Stock market for beginners

So you want to learn about the stock market. Don’t worry! You are at the right place. We will discuss everything about stock market in this article. You will get to know what are shares, why companies need them, what is nifty and sensex, value of sensex today, etc.

Why we need stock market?

Companies need money to survive. Many a times the profits earned by the companies are not sufficient to fund their future goals. So what can companies do? They can dilute the ownership of the company. This means that companies can divide the organization into small-small parts and issue it to the public. The public will have to pay a certain price to buy this ownership. This way companies will be able to raise money and at the same time public will be able to participate in the growth of the company.

What are shares?

Shares are the ownership of the company. Each shareholder has certain ownership in the company. For instance, if you hold 1% of all the shares traded in the market that means you own 1% of that company. Shares are also known as equity, stocks, script, etc. The person who owns shares of a company is known as its shareholder.

What is SEBI?

SEBI stands for Securities and Exchange Board of India. It is the supreme body who keeps an eye on all the transactions in the stock market. Their work is to punish shareholders, corporate, mutual fund houses, etc. for any fraudulent activity.

What are stock exchanges?

When you are buying a share, you need a seller. You cannot buy anything from thin air. This is where stock exchanges come in. Stock exchanges are a platform where buyers and sellers come together for transaction of shares.

How many stock exchanges are there in India?

In India, you have two stock exchanges, NSE and BSE. NSE stands for National Stock Exchange and BSE stands for Bombay Stock Exchange.

What are Nifty and Sensex?

Nifty and Sensex are benchmark indices. Nifty is the benchmark index of NSE and Sensex is the benchmark index of BSE. These indices are formed of a number of shares. Nifty constitutes 50 shares whereas Sensex constitute 30 shares. These indices give an idea about the overall direction of the market. If Nifty is rising, then most of the stocks in the market are rising. Similarly, if Nifty is falling most of the stocks in the share market are falling.

How do you make money from stock market?

You make money in the market by buying and selling of shares. Suppose you buy the shares of XYZ company at ₹100 and then sell it at ₹120. So you made a profit of ₹20 in each transaction. You can earn money by trading or investing.

To sum up

So these were some basic gyan about the stock market. Always remember that you can earn from the market only after you have learnt from the market. To be a part of this market you need to open a Demat account with 5paisa.