The share market or stock market is a place where the buying and selling of shares takes place. Basically, it is a marketplace to buy and sell shares, bonds, securities, etc.
A share = a unit of ownership, & A stock = a company that issues the shares.
This marketplace is also called as Stock Exchange. e.g. NSE (National Stock Exchange), BSE (Bombay Stock Exchange).
To know what bonds and securities mean, read our article – Government securities
What is a share ? 👇
Shares represent portions of a company’s ownership. A share is a unit of a company’s ownership. When one purchases shares of a company, they become a part-owner of the company. If an individual holds 20% of the total shares of a company, it means they are a 20% owner of the company.
The stock market is a secondary market where the buying and selling of shares, bonds, and other securities occur after their initial issuance. Investors trade these securities among themselves, not with the company that issued them. When a company issues its shares to the public for the first time, investors purchase shares directly from the company, and such transactions occur in the primary market.
Shares that were previously purchased can be sold in the secondary market (stock market) to other investors. Today, this can be done using your mobile device from the comfort of your own home.
Where are these markets located ?
The stock market or any primary or secondary markets used to be physical places until the 2000s. The digitization of the stock market in India took place in stages. In 1994, The National Stock Exchange (NSE) launched its electronic screen based trading. The Bombay Stock Exchange (BSE) did the same in 1995.
For the individual investors, internet based trading of shares truly began in April 2000. Before 2000 it used to be offline.
The BSE is located in Mumbai, Maharashtra and the NSE is also located in Mumbai, Maharashtra. Today there is no physical handling takes place of the shares in these marketplaces. The shares are now fully dematerialized (electronic form = no physical papers), i.e. the shares are available in the digital form only.
BSE & NSE both are government or private ?
The BSE and NSE both are private companies. Both NSE & BSE are for-profit companies. Though both the stock exchanges are private but are heavily regulated by the government. The ‘Securities and Exchange Board of India’ (SEBI) is the government appointed body to regulate the stock exchanges-BSE and NSE. Both the stock exchanges work under the strict regulation of SEBI.
So, stock market or share market is a marketplace for the buying & selling of shares. How to buy and sell the shares ? ⇾ We will learn about it in our next post.
4 thoughts on “What is a Share Market (Stock Market) ?”