📊 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
- 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).
- 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.
- 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.
- In India, the two main stock exchanges are:
💰 How People Earn Money
- Capital Gains
- Buy low, sell high. Example: Buy Infosys at ₹1,000, sell at ₹1,400 → Profit ₹400/share.
- Dividends
- Some companies share profits with investors as cash (dividends).
- 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.