Basics of Stock Market - Beginner

What is a Share Market?

Are you new to the stock market? In this article, I'll walk you through the world share market. Let's first learn about share market. The place where buying and selling takes place. A share is a unit of ownership in the company you purchased it from. You might buy 10 shares of Rs. You become a shareholder by buying 200 shares of ABC company. You can then sell your ABC shares whenever you wish. You can achieve your goals by investing in shares, such as higher education, buying a vehicle, or building a house. The rate of return is high if you invest early and keep it going for a while. Your investment strategy can be based on how much money you have available.

You are investing in the company by buying shares. Your share price will rise as the company grows. Selling shares on the stock market can bring you profit. The price of shares can be affected by many factors. The price of a share can fluctuate between rising and falling. The price drop will be offset by long-term investment.

Why would a company sell its shares to the public? Capital or money is required by a company for expansion, development, and so on. It raises money from the public. Initial Public Offering (IPO) is the process through which shares are issued by a company. You can read more about IPO in the Primary Market.

People would always talk about bear market and bull market. What is the difference? The bull market is when stocks prices continue rising while the bear market is when prices fall. All the buying and selling takes place in this market. NSE (National Stock Exchange), and BSE (Bombay Stock Exchange). These two stock exchanges are India's major and are regulated and supervised by SEBI (Securities and Exchange Board of India). The broker acts as an intermediary between investors and the stock exchange. To start trading or investing, you will need to open a trading account and a demat account with a broker. It is easy to open a demat account online. Once you have linked your bank account to these accounts, it is possible to start your investment journey.

There are two types of share market:

  • 1. Primary market
  • 2. Secondary Market

Primary Market

  • An IPO is when a company or government issues shares on the primary market.
  • You can either place the issue through private or public placement.
  • Issue is public if more than 200 people are allotted shares; issue is private if less than 200 people are allotted shares.
  • Price of a share may be determined by Fixed price or Book Building issue. Fixed price is set by the issuer and is mentioned in the offer document. Book building determines the price of the issue based upon investor demand.

Secondary Market

Secondary market allows you to sell shares that were purchased in the primary market. Secondary market is available through exchange traded and over-the-counter (OTC) markets. OTC markets are informal marketplaces where two parties agree to settle a specific transaction in the future.

Highly regulated exchange traded markets Also known as the auction market, where all transactions are made via the exchange.

What is the importance of the Share Market?

The share market is a key tool for companies looking to raise capital for expansion or growth. IPOs allow companies to issue shares to the public, which in turn allows them access funds for different purposes. After IPO, the company is listed on the stock exchange. This gives investors the opportunity to invest even if they are not common. The company's visibility also increases.

Investors and traders can both be part of the share market. Investors can hold stock for a longer time than traders. You can choose which investment product you prefer, depending on your financial situation.

This investment can be used by the investors to achieve their life goals. Because it offers liquidity, it's one the most popular platforms for investing. You can purchase or sell shares at any time, depending on your needs. This means that financial assets can be converted into cash at any time. This provides ample opportunity for wealth creation.

You already know that investing in shares can help you make money. These are some of the ways your money can grow.

  • 1. Dividends
  • 2. Capital Growth
  • 3. Buyback


  • 1. These are the profits that the company makes and they are distributed to shareholders as cash.
  • 2. It is divided according to how many shares you have.

Capital Growth

Capital appreciation is possible by investing in shares or equities. The higher the return, the longer the investment period. Stocks investment comes with risk. Your age, dependents and financial needs will determine your risk appetite. You can put more money in equities if you're young and have no dependents to earn more. If you have dependents or commitments, however, you can allocate a greater portion to equity and less to bonds.


The company purchases back shares from investors by paying more than the market price. It will buy back shares if it has a large cash pile or to consolidate its ownership.

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