What is Share Market and how does it Work?

A share market is an electronic market where investors can buy and sell their shares. The stock market is a place to buy and sell a stake in a listed company. These are bought and sold through brokers of a listed company on BSE or NSE itself.

By purchasing a share, you make a financial investment in the company. As the firm grows, the value of your stock may rise as well.

Four types of stocks

Selling and buying of these four types of stocks is done in the stock market

• Growth Stocks or Shares
• Dividend or Yield Stocks
• New issues of Shares
• Defensive Stocks

How does the Share Market work?

Suppose someone has a good business idea. But there is no money to get it off the ground. In this case, a company will be formed. That company talks about entering the Share market by contacting SEBI. Completes the paperwork, and then the stock market game begins. It is unnecessary to be a new company to enter the stock market. Old companies can also come into the stock market.

Share means to share. This means that the companies are listed in the stock market, their stake remains divided. To enter the stock market, one must register with SEBI, BSE, and NSE (National Stock Exchange).

The company in which a Trader buys shares becomes a shareholder. This shareholding depends on the number of shares purchased. Buying and selling of shares is done by Brokers. Brokers act as the most important link between the company and the shareholders.

What is IPO?

The word IPO comes to mind when it comes to the Share market. The complete form of IPO is Initial Public Offering. When any company brings an offer to issue its shares for the first time, it is called IPO.

The offer of IPO is called the primary stage market, and their buying and selling of shares are called the secondary stage market. Investors try to buy shares cheaply and sell them at high prices when the secondary stage market starts. The government also has to pay tax on the sale of shares at a given time.

What is Stock exchange?

The stock exchange can be called the market of shares. There are many stock exchanges. But BSE and NSE are the two most significant and vital stock exchanges. Both are included in the ten most prominent stock exchanges in the world. NSE opened in 1994.

What are Sensex and Nifty?

In the stock market news, Sensex and Nifty are always mentioned. Both of these are indexes, i.e., indices. Sensex is made up of two words Sensitive and Index.

There are mainly 30 big companies listed on BSE. Sensex decided based on the growth of these 30 companies. Sensex is a measure of the financial health of these companies. It started on 1st January 1986.

It's very complicated to calculate. But it can be understood directly that the rise of Sensex strengthens the position of these 30 companies. Thirty companies listed on BSE are not permanent. Companies keep coming and going in this list according to the time. But their number does not increase more than 30. This is because an index committee selects these 30 companies.

Nifty is an index of NSE which is a combination of National and Fifty words. In this, 50 companies from 22 different sectors are listed. The financial health of these 50 companies decides the Nifty index. Apart from Sensex and Nifty, there are many indexes, but these two are the most important.

What is decided by Nifty and Sensex?

30 companies listed on the stock exchange for Nifty and Sensex are the leading companies in their respective sectors. In such a situation, the coming fall or downfall in companies indicates the movement in this sector.

Apart from 30 companies listed for Sensex in BSE, there are more than 5000 companies listed, but these small companies do not impact the stock market. The same applies to Nifty as well.

How are Nifty and Sensex decided?

The most significant factor determining both these indicators is the performance of the company. If the company performs well, then people will want to buy its shares, and due to the increase in demand for the share, its price will increase. On the other hand, if the company's performance remains terrible, people will start selling the stakes, and the share prices will fall.

Apart from this, many other things affect Nifty and Sensex. Every political event also affects the stock market. From the trade war between China and America to Iran-US, tension also affects the stock market. All these things affect the business.

The Sensex had crossed 40 thousand on the return of the Modi government to power again with an absolute majority. This is because the market believes that a government with an absolute majority can take tough decisions. However, during the first total budget of this government, the market has expressed unhappiness.

One more thing, falling Sensex and Nifty does not mean that all the companies are going into losses or everyone's money is sinking. Sensex is determined by 30 big companies and Nifty by 50 big companies. Therefore, despite the fall in Sensex and Nifty many times, many small companies continue to perform well.

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