Stock Market: What Is The Stock Market, What Does It Do, And How Does It Work?

Stock Market: A Stock market is a place where investors can buy or sell listed companies. It is a place where investors can buy ownership of a stake in a company of their choice. It provides a common place for investors to find all major companies that want to raise capital by issuing their shares to the public. Let us gain more insights on the stock market and its work in this article.

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What is the Stock Market in Simple Words?

Stock market is a common place for investors who want to buy and sell their securities with a company that offers the best value. It is a set of exchanges where different companies raise their shares and other securities for trading.

It is also known as the equity market or stock market. It can be considered an aggregation of buyers and sellers together to exchange securities in trading. There are various types of stock in a stock market, such as common stock, preferred stock, registered shares, etc. These financial activities are conducted over the counter (OTC) and through formal exchanges that work under a set of regulations.

In the Indian stock market, we generally analyse Nifty50, Bank Nifty, and Sensex, where company stocks are listed under these indices. The rise and fall of these indices determines the rise and fall of the stock market. Investors try to gain profits by buying or selling during these index movements.

Also Read: Stock Market Indices: Definition, Importance & Types of Stock Market Indices

How Does the Indian Stock Market Work?

The Indian Stock market works similarly to other countries’ stock markets. Indian companies are listed either on NSE (National Stock Exchange) or BSE (Bombay Stock Exchange). They must meet regulatory requirements set by SEBI. SEBI or Security and Exchange Board of India, is responsible for maintaining a transparent and fair trading practice in India.

Now, different investors such as individual retailers, institutional investors (FII, DII, mutual funds, insurance companies, etc) take part in trading. In the Indian market trading hours range from Monday to Friday from 9:15 AM to 03:30 PM. Stock market accepts both electronic as well as traditional trading systems.

Electronic trading systems are a more feasible and effective mode of trading. There are different market indices that track the performance of stocks, which is crucial for investors to find the right time for buying and selling their securities. The two most popular indices are Nifty50 on NSE and Sensex on BSE.

Also Read: Stock Market Investing: Guide On How To Invest In Stock Market

How to Invest in the Stock Market?

First you need to open a demat account linked to your bank account. You can use this account to buy or sell. There are various platforms which support trading zerodha, upstox, groww, dhan, etc. These platforms provide 24×7 services and provide support assistance whenever required. Online brokerages have made the investment in the stock market simple and easy. You can credit your demat account fund and wait for the right time to make an investment.

Some of the major documents required to open a trading or demat account are given below.

Bank Account Details
Id for Address Proof
Identity proof
Cancelled cheque
Unique identification number
PAN card
Stockbroker (optional)
Income proof

You can either invest in the primary or secondary markets. In the primary market, investors can purchase company stocks directly via initial Public offerings (IPOs). However, in secondary markets, investors need to purchase securities from stock exchanges. Let us know a bit more about primary and secondary market investment.

1. Primary Market Investments (IPOs)

Investors can directly apply for IPO via. their bank account. However, they must have a trading or demat account first. The status of an IPO can be tracked via the mobile application of your trading app.

2. Secondary Market

This investment process is frequently used by investors. In these markets, traders can buy or sell shares directly from the list of shares available. The earned money is directly credited to your Demat account, which can be checked via your mobile application.

What is Stock Market Volatility?

Stock market volatility is the rate at which the price of a company’s share increases or decreases during a given period. Investing in the stock market comes with risks and investors need to analyse the risks before investing in a stock.

Investing in the stock market for a long period of time can bring more gains but if you actively buy or sell your stocks, there is an increased risk that you may suffer losses. The key to getting a profit in the stock market is staying in the market for a long time. Stocks are ideal for long time investment, a short time investment is not advisable and is prone to loss.

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Stock Market FAQs

What is a stock market?

What is the role of SEBI in the stock market?

SEBI or Security and Exchange Board of India, is responsible for maintaining a transparent and fair trading practice in India.

Is it safe to invest in the stock market?

Investing in the stock market is risky but you can reduce the risk by properly analysing and studying market and risk factors. Proper planning before investing is important to avoid risk. However, the risk factor is lower in fixed deposits.

Can I buy shares at 9 am?

Indian stock market starts trading from 9:15 AM to 3:30 p.m. However, the pre-market session is open from 9:00 to 9:15 am. Also, Indian stock markets are closed on Sunday.