The stock market is a marketplace where buyers and sellers trade financial assets such as stocks
(shares of companies), bonds, and derivatives. It serves as a platform for companies to raise capital and for investors to buy ownership in businesses, aiming for returns through price appreciation or dividends.
Key Components of the Stock Market
- Stock Exchanges – The two major stock exchanges in India are:
- BSE (Bombay Stock Exchange) – Established in 1875, one of the oldest exchanges in Asia.
- NSE (National Stock Exchange) – Introduced in 1992, known for its electronic trading system and benchmark index Nifty 50.
- Indices – These track overall market performance:
- Sensex (BSE) – Tracks the top 30 companies on the BSE.
- Nifty 50 (NSE) – Tracks the top 50 companies on the NSE.
- Market Participants – Different players in the stock market include:
- Retail Investors – Individual traders.
- Institutional Investors – Mutual funds, banks, insurance companies.
- Foreign Institutional Investors (FIIs) – Investors from outside India.
- Market Regulators – The Securities and Exchange Board of India (SEBI) regulates and ensures fair trading.
Types of Markets
- Primary Market – Companies issue new stocks through IPOs (Initial Public Offerings).
- Secondary Market – Investors trade existing shares on stock exchanges.
Factors Influencing the Stock Market
- Economic Indicators – Inflation, GDP growth, interest rates.
- Corporate Earnings – Profitability of listed companies.
- Global Events – Geopolitical tensions, global trade policies.
- Investor Sentiment – Market trends, speculation.
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