What is a Stock Market? Definition and Meaning

 

What is a Stock Market?

Planning to invest money? Then you might have come across many suggestions. But one of the common suggestions among them would be “Invest in the stock market”. But if you are new to all this, then the most common doubt popping up would be “What is a stock market?”

Definition and Meaning

Google definition of stock market- “A stock market equity market or a share market is the aggregation of buyers and sellers of stocks present on a business claim. This may include securities listed on a public stock exchange as well as stock that is only traded privately 50 shares of private companies which are sold to investors through equity crowdfunding platforms.”

  1. Trader- A stock trader is a person who attempts to profit from the Purchase and sale of stock shares. The stock traders can either be professionals trading on behalf of some huge company or they can be individuals trading on behalf of themselves.
  2. Investors- An investor is a term used to define a broader scope than a trader. investors look for larger returns over an extended period slot through buying and holding the shares. A trader is someone who looks for a shorter scope while an investor is a person who invests in shares for a long time.
  3. Stock Exchange- stock exchange is just like a Marketplace where the shares of companies are bought and sold. shares issued by various companies are traded on the stock exchanges after they have been issued in the market. Investors buy the shares which are available in the market and through that the company gets the money to grow its business. Once it has established itself, the prices of the shares increase and as a result, it provides profit to the shareholders who have invested in the company’s shares.
  4. NSE and BSE- NSE stands for National Stock Exchange whereas BSE stands for Bombay stock exchange. Both of them are the most popular stock exchanges. There are many other stock exchanges also present but these two are the most important ones. NSE is the biggest stock exchange in India while BSE is the oldest stock exchange in India.
  5. NIFTY- Nifty refers to the National Stock Exchange and 50. It is an abbreviation of the National Stock Exchange 50 Nifty is also known as Nifty 50 or CNX Nifty. Nifty is the index used for the National Stock Exchange. It is a collection of top-performing 50 Equity stocks that are actively trading in the index. The stock index is a measurement of the changes that take place in the stock market; it measures price movement and market performance.
  6. SENSEX- Sensex stands for stock exchange sensitive index. It is the stock market index of the Bombay Stock Exchange. The Sensex index comprises 30 stocks on BSE. These stocks are the largest and most actively traded stocks on the BSE. The Sensex is the oldest index in India and people consider it to be a reflection of the Indian economy.

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Explanation- How does all of this work?

Lastly, understand briefly how the whole of the stock market works using a simple example. Consider, a person wants to start a company that Manufactures premium quality chocolates. To begin the company, the entrepreneur goes and presents this idea to their potential investors. If the investor to whom the idea is presented lights the concept of the company then they provide the initial investment or what is called an initial public offering to the company(IPO).

What might affect the market value of a company?

There is always a brief race between supply and demand. this is due to many factors which can be stated as -

  • The change of the technology that is being implemented for the same
  • The shifting cost of the labors
  • Change in the leadership can also affect sense new people who take in charge might not be as trustworthy as the old ones in business
  • Bad publicity cost to the company
  • Change in government policies and laws
  • Many investors Book Profit per personal needs and benefit

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