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 the Concept of Share Market?”

In this article, you will get the basic guidance as a beginner who all want to know the basic term of share market.

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

What is the Concept of Share Market?

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

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

If you start 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 it means that you’re making an investment within the company. 

As a result when the company grows, the value of your share too can increase. 

The investors or the traders get the profit on the basis of selling their shares at a price more than its buying price within the market.

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

Typically, the value will rise and it will fall also and the long run investment can also result in nullifying the fall in the value.

A company needs capital or cash for its enlargement, development, etc. and for this reason it raise the cash from public. 

The method by which the company issues shares is named as Initial Public supply (IPO)

All the additional details on IPO will be covering in the Primary Market section.

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

So let us discuss them,

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

There are only the main two large exchanges in India where most of the trading and investing in the Share Market happens that is NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).

Above are the two major stock exchanges in India, which are regulated by SEBI (Securities and Exchange Board of India).

Brokers act as a middle man between the stock exchange and the investors or traders.

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

You can open the demat account using the online facility with easy method.

Once linking your bank account with these accounts, you can start with your investment journey.

These was all the information about the Share Market and how one can start their step into the share market.

Now we will understand about the category of the Share Market:

Types of Share Market

1. Primary Market

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

The issuing of shares can be either public or personal placement.

When the issue is public then once the allotment of shares is formed to over two hundred persons.

When the issue is personal then once the allotment is formed to less than the two hundred persons.

The price of a share is carried on fixed price or with book building issuing and the fixed value is identified by the institution that is mentioned in the offer document.

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

2. Secondary Market

All the shares that are bought within the primary market is sold-out in the secondary market.

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

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

Exchange traded markets are extremely regulated. 

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

Why is Share Market important?

Share Market plays a vital 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 company will increase similarly.

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

Traders are the one who hold stocks for a shorter amount of time whereas investors are the one that hold stocks for an extended period.

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

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

This is one among the key platforms for the purpose of investment because it provides liquidity. 

It means that financial assets are there to regenerate the money anytime.

It offers ample opportunities for wealth creation.

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

There are subsequent ways through which your cash grows.

1. Dividends

Dividends are the profits the company earns and therefore distribute the money among their shareholders.

The distribution is decided on as per the quantity of the shares you own.

2. Capital Growth

Investment in equities or shares results into capital appreciation.

The longer is the period of investment, the higher will be the returns.

Making an investment in stocks is related to risks.

Your risk appetence is based on your age, dependent and want.

If you’re young and don’t have any dependency then you can invest additional in equities to get the benefit of additional yield. 

However, if you have some dependency and commitments then you can allot the additional portion of cash to bonds and fewer to the equity.

3. Buyback

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

The buyback of shares happen once when there is a large money pile or to consolidate its possession.

Conclusion

From this article about “What is the Concept of Share Market?” guides the beginner from the scratch about the Share 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.

About Us

Trading Fuel helps the readers or the learners to get the opportunity to get all the updates about the Share Market in terms of blogs. You can also check the beginner blogs that will help you to give guidance about the smaller steps you need to make to understand the vast concept of the Share Market. Till then, you just read and learn more so that you can stay updated.

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.