Stock market is a place where shares of public listed Companies are traded. A stock exchange like BSE and NSE is a platform where buyers and sellers trade in stocks and derivatives (options and futures). The participants in the stock market like stock brokers must be registered with SEBI.
The stock market in India is also known as share market or equities market. The stock market is regulated by The Securities and Exchange Board of India (SEBI), that looks into the workings of the stock market and devises guidelines for fair trading, thereby protecting the rights of investors. Companies list on the stock exchange to draw funds. With equity, the Company can easily finance the business.
Stocks can be bought or sold online, as well as offline. To participate in the trading process, an individual must have a demat and trading account. The demat and trading account can be linked to your bank account to facilitate trading. This enables the easy transfer of money to buy stocks.
You have the primary market and the secondary market. Companies raise funds in the primary market through private placement. Then there is the initial public offer or IPO where Companies list shares on stock exchanges for the very first time.
After the Company goes public, the shares can be traded in the Secondary Markets also called stock markets. Stock Exchanges facilitate seamless buying/selling of shares by enabling transactions, electronically. You can buy/sell shares in seconds.
There are four major financial instruments that are traded in the stock market. They are:
SEE ALSO: Types of Order in Stock Market
There are a total of 23 stock exchanges in India with the NSE and the BSE being the largest.
SEBI, the capital market regulator was established in 1992. The overall responsibility of development, regulation and supervision of the stock market, rests with SEBI which functions as an independent authority. SEBI has laid regulatory guidelines to promote fair trading practices and end malpractices and corruption in the system. It enjoys vast powers of imposing penalties on market participants, in case of a breach.
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