What is Share Market in Simple Words? ( The Beginner’s Guide ):

Share Market?

What exactly it is?

You also have doubt regarding it, right?

Don’t worry will talk about this in brief through this article on “What is Share Market in Simple Words?

In this article it will be a basic guidance for the beginner or the one who want to know the term share market.

Let us begin first with the definition on “Share Market”

What is Share Market in Simple Words?

Share market is the place where all the financial securities are bought or sold by the investors or the traders in the stock exchange.

If you are investor then you invest for the long term in the market and hold the stocks for longer time that results that you get the ownership in the company from which you bought the shares.

If you begin the investment at a young age and keep endowed for a protracted time, the rate of return are going to be high. 

You’ll set up your investment strategy supported on the time you will need the money.

By buying the share, you’re making an investment within the company. 

Because the company grows, the value of your share too can increase. 

You’ll get profit by selling the shares within the market.

There are numerous factors that have an effect on the value of a share. 

Typically the value will rise and typically it will fall and the long run investment can nullify the fall in value.

An organization needs capital or cash for its enlargement, development, etc. and for this reason it raises cash from public. 

The method by that company issues shares is named Initial Public supply (IPO). 

We are going to scan additional details about the IPO underneath the Primary Market.

You would have perpetually detected individuals talking concerning about the bull market and bear market.

So let us discuss about them,

Bull Market is one where the costs of stocks keep rising and also the Bear market is where the costs keep falling. 

There are mainly two big exchanges in India where most of the trading and investing in the stock market happens that is NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).

These are the two major stock exchanges in India and they are regulated by SEBI (Securities and Exchange Board of India).

Brokers act as a mediator between the stock exchange and the investors. 

Therefore to begin investment or trading, you have got to open a demat account and trading account with a broker. 

You’ll open the demat account from online simply through a straightforward method. 

Once linking your bank account with these accounts, you’ll begin your investment journey.

These was about the information about the share market and how one can make their step into the share market.

Now we will understand about the category of the stock market:

Types of Share Market in Simple Words

1. Primary Market

A company or government raises cash by issuing the shares within the primary market by the method of trading.

The issue is either through public or personal placement.

Issue is public once the allotment of shares is formed to over two hundred persons; Issue is personal once the allotment is formed to less than the two hundred persons.

Price of a share is supported on fixed price or Book building issue; fixed value is determined by the institution and mentioned in offer document.

Book building is where the value of an issue that is noted on support of the demand from the investors.

2. Secondary Market

The shares bought within the primary market is sold-out within the secondary market.

Secondary market operates through over the counter (OTC) and exchange traded market. 

Over-the-counter (OTC) markets are informal markets whereby the 2 parties agree on a selected dealing to be settled in future.

Exchange traded markets are extremely regulated. 

Conjointly also referred to as auction market whereby all transactions happen via the exchange.

Why is Share Market important?

Share market plays an important role in aiding the businesses to raise capital for enlargement and growth.

Through IPOs, corporations issue shares to the general public and successively receive funds that are used for numerous functions. 

The corporate gets listed on the stock exchange after the IPO and this provides a chance to even a common investor or trader to take a position within the company.

The visibility of the corporate will increase similarly.

You can be a trader or investor within the share market.

Traders hold stocks for a shorter amount of your time whereas investors hold stocks for an extended period.

As per your financial wants, you’ll select the investment product.

The investors within the company will use this investment to satisfy their life goals.

It’s one among the key platforms for investment because it provides liquidity. 

That is, financial assets is regenerate to money anytime.

It offers ample opportunities for wealth creation.

You know well that you simply will earn cash by making an investment in shares. 

The subsequent are the ways in that through which your cash grows.

1. Dividends

These are the profits the corporate earns and it’s distributed as money among the shareholders.

It’s distributed as per the quantity of shares you own.

2. Capital Growth

Investment in equities/ shares ends up in capital appreciation.

The longer is that the period of investment, the higher the returns.

Investment in stocks is related to risks similarly.

Your risk appetence relies on your age, dependent and want.

If you’re young and don’t have any dependent, you’ll invest additional in equities to urge additional yield. 

However if you have got dependent and commitments, you’ll allot additional portion of cash to bonds and fewer to equity.

3. Buyback

The company buys back its share from the investors by paying a better price than the market price.

It buys back shares once it’s a large money pile or to consolidate its possession.

Conclusion

From this article about “What is Share Market in Simple Words?” guides the beginner from the scratch about the stock market. We hope for all the beginners reading this blog find it interesting and useful. Types of the share market is discussed and all the elements that are linked with the share market are correctly explained through this article.

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Author

Prashant Raut is a successful professional stock market trader. He is an expert in understanding and analyzing technical charts. With his 8 years of experience and expertise, he delivers webinars on stock market concepts. He also bags the ‘Golden Book of World Record’ for having the highest number of people attending his webinar on share trading.