What is the stock market and how can you make money from it?

What is a share market

Stock/Share Market

The Stock market is a place where stocks (pieces of ownership in a company) are traded between investors. It may also be called a share market. The share market is a way for people to invest in companies and make money by selling their stocks when the price goes up and buying when the price goes down. 

The share market is also a way for companies to raise money by selling their stocks. When a company sells its stock, it means that the company is giving away (selling) a part of its ownership in the company. The buyer of the stock usually gets a piece of the company, and the company is getting money from the sale.

Share Market Basics

A share is a unit of ownership in a company, and the shares are owned by the public. Shares can be traded on a stock market. The price of a share reflects the value of the company it represents.

There are three types of shares: common, preferred, and convertible.

Common shares are the most common type of share and are the ones most people are familiar with. They represent a share of the overall ownership of the company.

Preferred shares are special types of shares that have some special privileges, such as the right to vote before other shareholders. They are also less common than common shares.

Convertible shares allow shareholders to convert them into common shares at a predetermined price. This is often used to raise money when the company is about to go public.

How does Stock Market work?

The stock market is a collection of markets where stocks and other securities are traded between investors. It is made up of a large number of markets, each of which has a different price for stocks. It is a source of financial investment for many people, and it is also a way to get information about the stock market.

Most people have at least a general understanding of how the stock market works – you buy shares in a company, and if the company does well, the value of your shares goes up. If the company does poorly, the value of your shares goes down.

But what a lot of people don’t understand is how the stock market actually works. How do prices fluctuate? Who sets the prices?

 How do Stock prices fluctuate? 

When it comes to investments, there are a lot of things that can affect stock prices. The stock market is constantly fluctuating, and it can be hard to keep up with all the changes. But, if you understand how the stock market works, you can make better investment decisions.

Here are some of the things that can cause stock prices to fluctuate:

1. Economic indicators: Things like GDP, inflation, and unemployment rates can all have an impact on stock prices. When the economy is doing well, stocks usually go up. But, when the economy is struggling, stock prices usually go down.

2. Company news: If a company has Good earnings reports, an announcement of a new product, company acquisition, and positive economic conditions makes the buying pressure which in turn increases stock prices.

Who sets the prices?

When it comes to setting stock prices, there are a number of factors that come into play. The most important factor is what is known as supply and demand. This is what drives the price of stocks up or down. If there are more people buying a stock than selling it, the price will go up. Conversely, if there are more people selling stock than buying it, the price will go down.

History of Stock Market


The first recorded stock market crash was in 1792 when investors sold off the shares they had in the First Bank of the United States. The crash was caused by a sudden increase in the supply of paper money, which led to inflation and a decrease in the value of the shares. In 1814, the stock market crashed again, this time due to the Napoleonic Wars. The war caused a decrease in trade and an increase in the cost of living, which led to a decrease in the prices of Stocks.


The history of the stock market in India can be traced back to the 18th century when the East India Company was established. The company was formed to trade in the Indian subcontinent and was the first to issue stock in the form of shares. The first recorded sale of shares in the East India Company took place in 1720. In the early days, It was used by wealthy individuals and companies to raise capital for business ventures.

Primary Market and Secondary Market

Knowing how the primary and secondary markets work is a key way to understand how stocks, bonds, and other securities are traded.

 In the primary market, companies sell new stocks and bonds to the public for the first time. An initial public offering, or IPO, is an example of a primary market. The defining characteristic of the secondary market is that investors trade among themselves.

In the secondary market, investors trade previously issued stocks without the involvement of the company. For example, if an Investor wants to buy Stocks of Flipcart, then the investor was dealing only with another investor who owns stocks in Flipcart. Flipcart Board was not directly involved with this transaction.

What is stock market volatility?

volatility is the degree of fluctuation of a stock market index. It is simply a measure of how much a stock price can change in a short period of time. Volatility is usually measured by the standard deviation of the stock market index. The higher the standard deviation, the more volatile the stock market index. A stock with low volatility will be more stable than a stock with high volatility.

How do you invest in the stock market?

When investing in the stock market, an investor must consider a variety of factors, such as the company’s financial condition, its growth prospects, and the market’s current outlook. 

Many investors use a variety of methods to invest in the stock market, such as buying individual stocks, mutual funds, or exchange-traded funds.

Significance of stock indices

A stock index is a measure of how the stock market is performing. Stocks that are in a higher stock index are generally considered to be doing better than stocks that are in a lower stock index. 

The two benchmark indexes are Nifty and Sensex. One works for NSE(National Stock Exchange) and another works for BSE(Bombay Stock Exchange).


A stock market, equity market, or share market is the accumulation of buyers and sellers of stocks, which describe ownership claims on businesses; these may include securities documented on a public stock. It consists of exchanges or OTC markets in which shares and other financial securities of publicly owned companies are issued and traded.

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