We must have read earlier article in which I have written in detail about modern business, here we will see how stock market works. Before this we have seen about share market, its history and fundamentals of share investment. There is another article about.
In developed countries, the percentage of people investing in the stock market is very high, in India this percentage is close to 4%, almost 45% of the investment in the market till today is done by small investors, the remaining investment is made by foreign investments and financial institutions. . People like to make fixed deposits in the bank here, consider investing in the stock market as a speculation. In a developed country like America, big companies like Apple, Google, Microsoft, Facebook are establishing their supremacy all over the world.
The reason for this is the awareness and trust of the people about the stock market in America which gives protection to the investor by making laws. There is a need to create awareness among the people about investment in India, due to which investment in the stock market will increase further. Foreign investment has not increased as much as it should have after the 1990 reforms, today it is only 16%.
Why is it important to invest in the stock market? The more the investment in the stock market increases, the more companies will increase their projects and employment will be available from it, such is the cycle of the economy. That’s why today we will know in detail about the stock market here, how the stock market works. Because many people think that the share market means only buying and selling shares, but we will know in detail what happens in the share market apart from the equity market.
Securities Market –
Securities market means that companies raise money for themselves from the stock market through equity, debentures, bonds, derivatives. The term securities market is used for all the sources of fund raising.
Share market This term is only for a security, it also includes other investments, in which mainly there are shares for stake in the company, then bonds and debentures are raised by the company from the market in the form of debt.
- equity shares
Types of Security Market –
Primary Market –
Primary Market: Before the company is listed in the market, or before issuing bonds and debentures, in the primary market, after completing all the procedures of SEBI, it brings its shares to the stock exchange for the first time to the investor, before this the shares are not traded. .
Government companies raise money by issuing bonds and other companies attract investors for the first time through IPO, this is called primary market.
Secondary Market –
After the issue of shares or bonds in the primary market, they become available for trading in the stock market, which investors can buy those shares and bonds at any time in the ups and downs of the market.
What is IPO? –
In this primary market, when the company brings in the INTIAL PUBLIC ISSUE MARKET to raise money, then it has a process that SEBI has to give all the information about it and later it sets its value in the IPO market under SEBI’s guide line. It is the behavior of the company and the investor for the first time to open the shares, after that this share is available for trading in the market. Its initial investors directly join the company.
(SEBI) Security Exchange Board of India –
It is the regulatory authority controlling the stock market, which was passed in 1992 by making a law in the parliament. SEBI does the work of controlling all the movement methods of the market. Makes rules and regulations for the stock market. If any company wants to be listed in the market, first all the documents have to be submitted to SEBI, after the permission of SEBI, any company is listed in the market.
Before the establishment of SEBI, the Controller of Capital Issue, this institution used to control the stock market, which was governed by the Capital Issue (Control) Act, 1947. SEBI mainly has three functions. Making rules, doing justice, and seeing how the stock market is run under the law.
BSE (Bombay Stock Exchange) –
The Bombay Stock Exchange was established in 1875 and is the oldest stock market in Asia. Which was originally started in 1850 by five share brokers together. 1957 The first stock exchange to be recognized by the Government of India under the Securities Contracts Regulation Act.
There are 5749 companies listed in BSE which have raised money for their company from the market. BSE-30 This index is made for the top 30 companies of the stock exchange and S & P index to show the performance of such important index stock market so that the investor can identify the condition of the market.
NSE (National Stock Exchange) –
One of the main two stock exchanges of the country, NSE, this stock exchange came into existence in 1992, which was formed by India’s big banks and insurance companies. Nifty-20 of NSE is a very popular index which shows the performance of top 50 company shares of this stock market.
NSE is the first stock market which brought shares in demat form and we always get the question that why do we always do share trading from NSE? So this stock market keeps more updates and good liquidity than BSE stock market, this stock market is also better in terms of transparency, so brokers and share investors prefer trading from NSE.
Share Broker –
The company or person who works between the share market and the investor / investors is called a broker, who provides services to the investor for the entire process of investing in the share market as per the guidelines of SEBI and instead takes his own commission. .
This broker is registered with SEBI, after submitting its complete information to SEBI, SEBI gives SEBI’s register number to that person or company to work in the stock market as a representative of the investor.
Sub Broker –
Sometimes we also hear these names which are not registered with SEBI but work for brokers registered with SEBI and work to bring investor-broker together. If you want to invest, then take out your share market demat from the broker who is registered in SEBI’s list, it is better from the point of view of security.
Share market investors / Investors of Share Market –
Small investors, finance companies, mutual funds, foreign Indians and foreign financial institutions mainly invest in the stock market. After 1990, companies in India got more investment, so Narasimha Rao government invited foreign investment to invest in India, but till date the investment of foreign finance companies in Indian stock market is only 16%.
Small investors of India come a lot to invest in the stock market right now. Low purchasing power of Indian people can also be the reason for low investment of people in the market.
Mutual Fund –
Mutual Fund is an investor who gives returns through NAV to the investor’s investment for the same purpose, these investors do not invest in the direct stock market like investors invest in the equity market by hiring a stock broker with a demat account.
The company whose mutual fund investors take mutual funds, that company works with its expert team to invest in the market for mutual funds and decides in which segment to invest. The common investor prefers to invest in mutual funds because he has less knowledge of the stock market.
Investment method of share market –
There are many share brokers in the market who are registered with SEBI, they provide you the complete process of share market in electronic form on your computer laptop or mobile. Your bank account has to be linked to it, along with that package investment advice services are also given by the broker, it is up to you whether to take it or not.
Before 1990, this method used to run on paper and it used to take a lot of time to transfer shares, but after the advent of internet technology, this facility has become very transparent.
Fundamentals & Technical Analysis –
When people and finance companies invest money in the stock market, then they have to do fundamentals and technical analysis of the company through which the company is studied. This is considered a method of scanning a company.
Mainly people and institutions trading and investing in the stock market are seen. People who want to invest need to know the fundamentals of the company so that their investment can be safe but technical analysis is done by big finance institutions which makes future of a company for short term investment.
People investing for a long time do not need technical analysis, but many times we do not have this information, so through media and social media, we invest for a short period and get trapped in front of big investors.
Government Policies & News base Investments –
Investing and trading in the stock market, the maximum result is seen on this, that the news related to any company is given by the media. Due to which we see ups and downs in the stock market, this news can be about the activity happening under the company or the news about the winning events in relation to the company outside, we see ups and downs in the market.
The movement of the stock market also depends on how the weather will be for farming. If the weather is good then we get to see a boom in the market and if the weather is bad then we get to see a recession in the market.
We get to see the ups and downs in the stock market by the policies of the government, in which the budget is presented every year, due to which we get to see the results of many policies on the market. That’s why we have to keep these things in mind while investing or trading.
Political events and economic conditions also affect the market, so professional investor organizations keep the data of all these things with them and make algorithms using technology and do trading in the market for which they spend thousands of crores of rupees.
In this way we learned about the share market in which SEBI, NSE, BSE were known. Share market does not mean investing in equity shares only, but debt equity is also issued in the market.
Government companies, mainly when money falls short in their budget, funds are prepared by issuing bonds in the stock market, in which central government, state government, local authority like municipal corporation raise money by issuing their own bond in the market.
Other companies issue debentures so that the investor in the company only acts as a banker and does not become the owner. We can do the rest of the investment in the share market, it is necessary to practice completely.