you the fair market value of a stock in a defined period of time. The aim of this is to predict the future value of upcoming stock prices and trigger purchase or investment decisions accordingly.

The stock market can be divided into various categories based on different criteria.

Some of the common categories of the stock market are: What is Share Market or Stock Market or Equity Market ?

Primary and Secondary Market: The primary market is where new securities are issued for the first time, such as in an initial public offering (IPO). The secondary market is where securities that have already been issued are traded among investors.

Size: The stock market can also be categorized based on the size of the companies listed on it. For example, large-cap stocks are those of large, well-established companies, while mid-cap stocks belong to medium-sized companies, and small-cap stocks belong to small companies.

Industry: The stock market can also be categorized based on the industry or sector of the companies listed on it. For example, the technology sector, healthcare sector, financial sector, etc.

Geography: The stock market can also be categorized based on the geographical location of the companies listed on it. For example, the New York Stock Exchange (NYSE) is the primary stock exchange in the United States, while the Tokyo Stock Exchange is the primary stock exchange in Japan.

Investment Style: The stock market can also be categorized based on investment style, such as growth stocks, value stocks, dividend stocks, and so on.

These categories can be helpful for investors to identify the type of companies they want to invest in and to diversify their portfolio accordingly.

What is the Purpose of stock market? What is Share Market or Stock Market or Equity Market ?

The stock market serves several purposes that are essential for the smooth functioning of the economy. Some of the key purposes of the stock market are:

Raising Capital: One of the primary purposes of the stock market is to enable companies to raise capital by issuing and selling shares of their stock. By selling shares to the public, companies can raise funds to finance their operations, invest in new projects, and expand their business.

Providing Liquidity: The stock market provides liquidity to investors, enabling them to buy and sell securities quickly and efficiently. This liquidity allows investors to convert their investments into cash whenever they need it.

Facilitating Price Discovery: The stock market helps in discovering the true value of a company’s shares by allowing buyers and sellers to negotiate prices based on supply and demand. This process helps investors to determine the fair market value of the securities they hold or wish to buy.

Facilitating Investment Opportunities: The stock market offers a range of investment opportunities to investors of all types, from small retail investors to large institutional investors. Investors can choose from a wide range of securities, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs).

Economic Barometer: The stock market can serve as an economic barometer, providing information about the health of the economy. A rising stock market is often interpreted as a sign of a healthy economy, while a declining stock market may indicate economic weakness.

In summary, the stock market plays a critical role in providing companies with access to capital, offering investment opportunities to investors, and providing valuable information about the health of the economy.

 What is Traded in Stock Market? 

Several types of financial instruments are traded on the share market, including:

Stocks: Stocks, also known as shares or equities, represent ownership in a company. When investors buy stocks, they become partial owners of the company and are entitled to a share of the profits.

Bonds: Bonds are debt securities issued by companies, governments, or other organizations to raise capital. When investors buy bonds, they are essentially lending money to the issuer in exchange for regular interest payments and the return of the principal amount at maturity.

Mutual funds: Mutual funds are investment vehicles that pool money from multiple investors and use it to invest in a diversified portfolio of stocks, bonds, or other securities.

Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds, but they trade on the stock exchange like individual stocks. They are designed to track the performance of an underlying index, such as the S&P 500.

Derivatives: Derivatives are financial contracts that derive their value from an underlying asset, such as a stock or commodity. Examples of derivatives include options, futures, and swaps.

These financial instruments are bought and sold on the stock market through stock exchanges, such as the New York Stock Exchange (NYSE), Nasdaq, London Stock Exchange (LSE), Tokyo Stock Exchange (TSE), and many others. Investors can buy and sell these securities either directly through the exchange or through a brokerage account.

 

What is a stock exchange? and list of top stock exchange in world?

A stock exchange is a marketplace where securities, such as stocks and bonds, are bought and sold. It provides a platform for companies to raise capital by issuing shares of stock to the public, and for investors to buy and sell those shares.

Some of the top stock exchanges in the world, ranked by market capitalization, include:

New York Stock Exchange (NYSE) – USA

NASDAQ – USA

Tokyo Stock Exchange (TSE) – Japan

Shanghai Stock Exchange (SSE) – China

Hong Kong Stock Exchange (HKEX) – Hong Kong

Euronext – Europe (located in multiple countries including France, Netherlands, Belgium, and Portugal)

London Stock Exchange (LSE) – United Kingdom

Shenzhen Stock Exchange (SZSE) – China

Toronto Stock Exchange (TSX) – Canada

Bombay Stock Exchange (BSE) – India

These exchanges serve as important hubs for global finance and play a critical role in facilitating investment and economic growth.

 

What are Shares Priced in the Market and Who Decides the Price?

Shares are priced in the market based on the forces of supply and demand. The price of a share represents the amount that a buyer is willing to pay for it and the amount that a seller is willing to accept in exchange for it.

The price of a share is determined by the interactions of buyers and sellers in the market. When there is a high demand for a particular stock, the price tends to rise as buyers are willing to pay more to acquire it. Conversely, when there is a low demand for a stock, the price tends to fall as sellers are willing to accept less in order to sell their shares.

The primary marketplace for trading shares is the stock exchange, where buyers and sellers come together to trade securities. On a stock exchange, the price of a share is determined by an auction process where buyers submit bids to buy shares at a certain price, and sellers submit offers to sell shares at a certain price. When a buyer and seller agree on a price, a transaction occurs, and the share is transferred from the seller to the buyer.

There are also other factors that can affect the price of shares, such as the overall health of the economy, the performance of the company issuing the shares, changes in interest rates, and geopolitical events.

In summary, the price of shares is determined by market forces of supply and demand, with buyers and sellers interacting in the market to establish a price. No single person or entity decides the price of shares; rather, it is determined by the collective actions of all market participants.

