What is a share market?
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.
What’s the story of share market?
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 easy trading facility to the investors spread across the country.
Tell me more about markets?
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 markets 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.
Why do companies offer their shares in the market?
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.
Tell me more about the advantages of stock markets?
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 investors, who can participate in the growth of these companies by investing in their shares.
- The market allows investors easy entry and exit from the shares of any company at a price determined by demand and supply.
- Besides the ability to buy and sell, investors get access to all the relevant information about the listed companies to make informed decisions. Stock exchanges and market regulators require listed companies to meet strict disclosure and regulatory requirements.
- Stock exchanges also assure investors with a reliable and secure clearing mechanism. This way, investors are sure that the stocks they purchase will be delivered to them, even if the counterparty to the transaction does not deliver.