Learn what is share market – from basics to advanced. Understand how stock market works, types of markets, IPO, NSE, BSE, Demat Account, and how to start investing. Perfect guide for beginners!
1. Introduction to Share Market
What is the Share Market?
- Share market is a place where companies sell parts of their ownership, i.e. shares, in front of the public. By buying these shares, people become a part of that company. When you buy shares of a company, you become its small owner.
- This entire system happens between buyers and sellers and all this is managed through a regulated exchange – like NSE (National Stock Exchange) or BSE (Bombay Stock Exchange) in India.
Importance of the Share Market
- Raising Capital: Companies raise money for new projects.
- Investment Opportunities: People have a chance to multiply their money.
- Economic Growth: When companies grow, the economy also becomes stronger.
- Liquidity: You can buy/sell shares at any time.
2. Types of Share Markets
The share market is divided into two main categories – Primary Market and Secondary Market. Both have different roles and both are important for investors.
🔹 Primary Market
The primary market is the place where a company offers its shares to the public for the first time. This process is called IPO (Initial Public Offering).
✅ Example:
If Reliance had launched its shares in the market for the first time, it would have been a primary market transaction.
🏦 Purpose:
- Raising capital
- Expanding business
- Loan repayment or investing in new projects
🧾 Features:
- Shares are purchased directly from the company
- The price is generally fixed or in a price band
- The investor receives shares after allotment
🔹 Secondary Market
Once a share is listed on the stock exchange, it is then traded in the secondary market. Here investors buy or sell shares from each other – the company is not involved.
✅ Example:
You bought Tata Motors share from BSE for ₹700 – this is a secondary market transaction.
🔁 Features:
- Shares are listed on the exchange
- Prices change according to demand & supply
- Trading is possible both intraday or long-term
🧠 Key Difference:
| Feature | Primary Market | Secondary Market |
|---|---|---|
| Buyer | Public buys from Company | Public buys from Other Investors |
| Share Price | Fixed or Decided by Company | Market-driven (fluctuates) |
| Purpose | Capital Raising | Liquidity, Profit booking |
| Company Involved? | Yes | No |
3. How Does the Share Market Work?
Share market is a platform where companies offer their shares and people buy or sell those shares. This entire process takes place through a regulated system, in which many people and institutions are involved.
🔄 Step-by-Step Process:
🔹 1. Company’s share issue (IPO)
First of all, the company issues its shares in the primary market – which is called IPO (Initial Public Offering). This is where the public gets shares for the first time.
🔹 2. Listing of share on stock exchange
After the IPO, the company’s shares are listed on stock exchanges such as NSE (National Stock Exchange) or BSE (Bombay Stock Exchange). Now these shares can be freely traded in the secondary market.
🔹 3. Buying/Selling Investor’s Share
The investor buys or sells shares through his demat account. This transaction takes place through a stock broker, such as:
4. Role Of Stock Exchange
Talk Exchange provides a platform where buyers and sellers meet. It ensures that:
- Fair pricing
- Fast execution
- Maintain Transparency
5. Regulation of SEBI
SEBI (Securities and Exchange Board of India) is a regulator that monitors the entire stock market. Its job is:
- protection of investor
- protection from Market manipulation
- Ensuring Fair trading practices
6. Trade Settlement
When you buy shares, they are immediately credited to your Demat account (T+1 settlement system). Money is deducted from your trading account, and the shares are registered in your name.
💡 Real-Life Example:
Ram bought Reliance shares for ₹2500 from Groww App. His order was placed on BSE exchange. A seller sold it at that rate, the trade was executed, and after 1 day the shares got reflected in Manoj’s Demat account. This is the working system of the share market.
4. Stock Exchanges in India (NSE & BSE)
Trading in the share market is possible only when there is a proper platform or exchange. There are two big stock exchanges in India through which lakhs of people trade every day – NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).
🔹 NSE – National Stock Exchange
- Established: 1992
- Location: Mumbai
- Index: NIFTY 50
- India’s largest stock exchange by trading volume.
- Uses the most advanced technology system.
- Represents 50 top companies through the NIFTY 50 index.
- Electronic trading system has made stock buying-selling fast and transparent.
📌 Example:
If you see Infosys, TCS or HDFC Bank stock in NIFTY – they are listed on NSE.
🔹 BSE – Bombay Stock Exchange
- Established: 1875 (Asia ka sabse purana exchange)
- Location: Dalal Street, Mumbai
- Index: SENSEX
🧾 Features:
- Oldest stock exchange in Asia.
- 5000+ companies are listed on BSE.
- SENSEX represents the top 30 companies which are the backbone of India’s economy.
- It is also very active in investor education and SME (Small & Medium Enterprise) support.
📌 Example:
Reliance, Tata Motors, SBI — all these are also listed on BSE, and have weightage in SENSEX.
🆚 NSE vs BSE – Difference
| Feature | NSE | BSE |
|---|---|---|
| Year Established | 1992 | 1875 |
| Benchmark Index | NIFTY 50 | SENSEX |
| Number of Companies | ~1600+ | 5000+ |
| Trading Volume | Higher | Comparatively Lower |
| Speed/Technology | Advanced Tech Platform | Also Improved, But Initially Slow |
✅ Conclusion:
Be it NSE or BSE, both are very important for the Indian economy. Shares are listed on these exchanges and through them millions of trades are executed every day.
If you wish, you can invest in both NSE and BSE, depending on where the stock is listed. Most top companies are listed on both.
5. Key Players in the Share Market
🔹 1. Investor
The person or institution that buys/sells shares to earn profit. There are two types of investors – retail (common people) and institutional (banks, mutual funds).
🔹 2. Broker
A broker is a licensed agent who helps you buy or sell shares. Popular Brokers: Zerodha, Upstex, AngelOne.
🔹 3. SEBI (Securities and Exchange Board of India)
It is India’s stock market regulator. SEBI monitors the market and protects the rights of investors.
🔹 4. Companies
These are the firms that issue shares to raise capital for their business – like Reliance, Tux, HDFC, etc.
🔹 5. Stock Exchanges (NSE/BSE)
Ye platform provide karte hain jahan shares ka buying-selling hota hai in real-time with price updates.
Common Myths About Share Market
❌ Myth 1: Share Market = Gambling
➡️ Reality:
Stock market is not based on luck, it is based on knowledge and analysis. If you invest without research then it can become gambling. But with the right strategy the market makes money in the long term.
❌ Myth 2: Only rich people can invest
➡️ Reality:
You can invest even ₹100 via mutual funds or fractional shares. Market is for everyone – be it a student or a salaried employee.
❌ Myth 3: Market is only for experts
➡️ Reality:
Today, anyone can learn through YouTube, apps and blogs. Anyone can start with basic knowledge and patience.
❌ Myth 4: There is always loss
➡️ Reality:
Short-term ups and downs are normal, but in the long-term one gets good returns. Stocks like Infosys, TCS, HDFC have made people crorepatis – all that is needed is right timing and patience.
Conclusion:
The stock market is a place to invest with understanding. You can become a smart investor by breaking the myths
The stock market is a place where money can be made with the right knowledge, patience and planning. Whether you are a student, working professional or a retiree – if you are disciplined, the market can give you financial freedom in the long term.
In this blog series, we have covered the basic concepts of the stock market, types, how it works, key players, benefits, risks, tips and common myths. Now you have a solid base to get started.
Remember this:
“You don’t need rocket science to succeed in the market – you only need the right direction and patience.”
Keep your learning going, start investing with small amounts, and keep improving your strategy over time.