What are Sensex and Nifty in stock market?

Sensex and Nifty are two major stock market indices in India that are used to track the performance of the stock market.

The Sensex (short for “Sensitive Index”) is a stock market index of the Bombay Stock Exchange (BSE) and is made up of the top 30 companies listed on the BSE based on market capitalization. The Sensex is calculated based on the free-float market capitalization of the companies included in the index, which means it takes into account only the shares that are available for trading in the market.

The Nifty 50, or simply the Nifty, is another stock market index of the National Stock Exchange of India (NSE) and is made up of the top 50 companies listed on the NSE based on market capitalization. Similar to the Sensex, the Nifty is calculated based on the free-float market capitalization of the companies included in the index.

Both indices provide investors and analysts with a general overview of the performance of the Indian stock market. They serve as important benchmarks for investors to compare the performance of their investments against the broader market. Additionally, movements in these indices can be used as an indicator of the overall sentiment in the market.

The regular timings of NSE and BSE stock market is 9:15 AM to 3:30 PM. Additionally, there is a pre-opening session from 9:00 AM to 9:15 AM and a post-closing after 3:30 PM which goes on till 4:00 PM. The stock markets remain shut on certain days which are known as stock market holidays. Holi, Republic Day, Eid are examples of such holidays. The Share market remains closed on weekends.

How Many Indexes of Stock Market in India?

There are several stock market indices in India, but the two most commonly used indices are the BSE Sensex and the NSE Nifty 50.

BSE Sensex: The BSE Sensex, also known as the Bombay Stock Exchange Sensitive Index, is the oldest and the most widely followed stock market index in India. It consists of the top 30 companies listed on the Bombay Stock Exchange (BSE) based on market capitalization. The index is calculated using a free-float market capitalization methodology, which takes into account only the shares that are available for trading in the market.

NSE Nifty 50: The NSE Nifty 50, also known as the National Stock Exchange of India’s benchmark index, is a market capitalization-weighted index of the top 50 companies listed on the National Stock Exchange (NSE) based on market capitalization. The index is also calculated using the free-float market capitalization methodology.

 

Other important stock market indices in India include:

BSE 100: The BSE 100 index is a broad-based index that comprises the top 100 companies listed on the BSE based on market capitalization.

BSE 500: The BSE 500 index is a broad-based index that comprises the top 500 companies listed on the BSE based on market capitalization.

NSE 500: The NSE 500 index is a broad-based index that comprises the top 500 companies listed on the NSE based on market capitalization.

Nifty Bank: The Nifty Bank index comprises the most liquid and large capitalized banking stocks listed on the NSE.

These indices provide investors with an overview of the performance of different segments of the Indian stock market. They serve as important benchmarks for investors to compare the performance of their investments against the broader market.

What is Bombay Stock Exchange?

The Bombay Stock Exchange (BSE) is the oldest stock exchange in Asia and is located in Mumbai, India. It was established in 1875 and currently has more than 5,500 companies listed on its platform.

The BSE provides a platform for trading in equities, bonds, mutual funds, exchange-traded funds (ETFs), and other financial instruments. It is governed by the Securities and Exchange Board of India (SEBI) and follows a strict regulatory framework to ensure transparency and fairness in trading activities.

The BSE Sensex, the benchmark index of the Bombay Stock Exchange, is one of the most widely followed stock market indices in India. It consists of the top 30 companies listed on the BSE based on market capitalization.

The BSE has played a significant role in the development of the Indian capital market and has contributed to the growth of the Indian economy. It has also been at the forefront of introducing new products and technologies to the Indian market, such as the introduction of the world’s first centralized exchange-based internet trading system in 1995. Today, the BSE remains an important player in the Indian financial ecosystem and a key driver of the country’s economic growth.

Brief Description of Bombay Stock Exchange (BSE)?

BSE Limited, also known as the Bombay Stock Exchange (BSE), is an Indian stock exchange which is located on Dalal Street in Mumbai. Established in 1875 by cotton merchant Premchand Roychand, a Jain businessman, it is the oldest stock exchange in Asia, and also the tenth oldest in the world. The BSE is one of the world’s largest stock exchange by market capitalization.

Bombay Stock Exchange was started by Premchand Roychand in 1875. While BSE Limited is now synonymous with Dalal Street, it was not always so. In the 1850s, five stock brokers gathered together under a Banyan tree in front of Mumbai Town Hall, where Horniman Circle is now situated. A decade later, the brokers moved their location to another leafy setting, this time under banyan trees at the junction of Meadows Street and what was then called Esplanade Road, now Mahatma Gandhi Road. With a rapid increase in the number of brokers, they had to shift places repeatedly. At last, in 1874, the brokers found a permanent location, the one that they could call their own. The brokers group became an official organization known as “The Native Share & Stock Brokers Association” in 1875.

What is SEBI and When was SEBI constituted?

SEBI stands for the Securities and Exchange Board of India. It is the regulatory body responsible for overseeing and regulating the securities market in India. SEBI was established in 1988 as an independent statutory body under the Securities and Exchange Board of India Act, 1992.

The main objective of SEBI is to protect the interests of investors in securities and to promote the development of the securities market in India. To achieve this, SEBI regulates the functioning of stock exchanges, brokers, and other intermediaries in the securities market. It also monitors and regulates securities issuers and makes rules and regulations to ensure fair and transparent trading practices in the securities market.

SEBI has the power to investigate and impose penalties on individuals and entities that violate securities laws and regulations. It also has the power to take legal action against those who commit fraud, insider trading, or other violations of securities laws.

Overall, SEBI plays a crucial role in maintaining the integrity and stability of the Indian securities market, which in turn contributes to the growth and development of the Indian economy.

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