SYNOPSIS
Share markets are the markets where people can buy and sell a company’s shares. Buying shares means buying some percentage of ownership of that company. So, if that company is profited ,some percentage of that profit would be given to us and if the company makes a loss , a percentage of that loss will be borne by us.
HISTORY
If we look into the history it was quite fascinating. A kind of share market started around 400 years ago. Around the 1660s there used to be a Dutch East India company.
At that time the whole world map wasn’t discovered , people using ships used to explore different places. Companies used to send their ships to discover far off places and bring treasures from there.
But they need money to do so as the ships used to travel thousand kilometers. So, they invited people to invest in their ships and what all gold and treasures they would bring. accordingly it would be distributed to the investors.
But it used to be very risky because mostly the ships did not return and were robbed or lost in the sea. Eventually, people decided to invest in five or six ships as there will be a possibility that at least one ship will return to the deck.
STOCK EXCHANGE
Precisely stock exchange is a building where people can buy or sell shares. There are two types of market — primary and secondary market. Primary market is where companies sell their shares and these companies decide exactly the share price and there are specific regulations for it.
A company never sells all the shares, it keeps 51% or more than that, so that the owner can make decisions regarding the company and have control on the company. In the secondary market the company cannot control the prices of their shares. The share prices keep on fluctuating and depend upon demand and supply of the shares.
Sensex stands for Stock Exchange Sensitive Index is the stock market index for the Bombay Stock Exchange and it shows the average of the top thirty, whether the shares are moving up and down. Nifty shows price fluctuations of the share of the top 50 companies which are listed on the National Stock Exchange.
If a company for the first time wants to sell shares for the first time to the public, it is referred to as Initial Public Offering. As there were different scams. The rules and regulations became strict.
SEBI is a regulatory body that looks into different issues like which company should be listed, what are the finances of the company and if a company wants to be registered in the stock exchange, they need to fulfill particular norms of SEBI like more than 50 shareholders should be pre present in the company, if someone want to be registered in stock exchange.
If a common man wants to buy a share he/she will be termed as retailer and retailer can buy through a broker. A broker is a link which connects a company and a person who wants to buy shares. A broker can be either a person or bank itself. After we invest in share market the broker keeps his commission known as brokerage rate.
TRADING VS INVESTING
There is a major difference between investing and trading. Specifically investing means putting a particular or some amount in the stock market and letting it for a longer period of time.
Whereas, trading means to invest money for a short period of time and after investing they withdraw from some companies and then again invest in another company.