Basics to Stock Market- 1

To understand the fundas of Stock Market one must know about its core i.e. Financial Market. Financial market in simple term is a place where those who need money and those who have surplus money are brought together.
Financial Market is divided in two major segments-

1. Capital Market.
2. Money Market.

For the timing we'll now focus on Capital market. It is a market that deals in medium and long term finance, usually the maturity period of the instruments dealt in capital market is more than a year. The instruments in capital market consist of Shares, Debentures, Bonds, etc.

Here comes the role of stock exchange, as it's an important institution in capital market. Earlier investment into stocks/securities was believed to be the rich man's task, who had huge surplus funds and guts to take the risk. Currently it has now become an attraction even for the common man, who can invest his little surplus into the stock market, all thanks to the awareness, education and the introduction of the SIP (Systematic Investment Plan) where a common man can invest conveniently a certain sum of money (min. ₹500 per month) from his income. #noneedtoberichclass

Basically a stock exchange is a place where securities are purchased and sold in an organized way. (Securities- Shares, Debentures, Bonds, Mutual funds,etc.)

Stock Exchange = Stock Market = Share Bazar = Share Market.

Stock Market is categorized into two-

• Primary Market
• IPO (Initial Public Offer)- As the name suggests, Company offering its securities in its initial stage [Entering for the first time into Stock Exchange]
• Secondary Market
• A place where already issued securities are bought and sold repeatedly.

One must be aware that in order to transact in stock exchange one must have a Demat A/c (mandatory). Unlike Savings, Current a/c where your income and expenditure related transactions are recorded, demat operates just like a bank locker where you keep your valuable stocks (shares, securities) in an electronic form. The word DEMAT itself means dematerialization i.e. in electronic form rather physical form.

                                     to be continued...

*Surplus- Excess money.

The Bombay Stock Exchange (BSE) is the oldest stock exchange in Asia

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