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What is the share market?

  1. Stock Markets Basic
    1. Invest:3 benefits of investing for your future
    2. Types of Investment Diversification asset classes
    3. What is the share market? What Does It Do and How Does It Work with examples
    4. SEBI What is Securities and Exchange Board of India
    5. Stock Broker Financial Intermediaries or Market Intermediaries role in share market
    6. Depository and types of Depository Participants in India
    7. ICCL, NSE Clearing Limited and Bank’s role as Financial intermediary
    8. Angel Investors What are their roles with examples
    9. Venture Capitalist Who Are They and What Do They Do
    10. CAPEX Understanding Capital Expenditure with examples
    11. Private Equity Explained Understanding PE With Examples
    12. Initial Public Offering (IPO): What It Is and How It Works
    13. Launch IPO Why Do Companies Go Public
    14. IPO process how Initial Public Offering works in India
    15. What is IPO Key Terms Related to Initial Public Offering
    16. What is the share market?
    17. Share price understanding how does prices increase or decrease with examples
    18. Share trading: How Does It Work? with examples
    19. Types of traders in share market
    20. Market Index How Indexing Works, Types, and Examples in share market
    21. Share market indices importance and key terms
    22. Index construction methodology
    23. Share market terminology
    24. Share market terminology for beginners
    25. How to Trade Shares for Beginners
    26. Clearing and settlement process in the Indian Share market
    27. Stock selling learn What happens when you sell a stock
    28. Corporate actions in share market and impact on prices
    29. Bonus Issue of Shares Explained and How They Work
    30. Stock Split and Buyback of Shares What you need to know
    31. Monetary Policy by RBI Repo Rate, reverse repo rate, Cash reserve
    32. Inflation and IIP explained with examples
    33. Purchasing Managers Index, Budget, Corporate Earnings Announcement and Non-Financial events
    34. Stock market basics for beginners
    35. Offer for Sale and Follow-on Public Offer explained with examples
    36. Rights Issue and its relevance to shareholders explained with examples
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Marketopedia / Stock Markets Basic / What is the share market?

Public Limited Companies

We now understand the IPO process and reasons for offering shares to the public, thus allowing us to explore share markets further.

A publicly traded company is required to divulge all corporate-related matters to the public. The shares of such companies are exchanged regularly on the stock exchanges. In this chapter, we will look into some of the reasons why market participants trade stocks.

What is the share market?

The share market is an electronic marketplace where stocks, bonds, and other securities are bought and sold. Basically, it is a marketplace for investors to trade these financial instruments. It provides an avenue for companies to raise money through initial public offerings (IPOs) or existing shares in the market, while also enabling investors to generate returns by buying and selling securities.

Let’s take into consideration a scenario: 

Reliance Industries was confronted with a corporate action from the regulator. Also, some of their management personnel resigned. This had significantly impacted their reputation, and their stock price took a dive to Rs.3,000 from the previous Rs.3,500.

Let’s suppose that A and B are traders.

A’s take on Reliance Industries – With the challenge of finding a new CEO, what seems probable is that the stock price will decrease further. For trading with A’s outlook in mind, selling Reliance Industries shares should be considered.

B has a different take on the issue; she believes Reliance Industries stock price is overreacting to the leadership change and the corporate action, and will rebound shortly when a suitable head is found.

From B’s perspective, it would be wise to purchase shares of Reliance Industries.

For A and B, the transaction amount in Reliance Industries will be Rs. 3000, with A selling and B purchasing.

Both A and B will order to buy and sell shares via their stock brokers, who deliver it to the stock exchange. The share market’s primary responsibility is ensuring these orders match and the trade can be completed. It serves as an intermediary between varied market participants.

A stock exchange is a platform where market participants can acquire shares from any publicly listed firm and take part in trading from their perspective, with the understanding that there will be opposing perspectives. Ultimately, differing opinions create a competitive market.

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