What is Stock?
Stocks are issued by companies in order to raise capital and are bought by investors in order to acquire a portion of the company.
What is Stock market?
The stock market is where investors buy and sells share of companies. It’s a set of exchanges. Where companies issue shares and other securities for trading. It also includes over-the-counter marketplaces. Where investors trade securities directly with each other(rather than through an exchange)
Stocks Exchange In India
There are 22 stock exchanges in India but 2 of them are biggest –
NSE
(NATIONAL STOCK EXCHANGE)
NSE is the 11th largest stock exchange in the world by market capitalization (us $2.27 trillion) and the largest in India by the number of trades for both equities and derivative trading.
- Location - Mumbai
- Index - Nifty
- Consist of group - 50 Stocks
- Commenced operation - April 1994
- Base period - 1993- 94
- Base Index Value - 1000
BSE
(BOMBAY STOCK EXCHANGE)
BSE is the oldest stock exchange in Asia with a rich heritage of over 137 years of existence and is the 9th largest stock exchange in the world.
- Location - Mumbai
- Index - Sensex (SENSItve IndEX)
- Consist of group - 30 Stocks
- Base period - 1978-79
- Base Index Value - 100
- Date of Launched - 1 January 1986
What is Stock broker?
A stockbroker is a financial professional who executes orders in the market on behalf of clients. A stockbroker may also be known as a registered representative (RR) or an investment advisor. Most stockbrokers work for a brokerage firm and handle transactions for a number of individual and institutional customers.
Trading in stock market?
1. The market regulator, the securities and exchange board of India(SEBI)has made it compulsory to open a Demat account if you want to buy and sell stocks.
2. A person who wants to buy/sell stocks in the stock market has to first place his/her order with a broker or can do it themselves using an online trading system.
3. The Stocks purchased will be sent to your demat account. This process is called Rolling Settlement Cycle.
Powers of SEBI
1. Power to approve the bye-laws of stock exchange.
2. Power to inspect the book of accounts.
3. Power to grant license to any person for dealing in certain areas.
4. Power to delegate powers exercisable by it.
5. Power to try directly the foliation of certain provisions of the Company Act.
What is Demat Account?
A Daccount helps investors hold shares and securities in an electronic format. This kind of account is also called a dematerialized account. It also helps to keep proper track of all the investments an individual makes in shares, exchange-traded funds, bonds, and mutual funds in one place.
Stock market Condition.
There are two ways to describe the general condition of the stock market :
1) BULL MARKET
A Bull market indicates the constant upward movement of the stock market. A particular stock that seems to be increasing in value is described to bebullish.
2) BEAR MARKET
A Bear market indicates the continuous downward movement of the stock market. Stock that seems to be decreasing in value is described to bebearish.
How Stock market Affects economy
The economy and stock markets are closely related. Changes in the stock market have a significant impact on the economy, investors, and people in general. The state of the economy and the general population are reflected in the stock market’s performance. Continue reading to find out how the stock market affects the whole Indian economy.
Share price changes can affect consumer and corporate confidence, which can therefore have an impact on the economy either positively or negatively. Economic expansion and other factors might also impact stock markets at the same time. This is how the stock market influences the economy:
Positive and Negative impact on consumer
The stock market is erratic. Markets are erratic due to continuous spikes and declines in share prices. The stock market performs well and is often rising during a bull market. This increase shows investor and individual confidence as they grow more upbeat about markets.
On the other side, amid a stock market crisis, customers grow gloomy. It causes a sense of panic, most investors have a tendency to leave the markets, and it hurts the economy.
Effect on Consumption and wealth
People boost their investments during a bull market as they gain confidence. The economy benefits as a result of this driving up overall consumption. In order to obtain long-term returns that outpace inflation, people also have a tendency to expand their investments in market-linked products.
A bear market, however, has a negative effect on economic growth and reduces consumer spending. Because they are in a panic, investors hesitate to make investments, which slows growth.
Impact on business enviroment
Businesses are essential to economic expansion, and stock market performance has an impact on the business climate. Businesses are more likely to raise financing that can fuel their growth and increase value when the stock market is performing well.
On the other side, when markets are weak, businesses’ confidence suffers as well. Their lack of spending has a detrimental effect on the prices of products and services as well as the GDP.
Other factor
Bond markets, pension funds, and the stock market are all impacted. Since a sizable portion of pension funds are invested in the stock market, a decline in share prices will lower the fund’s value and have an impact on future pension payments. Due to the fact that people who rely on pension income tend to save more, which in turn reduces expenditure and eventually the GDP, this might slow economic growth.
A decline in share prices benefits the bond market while having a detrimental influence on a country’s GDP and economic growth. People search for alternative assets to invest their money in, such as bonds or gold, when the stock market is down. They frequently offer a higher return on investment than stock market shares.
Never forget how crucial it is to spread your risk and diversify your investing portfolio. Avoid putting all of your eggs in one basket.
Stock market Index?
A stock index usually referred to as a stock market index gauges a particular area of the stock market. In other words, the index calculates changes in share prices for various businesses.
The prices of specific equities are used to calculate the stock index (generally a weighted average). Financial organizations and investors frequently use it to compare the return on different investments and to define the market.