What Is the Stock Market and How Does It Work?
Investors buy and sell stock and other investments through the stock market.
The stock market is where investors connect to buy and sell investments — most commonly, stocks, which are shares of ownership in a public company.
Definition: What is the stock market?
The term “stock market” often refers to one of the major stock market indexes, such as the Sensex or Nifty50. Because it’s hard to track every single stock, these indexes include a section of the stock market and their performance is viewed as representative of the entire market.
You might see a news headline that says the stock market has moved lower, or that the stock market closed up or down for the day. Most often, this means stock market indexes have moved up or down, meaning the stocks within the index have either gained or lost value as a whole. Investors who buy and sell stocks hope to turn a profit through this movement in stock prices.
How does the stock market work?
The concept behind how the stock market works is pretty simple. Operating much like an auction house, the stock market enables buyers and sellers to negotiate prices and make trades.
The stock market works through a network of exchanges — you may have heard of the New York Stock Exchange or the Nasdaq. Companies list shares of their stock on an exchange through a process called an initial public offering, or IPO. Investors purchase those shares, which allows the company to raise money to grow its business. Investors can then buy and sell these stocks among themselves, and the exchange tracks the supply and demand of each listed stock.
That supply and demand help determine the price for each security, or the levels at which stock market participants — investors and traders — are willing to buy or sell. Computer algorithms generally do most of those calculations.
Buyers offer a “bid,” or the highest amount they’re willing to pay, which is usually lower than the amount sellers “ask” for in exchange. This difference is called the bid-ask spread. For a trade to occur, a buyer needs to increase his price or a seller needs to decrease hers.
What is NSE & NIFTY?
The National Stock Exchange of India ltd (NSE) is an Indian Stock Exchange located at Mumbai, Maharashtra India. It was established in 1992 and promoted by leading financial institutions on request of the government of India. It provides investors with access to asset classes like equities, debts and derivatives as well as currencies and mutual fund units.
NIFTY is the benchmark index of NSE known as NIFTY50.
Nifty50 comprises of top 50 and largest most actively traded stocks on NSE. Nifty50 is nothing but the calculated weighted average of the performance of 50 companies from various sectors. The base period for the Nifty index is November 03, 1995. The base value of the index has been set at 1000, with a base capital of Rs2.06 lakh cr.
What is BSE & SENSEX?
BSE (Bombay Stock Exchange) was founded in 1875 and is the oldest stock exchange in Asia.
BSE lists close to 6000 companies, it has helped develop the country's capital markets, including the retail debt markets, and helped grow the Indian corporate sectors. In 1995 the BSE switched from an open floor to an electronic trading system.
The BSE's overall performance is measured by the SENSEX.
SENSEX is a combination of Sensitive and Index, it was introduced in 1986. It is the benchmark index of BSE and consists of 30 companies that are listed on BSE.
Small cap Mid cap & Large cap stocks
Investors buy and sell stock and other investments through the stock market.
The stock market is where investors connect to buy and sell investments — most commonly, stocks, which are shares of ownership in a public company.
Definition: What is the stock market?
The term “stock market” often refers to one of the major stock market indexes, such as the Sensex or Nifty50. Because it’s hard to track every single stock, these indexes include a section of the stock market and their performance is viewed as representative of the entire market.
You might see a news headline that says the stock market has moved lower, or that the stock market closed up or down for the day. Most often, this means stock market indexes have moved up or down, meaning the stocks within the index have either gained or lost value as a whole. Investors who buy and sell stocks hope to turn a profit through this movement in stock prices.
How does the stock market work?
The concept behind how the stock market works is pretty simple. Operating much like an auction house, the stock market enables buyers and sellers to negotiate prices and make trades.
The stock market works through a network of exchanges — you may have heard of the New York Stock Exchange or the Nasdaq. Companies list shares of their stock on an exchange through a process called an initial public offering, or IPO. Investors purchase those shares, which allows the company to raise money to grow its business. Investors can then buy and sell these stocks among themselves, and the exchange tracks the supply and demand of each listed stock.
That supply and demand help determine the price for each security, or the levels at which stock market participants — investors and traders — are willing to buy or sell. Computer algorithms generally do most of those calculations.
Buyers offer a “bid,” or the highest amount they’re willing to pay, which is usually lower than the amount sellers “ask” for in exchange. This difference is called the bid-ask spread. For a trade to occur, a buyer needs to increase his price or a seller needs to decrease hers.
What is NSE & NIFTY?
The National Stock Exchange of India ltd (NSE) is an Indian Stock Exchange located at Mumbai, Maharashtra India. It was established in 1992 and promoted by leading financial institutions on request of the government of India. It provides investors with access to asset classes like equities, debts and derivatives as well as currencies and mutual fund units.
NIFTY is the benchmark index of NSE known as NIFTY50.
Nifty50 comprises of top 50 and largest most actively traded stocks on NSE. Nifty50 is nothing but the calculated weighted average of the performance of 50 companies from various sectors. The base period for the Nifty index is November 03, 1995. The base value of the index has been set at 1000, with a base capital of Rs2.06 lakh cr.
What is BSE & SENSEX?
BSE (Bombay Stock Exchange) was founded in 1875 and is the oldest stock exchange in Asia.
BSE lists close to 6000 companies, it has helped develop the country's capital markets, including the retail debt markets, and helped grow the Indian corporate sectors. In 1995 the BSE switched from an open floor to an electronic trading system.
The BSE's overall performance is measured by the SENSEX.
SENSEX is a combination of Sensitive and Index, it was introduced in 1986. It is the benchmark index of BSE and consists of 30 companies that are listed on BSE.
Small cap Mid cap & Large cap stocks
- Small-cap is a term used to distinguish companies with relatively small market capitalization. A company’s market capitalization is the market value of its outstanding shares. In India, normally a company below market capitalization of Rs.5000 crores is classified as a small-cap company.
- Mid-cap company is a company with a market capitalization above Rs.5000 crores and less than Rs.20000 crores are viewed as a midcap company.
- Large-cap refers to a company with a market capitalization value of more than Rs.20,000 crores is recognized as Large-cap companies. Large-cap is a reduced version of the term large market capitalization.
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