STOCK MARKETING IN INDIA
Nowadays, we all must have heard of stock markets and came across various stock market news like every day. We all even have acknowledged the importance of stock or share markets in many of the people’s lives and we all have felt or seen the effect on our economy. Ups and downs in the share market affect people’s lives and their pockets. But still many haven’t got the purpose or have a proper understanding of the Stock market in India. You always read the Sensex points going up down and news always flashing the points of the various company but don’t really get the idea behind it. So, here I am going to explain in very simple terms what actually Stock markets or Share market is.
IDEA BEHIND A STOCK MARKET IN INDIA
Let’s get a relevant idea of what happens when a company decides to sell its shares in the market and what is the role of the Stock market in India.
Just assume you started a business and it’s started getting a fine response in the market and giving u a decent earning. You obviously would want to expand your business more further to make more profit as your idea is getting a great response and you believe it’s going to be more prosperous. But you certainly gonna need more investment to do so. So you decide to sell some of your company shares to the common people which means people who own shares of your company will be the owner of that particular share of your company. Then the people are equally responsible for the profit or loss exerts on the company.
Now that’s how you can get funds required for your business, whereas common people can participate indirectly in the ongoing thrill of how the company gonna perform and earn some money based on its profitability metric.
So let’s say, the Stock market in India is the market where you offer your company shares in public. Unlike big investors investing in your business and owning the big shares, here u don’t lose the authority over your company but there is always the pressure of performing well in the market cause that will affect the common people as they have trusted u to invest their money in your business. In fact, the whole idea of the Stock market is maintaining trust with the common people and encouraging them to invest in the Share market.
Trading In Stock Market
Now you must be wondering, how are people gonna make a profit by owning these shares?
There are two processes that provide windows for earning money from the shares. First is the distribution of dividends. Dividends are basically thanking the people for buying the shares of their company by distributing some part of the money from the company profit. Referring to the previous assumption after going public your company gets hype and profit are now very healthy and then you feel very generous.
So out of generosity you want to give them some your profit as a way of thanking them, well this is what dividends mean. However, companies are not entitled to do so. But they give dividend away anyway to keep investors excited to engage in investing.
The second method is called trading. Suppose you buy some of the shares of a company that has recently gone public. There must be a price assign to it according to its profitability metric. The process of going public and assigning the initial price of a share is called INITIAL PUBLIC OFFERING (IPO). Now that You have gone through the experts and even have some news that this company is gonna do well. The market and even the people are excited about this company. So prices of shares are likely to go higher.
Now more people are interested in buying those shares as they are seeing a profit in investing in that company. Even If the prices have gone higher as they are supposed to go even higher in the newer future. So people are ready to buy it and you can sell it at a higher price than your purchase price. This buying and selling of the stocks are called trading and that’s how you earn money in the Stock market.
SENSEX AND NIFTY
Now that you understand the nearby concept of the share markets, further questions occur that how the trading gets executed. Most of the trading happens at these two platforms wiz. NATIONAL STOCK EXCHANGE (NSE) and BOMBAY STOCK EXCHANGE (BSE). These are the legitimate platforms to execute your trading. These two exchanges issue benchmarks or indexes to show how the companies established under these two particular exchanges are performing. and Hence, these are the two indexes, Nifty 50 (NSE) and Sensex (BSE).
BOMBAY STOCK EXCHANGE :–
The BSE established in 1875 makes it Asia’s oldest stock exchange. Before the establishment of the BSE, the process of the stock exchange was happening in the open in front of townhall under banyan trees. The BSE SENSEX is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange. The BSE is the world’s 10th largest stock exchange with an overall of more than $2.2 trillion on as of April 2018.
NATIONAL STOCK EXCHANGE :–
The NSE was established in 1992 as the first de-materialized electronic exchange in the country. it is located in Mumbai. NATIONAL STOCK EXCHANGE has a total market capitalization of more than US$2.27 trillion, making it the world’s 11th largest stock exchange. NIFTY 50 is its major index represent a weighted average of 50 Indian company stocks in 17 sectors.
INDICES are the benchmarks set by these two exchanges, shows the performance of the particular company enlisted in these two exchanges. Markets are often supposed to perform better than the benchmarks.
STOCK MARKET NEWS
Rendered news is often considered very important for any share market investment. You can easily make an assumption that without proper knowledge of the current situation of the market isn’t it a great risk to put your money over such things which are supposed to be dynamic. There are some platforms that provide u time to time news over the stock market such as some news channels like CNBC AWAAZ, NDTV PROFIT and newspapers like the economics times. They always keep track of the market and the news which can affect the stock market and even provide you with some decent advice for your investment.
Few of this Stock Market in India news that often highlighted and considered very important are:-
- During the time of election – As the new government is likely to come after the election the market gets excited as the government are supposed to do well after coming on power as they promised so.
- Big investment or great deal signing – As if any good investment is likely to be made in the company that you have invested or a great deal signing have come across then it is to be taken as a positive sign in the market.
- Corruption – As bad it sounds it is like insect for the farm as bigger the corruption means its gonna heart the investor to that extent.
SECURITIES AND EXCHANGE BOARD OF INDIA ( SEBI ) is a statutory regulatory body owned by the Indian government that monitors and regulates the securities market and protects the interests of the investors by enforcing certain rules and regulations.
STOCK MARKET HOLIDAYS 2020
Here the Stock Market Holidays List !!
STOCK MARKET MOVIES YOU MUST WATCH !!
- Too Big to Fail
- Inside Job
- The China Hustle
- Margin Call
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