A stock market or share market is the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately.
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The stock market broadly refers to the collection of exchanges and other venues where the buying, selling, and issuance of shares of publicly held companies take place.
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Activities of the Stock market are conducted through institutionalized formal exchanges (whether physical or electronic) marketplaces that operate under a defined set of regulations.
Indian Stock market is regulated by SEBI (Securities and Exchange Board of India)
Stock markets are venues where buyers and sellers meet to exchange equity shares of public and private companies.
The stock market performs many functions in markets, including efficient price discovery and efficient dealing.
In India investment in the Stock market has been considered very risky since its invention but now the perception is being changed towards the Stock market by the new generation.
How it Works
The stock market provides a secure and regulated platform where a market investor can transact in shares and other eligible financial instruments with transparency,
Operating under the defined rules as stated by the SEBI, the stock markets act as primary markets and secondary markets.
In the primary market, the stock market allows companies to issue and sell their shares to the common public investor for the first time through the process of an initial public offering (IPO). This is very famous nowadays as so many companies have given more than 100% return just in 10-15 days of investment.
The initial public offering helps companies raise necessary funds from investors. It essentially means that a company divides itself into several shares by selling some to public investors and keeping the majority of shares as a promoter.
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Main Index
SENSEX
The BSE SENSEX also known as the S and P Bombay Stock Exchange Sensitive Index or simply SENSEX is a stock market index of thirty very good and strong companies listed on the Bombay Stock Exchange.
BSE SENSEX Published since 1 January 1986, the S and P BSE SENSEX is regarded as the heartbeat of the domestic stock markets in India. The base value of the SENSEX was taken as 100 on 1 April 1979 and its base year as 1978–79.
The term Sensex refers to the benchmark index of the BSE in India and is started 560 points thirty-six years ago and now is at 57,863 with a whooping gain of 10,214% and just like a coin Stock Market also has two sides it creates wealth and it destroys wealth as well if you blindly invest.
In the late early 1990s investors were earning so much from the stock market but in 1992 Harshad Maheta scam BSE Sensex fell more than 50% and in the 2008 recession it fell to 8,900 from almost 20,000 by 56% and so many investors lost their money and so much wealth was destroyed. But it is a magical world for those investors who never panic as the recession fall of 2008 has been recovered in 2009 with 100% gain and that’s what strength of patience is.
NIFTY
The Nifty meaning is a combination of two words, i.e. National Stock Exchange and fifty. It is an abbreviation of the National Stock Exchange Fifty. It is a group of top-performing 50 equity stocks that are actively trading in the index.
Nifty is a popular stock index along with SENSEX. The National Stock Exchange of India introduced it in 1992. This index was founded in 1992 and started trading in 1994.
How is Nifty different from Sensex?
Here are differce between Nifty and Sensex
Full-Form
The nifty derivation is from the word National Fifty. It is also known as S&P CNX Nifty
Sensex derivation is from the phrase Sensitive Index. It is also known as the S&P BSE Index.
Date of Commencement
NSE Nifty incorporation year is 1992. However, the commencement of its operations was in November 1994.
BSE Sensex’s incorporation year is 1986.
Operations
Index and Services and Products Limited (IISL), an NSE India subsidiary owns and operates Nifty.
The Bombay Stock Exchange (BSE) owns Sensex. BSE is also the largest trading platform in India.
Location
Nifty is based on NSE. The corporate office location is at Exchange Plaza, Bandra Kurla Complex, Mumbai
Sensex is based on BSE. The corporate office location is at Dalal Street, Mumbai.
Base Period
Nifty’s base period is 3rd November 1992
Sensex base period is 1978-1979
Base value
The nifty base value is 1000
Sensex base value is 100
Base Capital
Nifty base capital is Rs.2.06 trillion
Sensex does not have a base capital
Number of constituents
Nifty comprises the top 50 stocks traded on NSE
Sensex comprises the top 30 stocks traded on BSE.
Number of sectors
Nifty is a broad market index that covers companies across 24 sectors
Sensex covers companies across 13 sectors.
