Stocks and Indices

A stock market (also known as an equity market or share market), is a collection of buyers and sellers of stocks. These stocks represent ownership interests in companies. These may include publicly or privately traded securities.

A share market is where shares are either issued or traded in.

A stock market is similar to a share market. The key difference is that a stock market helps you trade financial instruments like bonds, mutual funds, derivatives as well as shares of companies. A share market only allows trading of shares. The New York Stock Exchange (NYSE) is an example of a share market.

The stock market plays an important role in many countries’ economy, both from the point of view of nations’ industries, investors, and governments. That means that people with a strong understanding of the stock market are in high demand around the world.

A company enters the primary markets to raise capital. If the company is selling shares for the first time, it is called an Initial Public Offering (IPO) This makes the company public.

Once new securities have been sold in the primary market, these shares are traded in the secondary market. This is to offer a chance for investors to exit an investment and sell the shares

You need to open a trading account and a demat account. This trading and demat account will be linked to your savings account to facilitate smooth transfer of money and shares.

Usually, large companies will list their stock on a stock exchange because it makes their shares more liquid (i.e., easy to buy and sell), which investors love. This liquidity also attracts international investors.

There are short and long positions in stock trading. In Short Selling the borrower borrows one stock from an owner in exchange for an IOU and then sells it to a buyer. When the market value of the share is down, the borrower buys it and returns to the original owner.  In a long position, the owner benefits when the stock or share gains in value. The potential profit is UNLIMITED.