Stock Marketing-1: Introduction To Stock Market

Stock Market & Stock Exchange

The stock market is where publicly traded companies' shares are listed.
It is a virtual market, not a physical market. The stock market is a set of exchanges.
The stock exchange is the place where the trading of shares takes place.

Companies pull money from the stock market in which people invest their money to earn returns from their savings.
We can also sell the shares back in the share market when share prices are up and earn a profit.
The stock market is full of risks, as the price of shares changes rapidly.

Shares/Stocks are the units of equity ownership in a corporation, which means if we buy more shares of the company then we have more fraction of ownership of the company, and if we have less number of shares we have less ownership in that company.
There is no guarantee of profit when we buy stocks which makes stock one of the most risky investments. If a company does not perform well its stock can fall in price and investors can lose money.
There are 2 types of stocks: Equity Shares (Common Stocks), and Preference Shares (Preferred Stocks).

Two major stock exchanges in India are: BSE (Bombay Stock Exchange) and NSE (National Stock Exchanges).

We can trade in shares & derivatives from these exchanges.
NIFTY (National Stock Exchange Fifty) and SENSEX (Stock Exchange Sensitive Index) are the indicators/index of the NSE and BSE respectively.

Nifty is made up of 50 selected stocks from the top 50 firms that are used to calculate the index, whereas Sensex is made up of 30 selected stocks from the top 30 companies that are used to calculate the index. 04. The Nifty has a base index value of 1000, whereas the Sensex has a base index value of 100.

Bull Market refers to the stock market in which the price of stocks is generally rising. This is the type of market most investors prosper in as the majority of stock investors are buyers rather than sellers of stocks.
Bear Market exists when stock prices are overall declining in price.

Acquiring a short position means we generally sell the stock we don't own. Investors sell stocks at current price with expectations to buy the shares at a low price in the future.
Acquiring long position means we own the security. Investors maintain a "long position" in the expectation that stock will rise in the future. It is a bullish condition. Investors buy low-price stocks with expectations to sell the shares in high price in future.

Diversification: we can invest money in different industries, and companies.
Compounding: investing money for the long term in one place (share) can give us the benefits of compounding.
Win the race against inflation by providing high returns.
Powerful long-term investment
Tax benefits