What is Share Market?

The share market is a platform where people buy and sell stocks. India has two main stock exchanges: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). For both investors and companies, the share market plays an important role, as it provides access to capital and the opportunity to join the growth and success of a company. This article explains what is share market, its types and how to invest. 

How Does Share Market Work? 

After understanding the share market meaning, investor’s need to understand how share market works: 

1. Companies List Their Shares on Stock Exchanges 
   Stock exchanges provide a platform where listed shares are bought and sold and also track demand and supply for every stock during trading hours. 
2. Buyers and Sellers Place Orders 
   Investors submit buy orders indicating the price they are willing to pay, while sellers submit sell orders indicating the price they want to receive. 
3. Prices Are Set by Demand and Supply 
   When more people want to buy stock, the price usually goes up. When more people want to sell, the price usually goes down. 
4. Trading System Matches Orders 
   An automated system matches buy and sell orders at the best available price. When both sides agree, the trade is executed. 
5. Role of Brokers and Demat Accounts 
   A Demat account holds shares in electronic form. Brokers place orders on behalf of investors and help complete transactions. 
6. Shares Are Transferred After Trade 
   Once a trade is completed, funds are debited from the buyer and shares are credited to their Demat account. 
7. Different Market Participants Take Part 
   Different participants, such as retail investors, institutional investors, traders and market makers, keep the market active. 
8. Stock Indices and Market Direction 
   Indices like Sensex and Nifty track selected companies and show how the market is moving on a given day. 
9. Regulatory Oversight 
   The Securities and Exchange Board of India (SEBI) regulates the share market. It ensures transparency, fairness, and investor protection against fraudulent practices. 

Types of Share Market 

The following are the various types of share market: 

• Primary Market: Primary market refers to a market where new securities are listed for the very first time. In the primary market, a company issues new shares to the public to raise its capital. The primary market is also referred to as the “new issue market.”  
• Secondary Market: Once the shares are listed on the primary market, they are exchanged in the secondary market. These shares are traded on popular stock exchanges like the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE) in India. 
• Equity Market: The equity market is where company shares are bought and sold. Investors gain part ownership in the company. Buyers submit bids based on their willingness to pay, while sellers set ask prices as the minimum acceptable value. Brokers assist in executing trades. Once the trade happens, shares are deposited into the investor’s Demat account. The total cost includes the share price multiplied by quantity, along with applicable charges.  
• Derivative Market: The derivative market involves contracts such as futures and options. These contracts focus on future prices rather than ownership of shares and require deeper market understanding. 

How to Invest in Share Market 

Here is how to invest in share market: 

Step 1: Open a Demat and Trading Account: 
Before investing in the share market, it is important to have a Demat or trading account. A Demat account holds the shares in an electronic form, whereas a trading account makes the process of buying and selling shares easy.  
Click here to Open A Demat Account.  

Step 2: Select a Stockbroker:  
Select a reliable stockbroker or online trading platform to execute trades. 

Step 3: Research Stocks:  
Before investing in any stock, it is important to do the research on the performance of the company, market trends, and the stock fundamentals.  

Step 4: Start Small:  
As a beginner, investors should begin the investment journey with a small amount.  

Step 5: Place Orders:  
By using the trading account, buy or sell shares based on the research and investment goals. 

Step 6: Monitor Investments:  
Keep track of how the portfolio performance is going and then adjust the strategy accordingly.  

Conclusion

A share market is one of the most dynamic and growing markets, which is essential to the economy. It provides an opportunity for companies to obtain the required capital while investors look for ways to grow their wealth. The share market is mainly divided into two major markets: the primary and the secondary markets. Purchasing shares in a share market involves a lot of consideration as well as careful observation. In some way, it might appear quite complicated to understand what is share market, but once investors have the right information as well as the right approach, they may participate in it. One can also use an online trading app in order to stay updated on the fluctuations in the market.