Article General Knowledge - What is Stock Market & How they Run

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"Article General Knowledge - What is Stock Market & How it's Run"

📊 What is the Stock Market?

The stock market is like a big online marketplace where people buy and sell shares (ownership units) of companies.

• When you buy a share, you own a small part of that company.

• If the company does well, your share value goes up (and you can make money).

• If the company performs badly, the share value may fall (and you lose money).

🏦 How It Works

1. Companies Need Money

   • Suppose a company like Infosys wants to expand. Instead of only taking loans, it can raise money by selling shares to the public.

   • When they do this for the first time, it’s called an IPO (Initial Public Offering).

2. Investors Buy & Sell Shares

   • After IPO, shares are traded daily in the stock market between investors (not directly with the company).

   • Prices move up and down based on demand, supply, company performance, economy, news, and global events.

3. Stock Exchanges

• In India, the two main stock exchanges are:

  • NSE (National Stock Exchange)

  • BSE (Bombay Stock Exchange)

• Globally: NYSE, NASDAQ, London Stock Exchange, etc.

💰 How People Earn Money

1. Capital Gains

   • Buy low, sell high. Example: Buy Infosys at ₹1,000, sell at ₹1,400 → Profit ₹400/share.

2. Dividends

   • Some companies share profits with investors as cash (dividends).

3. Trading & Investing Styles

• Investing: Long-term (years) → Wealth building.

• Trading: Short-term (minutes, days, weeks) → Quick profit/loss.

⚠️ Risks of Stock Market

• Prices fluctuate daily.

• Global events, government policies, interest rates, war, oil prices can affect markets.

• Emotions (fear & greed) often cause losses if not handled properly.

🌍 Why the Stock Market is Important

• Helps companies raise money.

• Helps investors grow wealth.

• Reflects the economy’s health (Sensex, Nifty = barometer of India’s economy).

• Creates jobs & fuels business growth.