Understanding Stock Market

Do you dream of making huge money? To begin with, low investment in equity markets ( share markets) should be the most preferred ones. 

Days have gone by, when people were content with the earnings invested in saving and enjoyed the benefits obtained out of it. 

These days, people are fast approaching share markets where huge voluminous buying and selling of shares are done under the supervision of a regulatory body like SEBI in an equity market yard known as Share Bazaar, or Share Markets. 

These equity markets are run by stock markets at the Central & local level known as National Stock Exchange ( NSE), and Bombay Stock Exchange (BSE).

Note: 

The stocks that are listed in the share markets are only allowed to participate in the trading at NSE/BSE.

Important Participants in Stock Markets: 

Four important segments operate to form stock market business, they are stock exchanges, investors/traders, Stock-brokers, Stock exchange board of India, SEBI. 

Investors/Traders:

This community engages in buying and selling of the stocks to make profits in the stock markets, as they show the share price volatility. 

Stock brokers: 

This community is the facilitator in engaging buyers & sellers to conduct trade in the market corridors by charging a nominal fee for the brokerage services. 

Stock Exchanges:

It is a platform where you can find the buyers and sellers requests are processed in an orderly pattern, not missing out the rules of the trading game.

Stock Exchange Board of India (SEBI):

Stock Exchange Board of India is a regulatory authority that governs the rules and regulations to be followed by the trading professionals at stock markets. 

Primary Markets/Secondary Markets: 

The stocks that are raised for trading in the stock exchanges pass through two stages, known to be primary markets, and secondary markets. 

Companies that expand their capital-base on a general invitation to the public to make an investment. The capital is raised by issuing an Initial public offering, IPO that promotes the allotment of shares to different associated communities. They are retailers, institutional buyers, Non-institutional investors, and so on. 

The stock exchange does list these IPOs and later allows the buyers/sellers to trade. Until the listing process is complete in the NSE/BSE, they are known as primary markets. 

The secondary markets are NSE/BSE in India where these listed stocks are traded to make money. No matter, it is highly risky in nature. 

Example of ‘How a trade is executed in stock markets (NSE/BSE), in brief ? 

You want to buy a stock then you place an order ( option buy) through your stock broker at the stock exchange. 

Likewise, a seller shall place a sale order ( option put) through a stock broker at the stock exchange quoting a strike price. 

Depending upon the stock market trends, if the conditions of the buyers/seller match then the stock exchange finalizes the deal, and the stockbroker facilitates the ongoing buying/selling activity.

The stock exchange delivers the stocks to your demat account in T + 1 days, which means, you buy today then by tomorrow closing day, the stocks get delivered. 

Likewise, the stock exchange does credit the money for the sold shares by the following day’s closing of stock market. Here too, it is T+1 days.