Article General Knowledge – What is Stock Market & How they Run

📊 What is the Stock Market?

The stock market is like a big online marketplace where people buy and sell shares (ownership units) of companies.

  • When you buy a share, you own a small part of that company.
  • If the company does well, your share value goes up (and you can make money).
  • If the company performs badly, the share value may fall (and you lose money).

🏦 How It Works

  1. Companies Need Money
    • Suppose a company like Infosys wants to expand. Instead of only taking loans, it can raise money by selling shares to the public.
    • When they do this for the first time, it’s called an IPO (Initial Public Offering).
  2. Investors Buy & Sell Shares
    • After IPO, shares are traded daily in the stock market between investors (not directly with the company).
    • Prices move up and down based on demand, supply, company performance, economy, news, and global events.
  3. Stock Exchanges
    • In India, the two main stock exchanges are:
      • NSE (National Stock Exchange)
      • BSE (Bombay Stock Exchange)
    • Globally: NYSE, NASDAQ, London Stock Exchange, etc.

💰 How People Earn Money

  1. Capital Gains
    • Buy low, sell high. Example: Buy Infosys at ₹1,000, sell at ₹1,400 → Profit ₹400/share.
  2. Dividends
    • Some companies share profits with investors as cash (dividends).
  3. Trading & Investing Styles
    • Investing: Long-term (years) → Wealth building.
    • Trading: Short-term (minutes, days, weeks) → Quick profit/loss.

⚠️ Risks of Stock Market

  • Prices fluctuate daily.
  • Global events, government policies, interest rates, war, oil prices can affect markets.
  • Emotions (fear & greed) often cause losses if not handled properly.

🌍 Why the Stock Market is Important

  • Helps companies raise money.
  • Helps investors grow wealth.
  • Reflects the economy’s health (Sensex, Nifty = barometer of India’s economy).
  • Creates jobs & fuels business growth.

Chandan Singh

this is Chandan Singh from India. research technical analyst in financial market and helping investor or traders to generate knowleage with profit from financial market with having 17 years of experience!