INTRODUCTION TO SHARE MAREKT 

Definition of Stock Market

            The stock market is a place where companies are publicly listed and their shares are traded. You've likely heard its in newspapers, television, or videos. You may have also heard the term "Today's index closed with a gain or loss of so many points." Let's learn everything about the stock market from A to Z. Here, we'll analyze each aspect of it and introduce you to each term.

         

        First of all, let me tell you that ShareMarket is a market where you can buy and sell securities of listed companies. It is a market where there are both buyers and sellers. This is the practical definition but if we go in bookish language then It is a place where companies list their shares and give the opportunity to the general public to buy their shares so that people become part owners of that company and also become participants in its profits and losses. Now it must be coming to your mind that why would any company like to share its profit and loss with the general public, that is, why would anyone share his earnings with anyone? And what benefit does the company get from this? Let's Crack this first.

     When any company is started, it is done by an individual or a group of people. They start the company by taking their own capital funds. But as the work of the company increases, it needs more funds to expand its scale of business. So the company has mainly two options, one is to take that money as a loan on which it has to pay a fixed percentage of interest, whether the company earns profit from it or not, And the second way is that the owners of the company, who are also called Promoters , bring money into the company by selling some of their shares, for which they will not have to pay fixed interest, but before taking any major decision, they will have to take permission or opinion from the new holders to whom they have sold shares, whom we call ShareHolders of the company. They get a share in the company's big decisions as well as its profits and losses.

     The offer of shares of a company by its promoters to the public is called an Initial Public Offering (IPO). When a company goes through the IPO process, it is overseen by the Securities and Exchange Board, a body formed by the government whose main objective is to protect the money of the general public and their personal interests.In India, this work is done by the Securities and Exchange Board of India (SEBI). SEBI checks whether the company has written everything correctly in its share purchase invitation also known as Prospectus , whether all the financial statements and balance sheets are correct or not, whether any manipulation has been done which may harm any investor. If SEBI finds all the documents of the company correct, then only it gives permission to bring IPO, otherwise it reject the proposal. After getting permission from SEBI, the company takes money from different Types of Investors in return of which it gives them shares of the company at a fixed price, this price is called Issue Price, sometimes this price is also comes at the price band range . which is fixed by the investors by bidding and at whatever price is get fixed from this, the shares are issued at that price. Normally, any IPO open for three business working days. Within this timeline, the investor can submit the application for the IPO of that company. After that, the investor who has filled the new IPO is allotted the IPO as per the application. Sometimes, the IPO application is more than the total offering shares, which is also called oversubscription of IPO. In this, the investor is given allotment through lucky draw or systematically allotmet matrix. After the IPO allotment, the day on which it is listed on the stock exchange is called the listing date.

       There are mainly two major stock exchanges in India, first Bombay Stock Exchange (BSE) and second National Stock Exchange (NSE). So in this way a company comes with its IPO and after getting listed on the stock exchange, investors keep buying and selling it among themselves.