What is Stock Market and how it Works?

Stock Market: Stock Market is the place where you can invest in a company which is listed on stock exchange. you can buy a stock (share) of a company and get some ownership in that company so if company make profit than your investment (share you bought) will increase and if company make loss then your  investment will decrease. 
Lets see in simple way:

if you bought a share of a XYZ company at 100 Rs and comckpany make some profit and demand of that particular stock is more then price of that stock will increase and you will earn the profit.

why stock market needed?
let me give you an example if you want to start a business but capital(money) required is 
200000 and you have just 100000 so you go to your friend and try to convince his/her to join business and you promise him/hem to give 50% of partnership in your business. same thing but in big scale if any company wants a fund than they offers a partnership to public and give them some partnership in their company.
But why stock market? company can get money from bank as a loan?
If company get loan then they have to pay EMI on time to time and also interest will lived on the loan amount but in stock market company offers partnership to buyers thats the reason they don't have to pay EMIs on time to time. Hence big companies are listed on stock exchanges.
What is stock exchange?
In simple way stock exchange is the place where process of buy and sell of stocks is done.
In INDIA there is two major stock exchange BSE(Bombay Stock Exchange)  and NSE (National Stock Exchange) 

DEMAND AND SUPPLY THEORY: Stock Market is work on demand and supply theory that
if the demand is more than supply stock price will increase and supply is more than demand then price will decrease.we will discuss this theory in detail in IPO.
There are two types of market 
1. Primary Market.
2. Secondary Market.

PRIMARY MARKET: If any company wants to listed on stock exchange firstly they should offer an equity(share) to people. Hence they give the offer their share of company to publicly this process is called "IPO (Initial Public Offering)" 
What is IPO?
This is a Process of listing of any company on exchange.
Price of the share is decided by company management as per the guideline of SEBI. 
(SEBI is the govt. body which regulate stock exchanges and companies listed on exchanges)
people will apply in this IPO if they are interested and subscription of IPO will end in 3 days. after some days (previously decided date) listing of that company will done and then share will trade in secondary market after listing.again demand and supply theory will work here if demand of IPO is more then allotted shares than listed price will increase and if supply is more then demand then prise of share will decrease. we will discuss on IPO in detail separately. 
How to apply in IPO?
Simply you just have a Demat AC where your allotted stock will store and Trading AC with you can buy or sell a shares. You can open your Demat and  Trading AC with banks or brokerage companies.

SECONDARY MARKET: In secondary market people can buy and sell shares of companies listed on exchange with their trading AC.
There are many factor affect stock market or a stock price like Crude price, Currency price,Global factor, Fundamental of stocks and many more..... we will discuss these in a later
If you have any query let us know in comment section. we will glade to help you.     


we hope this will help you to understand what is stock market and how its work. 




Comments

Post a Comment

Popular posts from this blog

Explain technical analysis

Image
Technical analysis is a method used to evaluate stocks or other financial instruments by analyzing statistics generated by market activity, including past prices and volume. The basic premise of technical analysis is that market trends, patterns, and behaviors can be identified and used to predict future price movements. Technicians (as those who use technical analysis are often referred to) typically use charts to analyze price movements and identify trends.   They also rely on various technical indicators, such as  1-Moving Averages 2-Relative Strength Index (RSI) 3-Bollinger Bands, and  4-MACD, to provide additional insight into the market. (We will cover this topic in upcoming blogs in detail) One of the key advantages of technical analysis is the ability to identify trends and patterns that can be difficult to see in raw data.  For example, a technician might identify a support or resistance level, which is a price level at which a stock has historically had difficulty moving past
Read more

What is the Dow theory?

Image
Dow theory was created by Charles H Dow and they are the person introduced indices to the stock market for first time. What is the Dow theory? Dow theory is financial theory that says the market is in an upward trend if one of its averages advances above a previous important high and is accompanied or followed by a similar advance in the other average. Not get it ?? Don't worry example given below will make this easy. For example- If NIFTY makes new high than Sensex is expected to follow nifty How this theory works? 1. The Market Discount Everything: In simple language whether it is Risk factors or whether it is Opportunity in market discount everything with data or information market have. (In fact price tells everything) if price increase there are hopes for opportunities in market and prices decrease there are in fear of risks. 2. Three primary market trends: For long term(about 10 years) there are three trends 1. Up trend 2. Down trend 3. Sideways trend
Read more

Business model of Tesla

Image
1. Key Partners: Suppliers, government agencies, battery manufacturers, research and development partners. 2. Key Activities: Producing electric vehicles, designing and manufacturing battery technology, developing energy storage solutions, personalizing vehicles for customers, operating an online sales platform. 3. Key Resources: Skilled labor force, advanced manufacturing facilities, patented technology, strong brand reputation, a loyal customer base. 4. Value Proposition: Offering sustainable and efficient transportation solutions, providing electric vehicles that offer high performance and range, offering the latest in technology with automated driving features, creating an emotional connection with customers who share the company's values. 5. Customer Segments: Environmentally conscious customers, tech-savvy individuals, high-end car buyers, consumers in urban environments. 6. Customer Relationships: Offering personalized service and support, providing online tools for customer
Read more