What is the Share Market?
The share market is a marketplace where buyers and sellers trade shares of publicly listed companies. When a company lists its shares on a stock exchange, any investor can buy or sell those shares during market hours. In India, the two main share market exchanges are the NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).
What is a Share?
A share represents a small unit of ownership in a company. If a company has 1 crore total shares and you buy 100 shares, you own 0.0001% of that company. As the company grows and earns more profit, the value of its shares typically rises, increasing your investment value.
How the Share Market Works
Companies raise money from the public by issuing shares through an IPO (Initial Public Offering). After listing, these shares are traded on the exchange between investors. The price of each share changes constantly based on demand and supply, company performance, and broader economic factors.
Primary and Secondary Market
The share market has two segments:
- Primary market: Where companies first issue shares to the public through IPOs. Money goes directly to the company.
- Secondary market: Where investors buy and sell previously issued shares among themselves. The company does not receive money from these transactions.
Who Participates in the Share Market?
- Retail investors: Individual investors like you and me
- Institutional investors: Mutual funds, insurance companies, and pension funds
- Foreign investors: FIIs (Foreign Institutional Investors) and FPIs (Foreign Portfolio Investors)
- Brokers: Intermediaries who execute buy and sell orders on behalf of investors
What is Traded in the Share Market?
Besides shares, the share market also includes bonds, ETFs, REITs, and derivatives like futures and options. However, equity shares of companies are the most commonly traded instrument for retail investors.
Role of SEBI
SEBI (Securities and Exchange Board of India) regulates the share market. It ensures fair practices, protects investors, and maintains transparency. All companies, brokers, and exchanges must follow SEBI's rules and guidelines.
Key Takeaway
The share market is a regulated platform where investors buy and sell company shares to build wealth over time. It provides companies with capital and investors with ownership and returns. Use the Lemonn app to explore shares, track prices, and invest in India's growing companies.
