A Story of Share Market: What is Share market?

Hi, let's get the start of a story of the share market many of you may hear about the term share market or finance market and may be interested in knowing about it that's why you are on this page.

Let’s get a brief and simple knowledge about what is share market.

In simple words, I can say that a stock market is a venue where buyers and sellers meet to exchange equity shares of public corporations.

Maybe the above statement is simple for me but not for you so let’s get some more clarification on what is the stock market. And how share market work?

What is a stock market?

The term stock market refers to the exchange in which shares of publicly held companies are bought and sold. such activities are conducted through formal exchanges and over-the-counter(OTC)under a defined set of regulations.

Now, let’s discuss how the public gets shares of companies. and how companies get listed on an exchange. What is the role of an exchange?

How Share market work?

The companies who want to raise funds for their growth or want to increase assets and other things. Companies have three ways where can raise the funds.

first is the bank where the companies get the fund but in return, they have to pay a heavy interest on the loan.

The second choice is the financial service which is not a bank but gives loans so the companies get a loan from here also but the problem remains the same they also have to pay interest on the loan.

So, the companies want to pay less or no interest on the loan and so they choose the third method for their fund and the method is public, yes you read it right the public like you and me.

Companies register themselves on the exchanges in their country and divide their company capital and required funds into shares. The exchange regulates a set of rules under which companies are listed after the exchange release date of IPO(initial public offering), for those who are interested in investing in the company can buy the shares of companies from IPO.

Maybe here you may have a question why does the public like you and me buy shares in any company what does the public get by investing their money in any company?

Here is the answer to your confusion investing money in any company or giving your money to companies that give you a share of that company which means you are now a type of partner of that company, not a real partner but you are. You got a voting right per share at the company’s annual meeting, you get dividends provided by the company you get capital gain on your money. Hope this is a very good return on your money rather than putting your money in a saving account or any fixed deposits.

How do People invest in the share market?

Generally, Normal people can’t buy or sell shares directly from a stock exchange so the retailers like you and me need to take help from a stock broker.

A stock broker is nothing just an intermediate between you and the stock market a retailer needs to open a DEMAT Account with any reliable stockbroker.

For more detailed information about a stock broker and which stock broker is best for you can read my blog who is a stock broker by clicking on the link.