The share market, also known as the stock market or equity market, is a platform where companies list their shares or stocks for the public to buy and sell. It provides investors with an opportunity to invest in the ownership of a company and earn a return on their investment.

How does it work?

When a company wants to raise funds, it can issue shares of its stock to the public in the form of an Initial Public Offering (IPO). The shares are bought by investors, who become shareholders and part-owners of the company. The value of these shares is determined by the market forces of supply and demand. When the demand for a company's shares is high, the share price goes up, and when the demand is low, the share price goes down.

The share market is divided into two primary categories: the primary market and the secondary market. The primary market is where companies first issue their shares to the public, while the secondary market is where shares are traded between investors. The secondary market provides liquidity to investors, as they can buy and sell shares whenever they want.

The stock market is regulated by the Securities and Exchange Board of India (SEBI), which ensures that companies follow certain rules and regulations. The SEBI also monitors and regulates the activities of stockbrokers and other intermediaries involved in the stock market.

Types of shares

There are two types of shares that companies can issue - common shares and preferred shares. Common shares represent ownership in a company and give shareholders the right to vote on major decisions. Preferred shares, on the other hand, provide shareholders with a fixed dividend and do not have voting rights.

Risk and return

Investing in the stock market involves risk, as the value of shares can go up or down depending on various factors such as economic conditions, company performance, and global events. However, the stock market has historically provided better returns than other investment options such as fixed deposits, bonds, and real estate. It is important to note that higher returns come with higher risk, and investors must assess their risk appetite before investing in the stock market.

Conclusion

The share market is a vital component of the Indian economy, as it allows companies to raise funds and investors to earn a return on their investment. Understanding the workings of the stock market and the risks involved is essential before investing in it. Investors must also do their due diligence and invest in companies with a proven track record of performance and management. With the right knowledge and approach, the stock market can be an excellent tool for wealth creation and financial growth.