Stock Market and its functioning

What is a stock market?

Stock Market is also known as Share Market where money is invested through different modes such as equity, commodities, etc but mainly trading is done in equity market only where a listed company issues their share like about 10% or so but they avoid to issue share more than 49% of total companies worth or we can say they give partnership to each share holder for the value they pay just to raise money from the market or public for expansion of their business. In this case both profit and loss is beard by the shareholders if any happens. In equity market anyone is free to sell their stock through stock exchange and get rid of it by making profit if company is performing nicely or vice verse at any time they feel to. Companies introduces itself in the market to increase its worth other than raising funds so if equity prices goes down the company loses its worth and its total value decreases. All shares/stocks at a face value/actual value of Rs. 2-10 but depending on the current market status market value of the stock is there for example if a company has very good reputation and is going to be listed in the stock exchange then it might be that its face value is Rs. 10 but market value would be given as 450 i.e the price paid by the buyer. Stock Market is place full of risk where you can make huge profit and sometime huge loss also. In India we have two main Stock Exchange which is located in Mumbai (Dalal Street) i.e BSE(Bombay Stock Exchange) and NSE(National Stock Exchange).

How does share/stock prices changes?

Like any other things share market also works as a normal vegetable/any other market as for example if Potato or Tomato supply is less than demand their price increase and vice versa like this only stock prices are also depended on supply/availabilty and demand of stock method but here in stock market this availabilty and demand is very uncertain i.e it changes min to min or sometime lesser i.e if at a certain time huge buying of a stock occurs its price goes up due to less availabilty of the stock and the other minute/hour when price rises than for profit booking people sell it in huge number due to which prices of stock falls down but due to buying and selling prices doesn't have much fluctuation as compared to news regarding that company or related industry or sometime economic reforms/policy changes by the govt makes it fluctuate. The company outperform or under perform more on the day when their quarterly results are announced where it is made public that whether company has made profit/loss and by how much and if it outperform than stock prices jumps steeply.

How to make profit in Stock Market?

Well this is very difficult to tell anyone where or in which company to invest for making profit because market is very volatile except some days when it outperforms and it has a different mood everyday. Actually mood here is not of a individual or company or stock exchange but of investors who invest there. Sometime trend goes in favour of IT related stocks or sometime in favour of Real State related stocks so while investing one should judge the mood of investors rather than value or status/reputation of the company because mood plays a very important role in supply and demand concept. So keep eyes on news related to stock because if a company has some good news for its expansion than obviously investor will show confidence and invest more so price will go up because company stability will increase in the market. If you are new try to invest in Blue Chip companies i.e those companies that are in top 50 companies of BSE(Bombay Stock Exchange) and top 30 companies of NSE(National Stock Exchange) because they are very stable and good reputation companies and investors have great faith in them and daily transaction in these companies are very high so risk of losing is not much or very minute. But after all the things its totally a luck game.

What is the difference between BSE and NSE?

Here comes the most important question for most of us that what is the difference between BSE(Bombay Stock Exchange) and NSE(National Stock Exchange) so first of all I would like to inform that there are many other stock exchange in India other than these two such as Ahmedabad Stock Exchange or Pune Stock Exchange etc. but these are regional stock exchanges and are less popular as compared to BSE and NSE which are national level exchanges so we just hear the name of these two exchanges only. Now same like two different retail sector stores serving same service the two stock exchange provides same service but having different window/place for trading(buying/selling of share). This BSE and NSE is located in Dalal Street, Mumbai but NSE has its office in delhi and other places too. BSE has kept 30 companies in its list which decides the upward and downward trend of the Sensex because each company according to its status/reputation has been allotted some value i.e if X company share/stock will lose Rs. 4 than sensex will go down by 1 point and vice-versa and like wise for other 29 stocks. Like this only 50 stocks are listed in NSE's Nifty and its performance is decided. These companies may change time to time depending upon its status as their status are not permanent in the market.