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TOP TEN STOCK MARKET IN WORLD
SR NO MARKET MARKET CAP COUNTRY
1 New York Stock Exchange (NYSE) $27.69T US
2 NASDAQ $24.56T United States
3 Shanghai Stock Exchange (SSE) $8.15T China
4 EURONEXT $7.33T Europe
5 Japan Stock Exchange (JPX) $6.54T Japan
6 Shenzhen Stock Exchange (SZSE) $6.22T China
7 Honk Kong Stock Exchange (SEHK) $5.43T China
8 LSE Group $3.8T UK and Italy
9 National Stock Exchange (NSE) $3.55T India
10 Toronto Stock Exchange $3.26T Canada
TERMINOLOGY
BULL
A Bull stands for steady and continuous rising in the market. When the market goes up and up due to various reasons like economic growth, positive news, bulk buying by some Big Bull investor, FII (Foreign Institutional Investor), NII (National Institutional Investor), and Mutual Funds. The bull market gives lots of profit to investors and creates wealth for investors.
BEAR
A Bear stands for steady and continuous fall in the market. When the market goes down and down due to various reasons like economic slowdown, pandemic, world crisis, recession, negative news, bulk selling by some Bear investors, FII (Foreign Institutional Investor), NII (National Institutional Investor), and Mutual Funds. The bear market gives lots of losses to investors and destroys wealth for investors.
LARGE-CAP
As per SEBI classification, the Top 100 companies by market capitalization are categorized as Large Cap companies. Large Cap includes companies having a market capitalization of Rs. 20,000 crore or more.
MID-CAP
As per SEBI classification companies ranking in 101 to 250 by market capitalization are categorized as Mid Cap companies. Mid Cap includes companies having a market capitalization of Rs. 5,000 to Rs. 20,000 crore.
SMALL-CAP
As per SEBI classification companies ranking from 251 onwards by market capitalization are categorized as Small Cap companies. Small-Cap includes companies having a market capitalization of below Rs. 5,000 crore.
INTRADAY
When you buy some stocks and sell them on the same trading day it is called intraday trading. It is so risky to trade intraday. If you are new to the stock market you can lose your money in intraday trading.
OPTION TRADING
Options trading can be done through CALL and PUT. A Call option gives the buyer of the option the right to buy an asset while the seller of the option has no such right. A PUT option gives the buyer of the option the right to sell an asset while the seller of the option has no such right.
FUTURE TRADING
In Future trading, a futures contract is a legal agreement to buy or sell equity or derivatives at a predetermined price at a specific time in the future, between parties who are not known to each other.
EQUITY
Equity is the money or wealth invested or owned by the any companies. Equity is calculated by the difference between liabilities and assets which is recorded on the balance sheet of that company. Equity is Asset-Liability=Equity.
BROKER
In the Stock Market, a Broker is an Individual or Firm that helps investors to execute their Buy or Sell orders on the exchange. Brokers charge a fee or commission on the execution of all orders. Some brokers give some extra services like Investment plans, Research and Case studies, Margins, and other services.
PORTFOLIO
The portfolio is an investor’s collection of all financial investments like stocks, bonds, mutual funds, ETFs, Cash, commodities, etc.
DIVIDEND
A Dividend is the distribution of some of the company’s income to its shareholders. Shareholders of the dividend-paying companies are eligible for a dividend when they own stock before the Ex-dividend date. A dividend is paid by Interim dividend and Final dividend.
BONUS
Companies give Bonus shares to existing shareholders without any additional costs, based on the number of shares owned by the shareholders. A bonus is given when a company accumulates earnings. If a company gives a bonus in a 2:1 ratio, the shareholder gets 50 free shares if he holds 100 shares of the company.
SPLIT
When a company wants to increase its liquidity, it split its outstanding shares. Split doesn’t increase the company’s valuation as the price of the share drops proportionally.
BUYBACK
Companies buy some shares from their shareholders when the company’s cash reserves increase. Companies buy shares at a higher price than the market price. Buyback is done through a tender offer or open offer. Shares execution in buyback is dependent upon the acceptance ratio.
Hereby I’m not recommending you to invest or to not invest in such markets. This article is for information and knowledge purposes only.
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