What is Share Market and how does It Work?
The share market has always intrigued people, even though only a fraction of Indians invest in it directly. This is mostly because of the fear of the unknown that as people do not have much idea about the share market, and thus they are afraid of it. So, this article will help you understand what exactly a share market is, how it works, types of markets, the role of the share market, and more. If you want to learn about the share market from scratch, then joining a share market full course in Hindi for free can be the best option. Yes, now you can learn about the share market without worrying about the language gap. You can learn how to trade or invest in stocks in the share market with the best courses for stock market, that too in Hindi.
So, let’s begin.
What is the Share Market?
The Share Market can be defined as the marketplaces where stocks of different companies, other securities are bought and sold. Now these marketplaces function via stock exchanges, such as the National Securities Exchange (NSE) or the Bombay Stock Exchange (BSE). The stocks of public companies are listed on these exchanges, then the investors and traders can buy and sell those stocks.
The Securities and Exchange Board of India (SEBI) is the market regulator that develops all the rules and regulations for this marketplace and monitors the market for any ambiguities. The Brokerage houses are the intermediaries between investors and stock exchanges, and the Depositories work like banks to hold securities. You can learn about the market participants in detail by joining a free stock market course.
Types of Share Market in India
The types of share market in India can be segregated into two ways.
By Function of the Market
- Primary Market: The Primary market is the market where IPOs are launched, that is, when a company launches its shares for the first time in the market. The company becomes a public limited company from a private limited company after issuing its shares in the primary market, and the general public can invest in them.
- Secondary Market: Now, once the shares are subscribed during IPO, then the next time these shares are bought or sold, that will take place in the secondary market. After an IPO in the primary market, the shares are listed on the stock exchanges, and then people can trade or invest in them in the secondary market.
By Asset Class
- Equity Market: This is the market type where all the equity stocks of the companies are traded. Equities are assets themselves, which are the actual stocks of the companies listed on the stock exchange. In this market, direct buying and selling of stocks take place.
- Derivatives Market: In a derivatives market, as the name suggests, the derivatives are traded. Derivatives acquire their value from underlying assets, which can be equities, commodities, currencies, and other assets. Here, stocks are not directly traded; rather, contracts such as future contracts, options are traded.
To learn more about derivative markets and equity markets, you can join Free stock market courses.
How does the share market work in India?
The share market in India is huge, and only through regular learning can you understand how it works. You can join Stock market courses for beginners to deeply understand how the market works. Here is a brief idea of the same.
So, a company first launches their IPO in the primary market, the investors subscribe to the same, and the shares are allotted to the investors. Now, once the IPO is closed, the stocks are listed on the stock exchanges. Once the stocks are listed, the investors and traders can trade them on the secondary market.
The brokerage houses help the traders and investors with the trading platforms and resources that are required for trading and investing. Then come the depositories, which hold the securities in electronic format, and the clearing houses clear all the transactions.
The stock market is volatile because of the continuous buying and selling of shares. The prices go up and down as per different factors such as demand and supply, corporate announcements, companies’ performance, economic condition, and more.
In India, SEBI regulates the entire stock market, and it is right at the top of this entire share market structure.
Role of the Share Market in the Indian Economy
There are multiple share markets, and if you are keen on investing or trading in the market, it is crucial for you to understand these roles.
- The share market helps in enhancing market liquidity and helps companies with the availability of funds.
- The share market helps in price discovery of the company’s stock, as from this market, demand and supply dynamics can be understood for the shares. You can learn how the price of stocks is discovered with a share market full course in Hindi for free.
- Under SEBI’s regulations, the share market offers security and safety to investors and traders alike.
- The share market offers opportunities to traders and investors to generate returns from trading and investing in shares and other securities.
Importance of the Share Market in India
- Investing in shares offers the opportunity to generate long-term returns
- Trading offers opportunities in the short-term scenario for generating profits
- Investors can have complete ownership of their shareholdings
- The share market helps in diversifying the investment portfolio of an investor
- Liquidity is offered along with safety through continuous buying and selling of securities.
Wrapping Up
So, if you are interested in learning more about the share market, its process, participants, or any other factor, find the top Trading course online for free today and join. It will help you understand the market better and the insights of the markets as well, which is crucial for a trader as well as for investors. To start trading or investing, after learning about the market, you can open a Free Demat Account and then initially practice with a small amount and then gradually increase your investments.
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