Learning sharks-Share Market Institute

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What is the stock market and Who Regulates ?

Basics of stock market

Why invest?
who regulates?
• financial interdependence
• IPOs
• Stock Market returns
• Trading system

• Day end settlements
• Corporate actions
• News and Events
• Getting started
• Rights, ofs,fpo and more
• Notes

 
 
Why Investing is Important & Where to Invest?

What is the stock market?

Firstly, One crucial investment we make to produce returns that outperform inflation is in stocks. We came to this conclusion after reading the previous chapter. After that, how do we invest in stocks? It is imperative to comprehend the environment in which stocks operate before we delve further into this subject.

 

Similarly, Similar to how we visit our local supermarket or Kirana store to buy our daily necessities, we visit the stock market to buy and sell equity investments. Anyone looking to buy or NRI’s and OCIsell shares goes to the stock market. To buy and sell is to transact, to put it simply. Practically speaking, there is no other way to purchase or sell shares of a publicly traded company like Infosys than through the stock markets.

 

Moreover, The stock market’s main goal is to make your transactions easier for you. Thus, the stock market facilitates the meeting of buyers and sellers of shares.

 

Furthermore, The stock market does not have a physical location like a supermarket, however. It is accessible electronically. You use your computer to access the market electronically and proceed to complete your transactions (buying and selling of shares).

 

Importantly, It is also significant to remember that a registered intermediary known as a stockbroker can be used to access the stock market. The stockbrokers will be covered in more detail later.

 

At last, e-stock markets in India are composed of the two main stock exchanges. They are the National Stock Exchange and the Bombay Stock Exchange, respectively. In addition to these two exchanges, there are numerous other regional stock exchanges, such as the Bangalore Stock Exchange and the Madras Stock Exchange, that are essentially being phased out and no longer serve any significant function.

The need for regulation of stock market participants

Accordingly, The stock market draws companies and people from all walks of life. A market participant is a person who engages in stock market trading. The market participant can be divided into several groups. Following are a few of the different types of market participants:

1. Domestic Retail Participants – These are regular people like you and me who conduct transactions in markets.

2. NRI’s and OCI – These individuals are based outside of India but have Indian ancestral roots.

3. Domestic Institutions – These are large corporate entities based in India. A classic example would be the LIC of India

4. Domestic Asset Management Companies (AMC) –Typical participants in this category would be the mutual fund companies such as SBI Mutual Fund, DSP Black Rock, Fidelity Investments, HDFC AMC, etc

5. Foreign Institutional Investors –corporate bodies that are not Indian. These could be other investors, hedge funds, and foreign asset management firms.

 

Now, everyone’s goal is the same: to conduct profitable transactions, regardless of the category of market participant. To put it more simply: to make money.

 

Especially, Human emotions such as fear and greed are often at their peak when money is involved. These feelings are easily exploited, and engaging in unfair behavior is easy. Due to operations run by Harshad Mehta and other individuals, India has its fair share of such perverse practices.

 

Nevertheless, Given this, the stock markets require a person who can establish the rules of the game (commonly referred to as regulation and compliance) and make sure that players abide by them, creating a level playing field for all participants.

Who Regulator

For this reason, The Securities and Exchange Board of India, or SEBI, is the organization in charge of regulating the stock market in India. Whereas, The mission of SEBI is to safeguard the interests of small investors, advance the growth of stock exchanges, and control the activities of market participants and financial intermediaries. SEBI generally ensures:

  1. The BSE and NSE stock exchanges operate ethically.
  2. The way that stockbrokers and sub-brokers conduct business are ethical
  3. Corporate entities (such as Satyam Computers) do not unfairly benefit from the markets.
  4. Participants refrain from engaging in unethical behavior.
  5. The interests of small retail investors are safeguarded
  6. Market manipulation should not be done by large investors with large cash reserves.
  7. Overall development of markets