All about Share market or Stock Market or Equity Market

All About Share Market or Stock Market

What is Share market or stock market or equity market?

Share market is a place where public companies sale their stocks and public buy those shares to earn profit. It is a platform for public companies to raise capital from investors. Investers buy stocks and becomes owner of the concerned company. Invetors helps companies to increase capital. Share market plays an important role for development of economy of a conuntry by allowing investors to participate in capital raising of companies.

Key Concepts of Share Market

Shares and Equity: A share represent a unit of ownership in a company.

Stock Exchange: It an organized platform whre shares are traded among investors and companies.

Market Participants: Retail investors, Institutional investors, Traders and Regulators are the different participants in share market.

Functions of Share Market

Capital Raising: Companies issues shares to raise money for expanision, research and other business need through primary market.

Liquidity: It enables investors to buy and sale shares quickly and convert them into cash in secondary market.

Price Discovery:Share prices are determined here through demand and supply of share of a company.

Economic Indicators:It reflects overall health of market performance. Raising market indicates growth while declining market indicated challange.

Investment opportunities:It privides individual and institutions to grow wealth through divident, capital etc.

How the Share Market Work?

Listing of Companies: All companies must meet the regulatory and financial standard to list their stock on stock exchange.

Buying and Saling Shares:Investors trade shares through brokers in stock exchange.

Settlement Process: Shares and payments are exchanged between company and investors with in two days according to norms set for it.

Types of Securities traded in market

Equities (Shares): It is an ownership in a company.

Derevatives:It is a contract like futures and options based on underlying assets.

Bonds:These are fixed income securities representing loans to company  or government.

Mutual Funds and ETFS: It is pooled investment vehicles for diversified exposures.

Benefits of the Share Market

Wealth creation: Investing on shares allows potential growth devedends and price appriciation.

Liquidity: It helps to buy and sell share quickly.

Diversification: It helps to investors to access sectors and industries geographically.

Transparency: It means regulated trading with clear pricing and reporting.

Risk of the Share Market

Market Risk: Prices of shares can fall down due to economic downturn and specific issue of concerned company.

Volatility: It means share price can flactuate badly in short term that can be high risk for investors.

Regulatory Risk: Change in regulation can affect share market too.

Liquidity Risk: It is sometimes difficult to sale shares at desired price in low volume stocks.

  

Share markets in India and World

Share markets can be categorises on the basis of their function, structure and purpose.

Primary market: This is a type of share market where new companies raise fund from investors by selling their stocks first time. IPO (Initial Public Offerings) is an example of such market.

Secondary market: It is a type of share market where existing securities are traded among investors. BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) in India and NYSE (New York Stock Exchange) and LSE (London Stock Exchange) are the examples of such market.

Stock Exchange: It is a place of exchanging stocks amont investors, companies through broker of stock exchange. The traders buy shares, bonds, securities according to their benefits. Tokyo Stock Exchange in Japan and NSE in India provides such facilities to investors following trading rules and regulations.

Over theCounter: It is a decentralized market where securities are traded directly among parties with less rules and regulations of stock exchange. Pink Sheets in the U.S

Derivatives Market: This is for trading contractslike future and option based on underlying assets like stocks, commodities etc.

Commodity Market: This market for trading physical commodities and derivatives like gold, oil and agriculture product. MCX (Multi commodity exchange) and NCDEX (National Commodity and Derevatives Exchange) in India, LME (London Metal Exchange) in the world are the examples of such market. 

Forex Market: THis market is for trading currency for global trade, hedging and speculation. i.e. Interbank forex market. 

Bond Market: This market deals with debt instruments like Govt. and corporate bonds. Govt. Security market is India and U.S Treasury market are some of examples.

Developed Market: Mature and well regulated with high liquidity comes under it.

Emerging Market: Growing market with higher risk and return potential.

Frontier Market: Smaller and less developed with signficant growth potential market.

Retail Market: Individual investors and small traders do trading in this market.Demat account is used by investors in India for retail trading.

Institutional Market: In this market large financial entities like mutual fund , pension fund and foreign instituonal investors trade.

Traditional Exchange:In this case trading takes place through physical trading floor.

Electronic Exchange: It is fully automated and online based trading platform and algorithm. NSE in India is fully electronic and automated.

Dark Pool: It is anonymous private platform where large volume institutional traders participates.

Regulated Market: It is completely governed and regulated by government authorities for investors protection and ensuring complience.

Informal or Iregulated market: It is open and high risk market which is not governed by regulatory authority.

Green Finance Market: This market focus on investments in environmentally sustainable  and social projects.

Crypto Currency and Block Chain Market: These are not traditional share market. They grow a newly investment space like Bitcoin and Etherum.

Conclusion

The share market is a cornerstone of modern economies, facilitating capital formation, investment, and wealth generation. While it offers significant growth opportunities, understanding its dynamics and risks is critical for successful participation. It caters to diverse participants, from beginners to seasoned investors, and adapts continuously with technological and regulatory advancements.

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