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How The Stock Markets Works

A stock market is a place where investors buy and sell investments. These investments are in the form of stocks which are shares of ownership of the company (public). The stock market is a global platform where investors trade in shares, bonds, and other financial instruments. The topic of the stock market is the hype these days. All the students need to have thorough knowledge about the stock market, its functions, and how the stock market regulates. In this article, we will be looking at all these points in detail so keep reading.

What is the Stock Market?

Buying a stock of the company means purchasing a small piece of that public company. Trading of these small pieces is held in a global market known as the stock market. Stock markets I want have the largest avenues for investments. In India, there are two stock exchanges: the Bombay Stock exchange (BSE) and the national stock exchange (NSE). Investors trade in shares listed by the companies on the stock exchange, through the secondary market.  

In simple terms, a stock market is the aggregation of buyers and sellers representing ownership claims on the businesses.

How does the stock market work?

Some people often consider the stock investment as gambling. But it is also true that with proper knowledge and the stock market and its regulation can change your perception. The stock market works in a very simple and sober concept. It allows the buyers and sellers to make trades with negotiated prices. Let us look at how the stock market works in detail:

  • Public companies list their shares on the stock exchange through an IPO.
  • Investors purchases these stocks/shares allowing the company to raise their business.
  • Circulation of stocks takes place through buying and selling amongst the investors.
  • The price of the security is determined through supply and demand.

The process of buying stocks these days has been simplified in this digitalized era. Now beginners can buy and sell stocks through online mode and several verified applications. Candidates must ensure that they go through the guidelines of SEBI before investing in the stock market.

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