Share Market| Stock Market| Capital Market |Fore Index|Nifty Index

Stock market or Share Marketis a public unit for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.

All people know that it’s very risky place where any time comes fluctuation and effect of very harmful after all Investors comes these field & invest prices.

The stocks are listed and traded on stock exchanges which are entities of a business or joint organization particular in the business of bringing buyers and sellers of the organizations to a listing of Stocks and securities together.

Participants in the Stock Market range from small individual stock investors to large hedge fund traders, who can be based anywhere.Their orders usually end up with a professional at a stock exchange,Who executes the order? Actual trades are based on an auction market model somewhere a possible purchaser bids a specific price for a stock and a possible seller asks a specific price for the stock.

Buying or selling at market means you will accept any ask price or bid price for the stock,respectively. When the bid and ask prices match,a sale takes place.

A stock exchange is a unit that provides services for stock brokers and traders to trade stocks,bonds, and other securities.Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments and assets events counting the payment of profits and dividends.Securities traded on a stock exchange include shares issued by companies,unit trusts, derivatives,Pooled asset products and bonds.To be able to trade a security on a certain stock exchange,it must be listed there.The initial offering of stocks and bonds to investors is by definition done in the primary market and following trading is done in the secondary market.A stock exchange is often the most important part of a stock market. Supply and demand in stock markets is ambitious by various factors that,as in all free markets.

There is typically no force to subject stock via the stock exchange itself,nor must stock be next traded on the exchange.Such trading is said to be off exchange or over-the-counter.This is the usual way that derivatives and bonds are traded. More and more,stock exchanges are part of a global market for securities.The stock market is one of the most important sources for companies to hoist money.This allows businesses to be openly traded,or hoist extra financial capital for expansion by selling shares of ownership of the company in a public market.The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities.

This is a good-looking feature of investing in stocks, compared to other less liquid investments such as real land.From experience we know that investors may 'temporarily' move financial prices absent from their long term collective price.

 

[Dhruv Bindhani]

This article provides a basic explanation of the stock market (or share market), outlining its purpose, participants, how trading occurs, and the role of stock exchanges.

What is the Stock Market?

The stock market is essentially a public platform for the trading of company stocks and derivatives. This includes securities listed on a formal stock exchange as well as those traded privately (over-the-counter).

• Risky but Attractive: While acknowledged as a "very risky place" due to constant fluctuations, investors continue to participate.
• Listing and Trading: Stocks are listed and traded on stock exchanges, which are entities designed to bring together buyers and sellers of securities.

Participants in the Stock Market:

Participants range widely, from:

• Small individual stock investors: Everyday people investing their money.
• Large hedge fund traders: Professional entities that manage substantial capital.

Orders from these participants typically go through professionals at a stock exchange who execute the trades.

How Trading Works (Auction Market Model):

• Bids and Asks: Trading operates on an "auction market model." A potential buyer "bids" a specific price for a stock, while a potential seller "asks" a specific price for the same stock.
• Market Orders: "Buying or selling at market" means accepting the prevailing ask price (for buying) or bid price (for selling).
• Sale Execution: A sale occurs when the bid and ask prices match.

Role of a Stock Exchange:

A stock exchange is a crucial facility that provides services for:

• Trading Securities: Stockbrokers and traders can buy and sell stocks, bonds, and other financial instruments.
• Issuance and Redemption: They facilitate the initial issuance of new securities (in the primary market, e.g., through IPOs) and the redemption of existing ones.
• Financial Events: They handle asset events like the payment of profits (dividends).
• Types of Securities: Securities traded include shares, unit trusts, derivatives, pooled asset products, and bonds.
• Listing Requirement: For a security to be traded on a specific exchange, it must be officially "listed" there.
• Secondary Market: Following initial issuance in the primary market, subsequent trading of these securities occurs in the secondary market, which is where most stock market activity takes place.
• Market Mechanism: The stock exchange provides a regulated and organized marketplace for these transactions, often representing the most important part of the broader stock market.
• Price Discovery: Supply and demand dynamics, influenced by various factors, drive prices.

Beyond the Exchange (Off-Exchange / Over-the-Counter - OTC):

• Trading does not have to occur directly on a stock exchange.
• "Off-exchange" or "over-the-counter" (OTC) trading is common for derivatives and bonds, where trades happen directly between parties or through dealers outside a formal exchange.

Importance of the Stock Market:

• Capital Raising: It is a vital source for companies to "hoist money" (raise capital). Businesses can go public or raise additional financial capital for expansion by selling shares of ownership.
• Liquidity: The exchange provides "liquidity," allowing investors to quickly and easily buy and sell securities. This is a key advantage compared to less liquid investments like real estate.

The article concludes by acknowledging that while long-term value is a goal, investors can sometimes cause financial prices to deviate "temporarily" from their intrinsic long-term value.