The share market, also known as the stock market or equity market, is a platform where shares of publicly listed companies are bought and sold.
The process of share market begins with issue of shares on the platform of a stock exchange to general public or institutional investors by companies to raise capital to support the company’s business.
In India the procedure of issuing shares and its transactions is governed by the Securities and Exchange Board of India (SEBI) as the statutory authority. The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are India’s two main stock exchanges (NSE).
A broker, who stands between the investor and the stock exchange, helps investors buy or sell shares. After receiving the investor’s order, the broker places said order on the exchange for trading. The real trading of shares happens at the exchange.
Supply and demand plays big role determines a share’s price. However share market works on perception of national and international factors of concern to the business and industry resulting in fluctuations in share prices.
The performance of a company has a direct impact on the price of its shares. If a company is doing well, its share price is likely to rise, if doing poorly, the share price is likely to fall. Dividends are payments provided by firms to shareholders as a share of profit.
Share market has its own risks . Share prices fluctuate. Earnings are never linear. Investors risk losing money.Individual investors carry out their own research before investing in share market. Many prefer to invest in mutual funds who channelize investments further into stocks. Mutual funds houses work on thorough research, minimizing risk for an investor.
Investors have a choice of investing in Equity or debt funds. Alternatively some prefer to invest in balance funds or liquid funds. Sell of shares attracts capital gain tax which varies on one’s long term / short term possession of the shares.
The fact is inspite of market risks in India huge funds are being invested daily in Equity market by individual as well as institutional investors as investors believe “ Risk ka fal meetha hota hai “