Every day, we usually come across a section of news about Share Market in newspapers and news channels. But most of us don't know about this phenomenon especially non commerce students.
Highlights :
The words Share market, stock exchange, Sensex, Nifty are not so familiar for most of us. In this article, we tried briefly to give you an idea about Share Market and it's operations.
What is Share Market?
A person wants to start a company for which he need some money. If he is deprived of the required money, he may take a loan. Instead of taking a loan, he can get the required money in another way.
The required capital will be divided into small parts and sold as share to the public and raise the money he wanted to start his company. The place where the companies' shares are being sold and bought is called Share Market.
Ordinary people can also buy the shares of a company from the Share Market. If a company sells it's share for the first time, the company will enter a stage called Initial Public Offering (IPO).
The shareholders who bought shares from a company can gain profit from the company based on the percentage of share they hold. They can also sell their share whenever they want.
Inspire of being able to earn money easily, this will involve some risks. If the company from which an investor bought a share runs in loss, the Investor might lose money.
In order to participate in the trading of shares,the company and the Investor should register in Stock exchanges and SEBI (Securities and Exchange Board of India).
There are two types of Share Markets. They are,
1. Primary Share Market
A company raise funds by selling it's share in Primary Share Market. Only through Primary Share Market, a company gets listed on stock exchange.
2. Secondary Share Market
Investors buy shares from a company listed on stock exchange through Secondary Share Market. Generally, investors buy share with help of some brokers.
A Demat account is needed to trade in stock exchange. Demat account is an account which is specially created for trading in Share Market.
Generally, a company will rise in the market when it's share have more demand. If a investor buy a share from a company. He/she might get some profit so he/she decided to quit by selling the share through stock exchange brokers.
The stock exchange broker will always impose some percent of interest to the investor either he has the profit or not. The interest may be 1-3%.
Obviously, the Investor will get money but if the sold share is stagnant with the broker then the company's value will reduce in the market.
Stock exchange is a market where trading of shares, securities occur. In stock exchanges, there are three grades of companies namely A, B and c.
'A' grade companies are those who are mostly top in the market. Rarely, they may fall but immediately they are able to recover.
'B' grade companies are always oscillating in the market. Something they may rise and sometimes they may fall.
'C' grade companies are those which are mostly in the low level. They may rise in the market very rarely. Generally, people don't prefer to buy shares from these companies.
Father of Stock market is Rakesh Jhunjhunwala. He entered stock market with 50000 crores and now his turnover is 19000 crores approx per annum.
More recently he showed his masterclass in the share market
https://www.financialexpress.com/market/rakesh-jhujhunwalas-wealth-grows-rs-181-cr-in-1-hour-on-his-favourite-stock-and-he-gets-dividend-too/2043168/lite/
What are the stock exchanges in India?
By the year 2020 , there are nearly 23 stock exchanges in India. Out of these, two stock exchanges namely National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The remaining 21 stock exchanges are regional Stock Exchanges.
Bombay Stock Exchange (BSE)
BSE is situated in Dalal street, Mumbai. It was found by M. Premchand Roychand in 1875. It's old name was "The Native shares and stock brokers association".
It is one of the oldest stock exchanges in Asia. Currently 5749 companies are listed in BSE. It is ranked 10th among world's top stock exchanges. The benchmark index of BSE is Sensex.
National Stock Exchange (NSE)
NSE was formed in 1992. It has about 1696 companies. NSE ranked 11th among world's top stock exchanges.
NSE was the first to introduce modern and automated electronic trading system in India. The benchmark index of NSE is Nifty.
Madras Stock Exchange (MSE) is the stock exchange in Tamilnadu. It was found in the year 1937 and it was closed in 2015.
What is Sensex and Nifty?
Stock exchanges use indices to know about the overall performance of the companies listed in them. They usually take top companies for their benchmark index.
The benchmark index used by BSE is Sensex. In BSE Sensex, 30 top companies of various industrial sectors in our country are listed. The purpose of this index is to get an overview about the economical condition of India. The company average of 30 companies is called Dow Jones industrial average.
The benchmark index used by NSE is Nifty. In NSE Nifty, 50 top companies of various industrial sectors of our country are listed in Nifty .
Those top companies were selected from all sectors including petroleum, motors, insurance, pharmacy etc.,
How these indices are calculated?
One point in index is equal to one dollar for stocks. For example if a company has a profit of 2 dollars then the points increases by 2. If a company suffers a loss of 2 dollars, then the points decreases by 2.
Points movement are always different for various companies involved. So the average rise or fall of those companies will be taken and from that and it will be concluded whether Sensex/Nifty rise or fall.
The terms Bull market and Bear market are used to indicate that market is in rise or fall.
The term Stag is used to indicate those who buy a share, get profit and immediately quit.
The term lame duck is used to indicate those who can't meet the expectation in bear market.
To know the live updates of BSE and NSE, click the link below,
These all are the information we collected about Share Market. Hope this Will be an informative article to you.
Thank you.
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Today's English word
Neophyte
This means that a person is new to a subject.
Sentence Usage
Tom is a neophyte in the field of share market.
Let's all learn together and enlighten others.
4 Comments
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ReplyDeleteSuper ya useful
ReplyDeleteThank you sir
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