What is Share Market? Meaning, Types

The share market, often referred to as the stock market, is a financial marketplace where investors can buy and sell shares of publicly traded companies. It serves as a platform for companies to raise capital by issuing ownership stakes (shares) to the public. Investors can acquire these shares to earn returns through price appreciation and dividends.

What is the Share Market?

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Why Invest in the Share Market?

• Potential for High Returns : Historically, the share market has provided opportunities for substantial returns compared to many other investment avenues, especially over the long term.
• Ownership in Companies : Purchasing shares grants you a stake in the company. As the company’s value and profits increase, so does the value of your investment.
• Diversification : By investing in various companies across different sectors, you can spread your risk and mitigate the impact of any underperforming investment.
• Liquidity : The share market is highly liquid, allowing you to easily convert your investments into cash by selling your shares.
• Long-Term Wealth Creation : Shares can contribute to long-term wealth accumulation through capital appreciation and dividend income, making them a powerful tool for growing your financial assets over time.

Types of share market

Primary Market

Secondary Market

Equity Market

Derivative Market

How to Invest in Share Market?

Share Market Basics - Important Terms

• Demat Account : A demat account is a digital account that stores securities such as shares, bonds, and mutual fund units in electronic form.
• Stock Broker : A stock broker acts as an intermediary between traders or investors and the stock exchange, executing buy and sell trades on behalf of clients.
• Trading Account : A trading account is an electronic account provided by a stock broker that enables traders and investors to buy and sell shares and other securities on the stock exchange.
• Portfolio : A portfolio refers to a collection of assets an investor has invested in, which can consist of various types of the same asset class or different asset classes.
• Index : An index is a group of stocks listed on stock exchanges that measures the stock market's performance as a whole or in specific sectors.
• Sensex : Sensex is a broad market index created by the Bombay Stock Exchange (BSE). It comprises 30 top companies listed based on market capitalization, representing multiple sectors of the economy.
• Nifty : The Nifty is a broad market index established by the National Stock Exchange. It consists of 50 top companies listed by market capitalization. Like Sensex, it includes stocks from major sectors and industries.
• Bullish Market : A market is bullish when stock prices have been rising over some time.
• Ask Price : The asking price is the lowest amount a seller will accept for an asset. Details of the asks can also be accessed via the stockbroker’s trading portal.
• Dividend : Companies may distribute a portion of their profits to shareholders, known as dividends, which can be issued in cash or as additional shares.
• Derivatives : Derivatives are financial instruments whose value derives from an underlying asset. They include futures and options and can be traded freely on exchanges.

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