Stock Market & Effects

Stock market is the hub where all public listed companies’ trade. The primary market is the place where companies issue their shares to the general public in the form of an IPO for additional capital.

The moment new securities are raised on the primary market, they are eligible to be traded in the secondary market, where one investor can buy from another investor, at the market price or whatever price they both agree to. Both primary & secondary markets are regulated and governed by the Security and Exchange Board of India (SEBI).

A stock exchange can help trade company shares and securities. Any share can only be bought or sold if it is properly listed on a stock exchange. It is the common point for buyers, sellers and intermediaries. Thus, it is the common place of the stock buyers and sellers. India’s leading two stock exchanges Bombay Stock Exchange and the National Stock Exchange.

In a stock market, shares are specially traded along with instruments like bon ds, mutual funds and derivative contracts. All these instruments can be bought and sold in a stock market.

Let’s highlight the below 2 share markets:

1. Primary share market:

Whenever a company is conceptualized and started, injection of a huge investment is required. A company raises funds in the primary market. This is the primary most channel to get a company registered and put up demand for it in the market. This is the most basic way to route money towards the company. When a company is publicly raising funds for the first time, it’s called an IPO. Whenever an IPO is issued, full transparency in terms of its financials, promoters, businesses, existing stocks, price bracket etc.

2. Secondary share market:

In the secondary share market, individuals’ trade in the existing securities by selling and buying them. Most transactions in the stock market are conducted through a middleman at prevailing prices then, market transactions are transactions where one investor buys shares from another at the prevailing price. Secondary share market gives you the option to trade as much and then exit at will by selling off existing shares.

The share market is the right place to raise capital and give away ownership through