Share Market Simplified: Definition, Types, and How It Works
It’s the heart of the investors. Their people sell and buy their shares to make some profits or extra returns on their investment, which is known as the share market.
TABLE OF CONTENT
How does the share market works?
Investing in the stock market has become not just a financial journey but a deeply personal one. The market here is filled with opportunities but also risks. First, companies listed their shares on security exchanges for allot of money from people. Then people buy these shares, and they pay some money to these companies for the exchange of these shares.
After that, the company works well and makes profits, then the company shares their profits with the investors as per their shareholdings. If a company works more than its expectations, it pays dividends to the investors. Dividends are part of the profits companies distribute to their investors for the trust of the company. It comes to the additional shares, cash, and other forms of value.
In the Indian Share Market, there are two exchanges:
NATIONAL STOCK EXCHANGES {NSE}
They are playing a major role in the stock market. The Securities and Exchange Board of India (SEBI) regulates the stock market in India, ensuring fair and transparent market operations. This is important for building trust, especially for common folks trying to build wealth in an environment that sometimes feels like a risky gamble.
Types of Share Market
- Primary Market: The Starting of the Journey
- Secondary Market: Where Dreams and Fears Hit
- Over-the-Counter (OTC) Market: A Wild West With Few Limits
- Foreign Exchange Market (Forex): A Global Adventure
- Equity Market: Start investing
- Debt Market (Bond Market): representing loans to corporations
- Derivatives Market: Dive into options and futures FNO
- Commodity Market: trade in gold, oil, and agricultural products
- Crypto market: trade in cryptocurrency {virtual currency}.
- Primary Market: The Starting of the Journey
This is where new stakes are issued for the first time. Companies sell shares in the primary market through Initial Public Offerings (IPOs) to raise money. These shares are traded on the secondary market after they are issued.
- Secondary Market: Where Dreams and Fears Hit
In this market, existing shares are bought and sold by investors. It provides liquidity, allowing shareholders to sell their stocks to other buyers in the market. In the Indian market, there are two exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
- Over the Counter (OTC) Market: A Wild West With Few Limits
In this market, stocks are exchanged directly between two parties (buyers and sellers) without the involvement of a central exchange. Usually, smaller or newer companies that don’t meet major exchange requirements are traded over-the-counter. This market is supported by websites such as Pink Sheets and the OTC Bulletin Board.
- Foreign Exchange Market (Forex): A Global Adventure
In this market, currency is exchanged in this international economy. Along with stock market investments, many investors use forex to diversify their portfolios. It is a major index in the world.
- Equity Market: Start investing
This market is designed specifically for buying and selling company stocks, also known as equities. In an effort to purchase a share of a company, investors buy shares that they can later sell for a profit if prices increase, or they may get dividends.
- Debt Market (Bond Market): representing loans to corporations
The debt market is an important part of capital markets, even if it isn’t strictly a “stock” market. Here, investors buy and trade bonds, which are loans made to governments or businesses that provide fixed income in exchange for ownership.
- Derivatives Market: Dive into options and futures FNO
This market involves financial instruments that are based on the value of underlying assets such as stocks or indices. Options and futures are common derivatives that allow investors to manage risks or price swings on price changes.
- Commodity Market: Trade in gold, oil, and agricultural products
Although not an ordinary stock market, commodity markets are commonly brought up in discussions about finance. Items such as gold, oil, and agricultural goods are exchanged in this market, presenting investors with an additional opportunity to diversify their investments.
- Crypto market: trade in cryptocurrency {virtual currency}.
The cryptocurrency market is an online marketplace for buying, selling, and exchanging digital currencies. Cryptocurrencies such as Bitcoin, Ethereum, and others are digital assets that are decentralized and utilise blockchain technology for secure transactions.
BESICS covered…
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