What is Share Market | How does share market work?

Now, today i am here with new article topic regarding "Share Market" or "Stock Market.

Article content
  • 1. What is Share Market?
  • 2. Basic concept of share market.
  • 3. What are the shares???
  • 4. Why does company sell shares?
  • 5. What is a stock exchange?
  • 6. Are you ready to invest in share market?

"The stock market?" It's nothing but gambling. Rather legally legitimate gambling. Choose a good company and buy shares. If the share price goes up, then you win. And if share price goes down, you will lose. Many people who invested in the stock market have become billionaire at a glance or many pepole lost everything. It's a game of luck, experience and experiments. If you are unlucky one, then the stock market is not for you.

What is share market?

To most people outside, the stock market looks a lot like this. Even most new investors enter the stock market with this idea. Many people believe that the stock market is a platform that will either bring you a lot of profits, or suffer severe losses. But what is it? Not at all!

After reading this article you will understand why the stock market is not a gamble, but you can not say how much profit will come or not.

If you want know the details about the stock market, I would like to explain some basic things.

Let's find out first,

what are the shares??

'Share' is a company-owned partnership. When you buy a share of a company, you are essentially dividing that company's assets and income. It is said that you are buying a small portion of their property. All that is owned by the company is 'company property'; For example, machinery, building, land, etc. And 'company income' is money, which the company has earned through the sale of goods.

Why does a company sell shares?

Now the question is, why would a company share its ownership with the general public? Because, the company needs money. Whether it's for raising initial investment money or for growing a business, a company will need money. They can raise the money in two ways. Either they have to borrow from an organization, or they have to sell some of their ownership. So which one is more convenient for a company?

Let's try to understand the matter with a simple example.

Suppose I want to start a good company. I need a 1000 rupees for that, but I only have 800 with me. I offer my friends to be partners in my company. Two of them -A and B - agree and they contribute 100 each. Our business takes off and, by virtue of our respective contributions, my share in the business is 80%, while A and B hold 10% each.

Here, Rs. 1000 is the equity capital of our business. Our business is running cool and we now plan to expand it. We want to double the equity capital of our business so that we may increase our production. Thus we need Rs. 1000 more to make our equity capital Rs. 2000. This time we don't ask individual friends, we can take loan from bank or we just spread the word around that we are planning to expand and investor is welcome to contribute.

This is exactly what a company thinks when they want to sell part of the property. When they need money, they often want to sell part of the property. That is, the stock wants to sell. Because if you take loan from the bank, you have to pay interest. But selling the shares is not a problem there.

What is a stock exchange?

Let's go back to the story of that company. it would be better for you to find an investor without taking loan from bank. But where do you suddenly find investors? You can advertise in magazines or contact friends, relatives. Suddenly one of your friends bought the shares. But what if that friend wants to sell his share after one year? Especially if the condition of your companay is not very good, then finding a buyer will be surely very difficult.

The stock exchange basically eliminates this problem. The stock or shares of the companies are traded on the stock exchange (also known as the stock market). This is basically a platform. The Bombay Stock Exchange is one such market. Just like we go to a supermarket to get many products together, a stock exchange is a stock or stock supermarket, where willing buyers can buy shares. There are currently two stock exchanges in India. One is National Stock Exchange India (NSE) and the other is Bombay Stock Exchange (BSE).

Who is Shareholder???

Those who buy shares of a company are called shareholders. Simply, the shareholders are the owners of the company. The shareholders formed a board of directors to manage the company. The members of this board are the policy makers of the company.

A corporation can take both its shareholders, private and public. The shareholders of the "privately held company" know each other and buy shares among themselves. Many people buy shares in these companies. On the other hand, a "Publicly Held company" sells their shares through the stock exchange. Thousands of people can buy shares of these companies, even without meeting each other. We usually mean by share buying, is the shares of Publicly Held Company.

Why share price changes?

Why share price changes?

The value of a share is never fixed. Just when a company's shares are sold to the general public, the share price based on Free Market Forces increases.

Generally, the price of a product in the market is reduced, based on both its demand and supply. The demand for a product in a Free Market system increases as the price increases.

The same applies to the stock market. If a company has a certain number of shares in the stock market, the price will increase as soon as people buy shares of that company. And if more people want to sell the shares of that company, that is, if the demand for the shares of that company goes down, then the price will continue to fall.

However, despite this demand and the simple theory of supply, there are some other reasons behind the change in share prices. A company's stock number in the stock market is specified. So it's not easy to figure out how demand changes.

However, the company's earnings and profits play an important role in driving down prices and lowering. Let's talk about the Company. If the Company gets a lot of popularity and starts making high profits, then this company will undoubtedly get a lot of investors. By investing in your organization, everyone will be interested in investing there, hoping to get good profits. As a result, the share price of your Company will increase.

However, it would not be fair to assume that the share price of your company will increase only if the profit is high. Domestic and international competition has to be kept in mind. Or if the price of your Company's raw material rises, it can be worried for investors.
As a result, investors may lose interest in investing in your company. When professional stock analysts and brokers go to estimate the future of a share price, they have to keep everything in mind. So one of the safest ways to invest in the stock market is to find a good broker company who can help you understand your investment strategy.

Are you ready to invest in the stock market?

No one can guarantee you the earnings in the stock market. This market is for people who want to take risks.

If you have a fixed source of income per month, investing in the stock market is very risky compared to that. So, do not mix the stock market with other jobs or businesses. The risk is especially high when one starts investing in the stock market, not having enough knowledge. Tell me who can hope to earn more in a short time. But knowledge and patience are two of the key to survival in the stock market. If you don't have, the stock market is not for you. And the best thing I can do with these two is the ability to handle risk. When you can prepare yourself for these three things, you should step up to the stock market.

Our last words ,

Hope, everyone can taking it easily. For any query or question, feel always free to comment me.
Thank you

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