Stock market basics: We all understand that in market parlance, shares are partial ownership in a company. So if a company has issued 100 shares and you own 1 share, you have a 1% stake in the company. Share market is the market where shares of various companies are traded.
Difference between primary markets and secondary stock markets
When a company comes up with an initial public offering (IPO), it is called the primary market. The general objective of an IPO is to list the stock in the stock market. After the share is listed and purchased, it starts further trading in the secondary market.
How are shares priced on the market, and who decides?
The market determines the share price according to the general rules of demand and supply. Generally, when the company is growing rapidly or it is making great profits or receiving new orders, share prices go up. Since there is demand for the stock, more investors want to buy the stock at higher prices and thus the price increases.
Companies need money to take up big projects. They raise it by issuing bonds, and the bond holders are repaid through profits made on the project. Bonds are a type of financial instrument where multiple investors lend money to companies.
What are stock indices in the stock market ?
To create an index, a few similar stocks are added together, from companies listed on the stock exchange. Classification may be based on company size, industry, market capitalization or other categories. The Sensex is the oldest index comprising shares of 30 companies and represents at least 45% of the free-float market capitalisation. Nifty comprises 50 companies and accounts for about 62% of its free-float market capital. Other sector indices include, such as Bankex, market cap indices such as BSE Midcap or BSE Small Cap and others.
What is the difference between offline and online trading in the stock market ?
Online trading means buying and selling shares over the internet while sitting in your office or your home. You just need to log in to your trading account and you can buy and sell equities. In offline trading, you have to trade by visiting your broker’s office or by telephoning your broker.
What is the role of brokers in the stock market?
The broker assists you in carrying out your purchase and sell equities. Brokers usually help buyers find sellers and sellers find buyers. Most of the brokers give you advice on which stock to buy, which stock to sell and how to invest money in the stock market for beginners. For this service, the broker is paid brokerage. ,
Can anyone purchase and sell stock on the stock trading?
Any person competent to enter into contracts can buy and sell shares in the market. For this you have to open a trading account with the broker and after opening the trading account you can buy and sell shares in the stock market.
Trading Account vs Demat Account in stock market?
There is an important difference between the two. A trading account is the account where you place your buying and selling trades. Demat account is the account where your shares are kept in custody. When you buy shares in your trading account, your bank account is debited and your demat account is credited. The reverse happens when you sell shares.
What does trading and investing mean in the stock market?
The fundamental difference between the two is that trading refers to short-term buying and selling of shares, whereas investing refers to long-term holding and purchasing of shares. A trader usually tries to make money quickly based on short-term events and market movements of any company’s stock prices, while an investor tries to buy good stocks in the stock market and control the stock price over time. Awaits profit from growth.
What is rolling settlement?
Every order placed on the stock exchange must be fulfilled. Buyers receive their shares and sellers receive the proceeds of the sale. Settlement is the process in which buyers receive their shares and sellers receive their money. When all deals must be resolved at the end of the day, this is known as rolling settlement. In other words, the buyer has to pay for his purchase and the seller has to deliver the shares sold in a day in the stock market. Indian stock markets follow T+2 settlement, which means that transactions are completed within a day and settlement of these trades should be completed within two working days from that day. However, currently T+1 is being adopted in phases.
What is SEBI?
SEBI, an abbreviation for the Securities and Exchange Board of India, is a recognised regulatory authority in the country. Because the foreign exchange market involves inherent risks, there is a need for a market regulator. SEBI is provided with this power and given the responsibility of developing and regulating the markets. Its basic objectives include protecting the interests of investors, developing the stock market and promoting its functioning.
Disclaimer: The information in this “Stock Profile” blog post is for informational purposes only. It is not financial advice. Always consult a qualified expert before making investment decisions.