Share market is the marketplace where you meet buyers and sellers for trading in shares and stocks. Companies contact the share market, start selling their shares, and the market issues the shares for trading.
It all started with the Indian stock market which operated around banyan trees where buyers and sellers met to trade stocks. In 1854, they moved to Dalal Street which is now popular for the oldest stock exchange in Asia, i.e. the Bombay Stock Exchange (BSE). The BSE became the first stock exchange in India and played a significant role in the growth of the Indian stock market.
Later in 1992, the National Stock Exchange (NSE) was established. NSE was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system which offered an easy trading facility to the investors spread across the country.
Let’s start with the term ‘Capital’ which indicates wealth in the form of money, assets or investments owned by individuals or organizations. Capital Markets help individuals and organizations to fulfill their various needs, such as buy a car, increase savings, etc. using different ways of investing.
Capital markets generally consist of primary market and secondary market.
Primary market is the market where securities are issued to investors for the first time while secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market.
Primary markets may be thought of as being synonymous with an Initial Public Offering (IPO). Simply put, an IPO occurs when a private company sells stocks to the public for the first time. The secondary markets are usually what people refer to when they talk about the stock markets.
Companies offer their shares in the market to raise money to fulfill their various goals such as company expansion, purchase of new machinery, etc. The money spent by the shareholders will be used to build the company’s business.
One of the obvious benefits is that they allow firms/corporations to secure long-term finance that will allow them to undertake new projects and grow. The bigger benefits, however, accrue to investor who can participate in the growth of these companies by investing in their shares.