What is stock market ?
Picturize in your mind that stock market is a place where the shares of publicly listed companies are traded. So when we buy and sell a share we become a stock market participant. A stock market is comprised of equity market which is also known as cash market and Derivative Market . When we buy or sell a share of a company we are trading in equity market. Both of these markets will be focused soon .The stock market is a complex and dynamic financial system that allows individuals and businesses to invest in publicly traded companies and potentially earn returns on their investments.
When it comes to investing it important to acquire proper investment knowledge and to have a disciplined approach to stock market investing. Successful investors adhere to a well-defined investment plan, stick to their investment thesis, and avoid emotional decision-making. In investing time is what provides bigger returns to investors and emotions comes as their biggest enemy. It is important to have a clear investment strategy and follow it consistently, rather than following someone else’s approach and without understanding the reason and risk management behind it. Investing requires knowledge, understanding, and a disciplined approach. It’s important to diversify investments, conduct thorough research, have a long-term investment horizon, manage risks effectively, and follow a well-defined investment plan.
How Stock market works ?
The Indian stock market is regulated by the securities and exchange board of India (SEBI) and funds , securities etc are managed by the stock exchange . The leading stock exchanges of India are National stock exchange (NSE) and Bombay stock exchange (BSE). Interesting fact about the stock market is that investors like us are not able to buy a stock directly from a company , there comes another stock market participant the brokers. Brokers enables us to buy a share by assigning a seller for us. The shares we bought from a seller are stored digitally in an account known as Demat Account. This is the most simplified interpretation about how the stock market is working . It is always better to choose discount brokers incase of charges and convenience . leading discount broker provides us the Demat account facility and they are very convenient as we can buy / sell a share with just a single click.
How does price of a share fluctuate
The price fluctuation is impacted by the demand and supply like in any markets. Stock prices tends to move during the trading time on how the sellers and buyers react. If more people want to buy a stock that means there is a rise in demand for that stock than the sellers (supply), as the demand increases the price of the share also goes up. if more people wanted to sell a stock then there would more stock to sell in supply than demand, and the price of a stock will go down. Stock prices are determined by the interaction of market participants, including buyers and sellers, in the stock market. The forces of supply and demand drive stock prices up or down, resulting in fluctuations in stock prices. A stock’s price reflects the perceived value of a company, taking into account its financial performance, growth prospects, industry conditions, and market sentiment.
For example , a negative news can affect the emotion of the share market participants and they will start panic selling so there will be more sellers than buyers , eventually the share price will decline. Human emotions have a greater participation in the fluctuation of a share price.
