How share market or stock market works? Or How share market functions in India?

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Feb 20, 2023

The stock market in India operates much like stock markets in other countries, with the buying and selling of stocks (also known as shares) representing ownership in publicly traded companies. In India, the two primary stock exchanges are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Here’s a basic overview of how the stock market works in India:

1. Companies issue stocks: Companies that want to raise capital can issue stocks to the public, which represent a share of ownership in the company. These stocks can then be bought and sold by individual investors on the stock exchange.
2. Trading takes place on stock exchanges: Investors can buy and sell stocks through a broker, who will execute trades on the stock exchange on behalf of the investor. The BSE and NSE are the two main stock exchanges in India and offer a platform for trading of stocks listed on the exchange.
3. Determining stock prices: The price of a stock is determined by supply and demand in the market. If more people want to buy a stock than sell it, the price will go up, and vice versa. A variety of factors, such as the company’s financial performance, market conditions, and economic news, can affect demand for a stock and therefore its price.
4. Regulations: The Securities and Exchange Board of India (SEBI) is the primary regulatory body responsible for ensuring the fairness and integrity of the stock market in India. SEBI enforces various rules and regulations aimed at protecting investors and promoting transparency in the market.

Investing in the stock market in India can be a good way to grow your money over the long term, but it’s important to understand that investing in the stock market involves a certain level of risk and the value of your investments can fluctuate in response to changes in the market. It’s also important to seek professional financial advice and thoroughly research any investment decisions before making them.