A Stock Market, Equity market or Share Market is the collection of buyers and sellers (a loose network of economic trading, not an office or physical facility or discrete location) of stocks (also known as shares), which show ownership claims on the company or business; these may include and is not limited to securities listed on a public stock exchange and also those that are traded privately.
Stock Market or Share Market, What it is exactly ??
The Stock market is one of the important and most Primary sources for Company to raise Money or Funds. Once the Investor Buy Stock of the company, he is borrowing that Money to Company through the Share Market exchange as shares are publicly traded. The Stock Exchange acts as the clearinghouse or middle party between the Buyer and Seller for each transaction. They collect and deliver every transaction and guarantee payment to the seller of the Stock.
BSE (Bombay Stock Exchange) is the oldest of all, founded in 1875. Stocks are traded in many volumes in every sector. NSE is the 12th Largest stock exchange market in the world by its large Capitalization and Daily turnover of Trades of both equity and derivatives trading. NSE Market which is founded in 1992 and NSDL (National Securities Depository Limited) was established in 1995 as the first electronic securities depository in India. The National Stock Exchange is India’s leading stock exchange covering 364 cities and towns across the country. NSE has a market capitalization of more than US$1.65 trillion as of 23 January 2015. From over past decades, the numbers of traders increase due to the availability of Internet Connection and Online Trading has grown exponentially. The Demand increased due to various factor, the most with advances in trading technology opened up the markets so that nowadays nearly anybody can own stocks in his Online Trading account also known as the Demat account. Stocks are issued by companies in order to raise capitals and are bought by investors in order to acquire a portion of the company. A Stock market is a place where buying and selling of stocks take place.The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to open the Demat account if you want to buy and sell stocks. The trader wants to buy or sell stocks in the stock market has to first place his order with a broker or can do themselves using online trading systems. The stocks purchased will be sent to your Demat account. This process is also called Rolling Settlement Cycle. DEMAT stands for DEMATerialization. It is the process in which physical paper shares are converted into paperless (Digitalized) form.
Examples of these include stocks of private companies which are listed to investors through IPO (Initial Public Offering) or in Secondary Market. The stock exchanges list shares of equity and other security types, for example, Derivatives, Commodity, Forex, etc.
What is a Stock Exchange?
A stock exchange is a neutral entity or an organization through which individuals, traders, investors and even independent organizations can trade stocks. Many large public companies with a view to increasing their market cap list themselves in stock exchanges. Even government companies have their stocks listed on a stock exchange. This makes the stock more liquid and flexible thus more attractive to many investors.
The exchange may also act as a middleman or influencer in many trade dealings. The stocks can also be traded “over the counter” (OTC), that is, through a dealer present in an exchange physically by ringing their desk. Some large multinational companies will list their stocks in multiple exchanges in a bid to attract potential foreign investors from different countries.
Trading in stock markets means the movement for money of a share from a seller (owner) to a buyer (investor). The whole process requires the two parties to agree on an amount at which the stocks will be sold. Stocks or shares represent an ownership interest in a company.
Participants in the share market can go from small beginner stock investors to larger veteran trader investors, who can run their online empire from anywhere in the world, and may include but not limited banks, insurance companies, funds (mutual funds and hedge funds). Buying or selling orders may be carried on their behalf by a stock exchange marketer.
Some exchanges like the NSE and BSE are physical locations where transactions and trading are carried out on a trading floor, by open outcry. This method involves traders shouting bids and offers and is used in some commodity and stock exchanges. The other more modernized type of stock exchange house a network of computers all connected and trades are made electronically and more efficiently. NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) is an example of such exchange.
A potential investor offers a price for a stock, and a potential seller demands a specific price for the same stock. Buying or selling at a stock exchange means you will accept any price offered or asked for the stock. The sale of a stock takes place on a first come first serve basis if there are multiple bidders or askers at a given price only when the asking price and bidding prices match and both parties reach a mutual agreement.
Market capitalization refers to the total market value of a company‘s present shares listed or available in the market. Commonly referred to as “market cap,” it is calculated by multiplying the total number of shares in a company to the current price of one share in the market. The stock market community uses this data figure to determine a company’s value and size in the market, as opposed to using sales or total asset figures.
Market capitalization is an integral part of trading and helps determine the size of a company and also important because company size is a basic determinant of many features investors look into before investing, including but not limited to risk.