WHAT IS STOCK MARKET?

Published by Jainil Devaliya

WHAT IS STOCK MARKET?

The stock market is a place where the shares of companies that are publicly owned can be bought and sold either OTC (Over-The-Counter) or through centralized exchanges.

There can be multiple stock trading venues in a country or a region which allow transactions in stocks and other forms of securities. This market is also known as share market and equity market.

While both terms-stock market and stock exchange-are used interchangeably, the latter term is generally a subset of the former.

The leading stock exchanges in India include National stock exchange (NSE) , Bombay stock exchange (BSE), etc... 

The total market capitalization of equity backed securities worldwide rose from US$2.5 trillion in 1980 to US$68.65 trillion at the end of 2018.As of December 31, 2019, the total market capitalization of all stocks worldwide was approximately US$70.75 trillion.

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.

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