|
Stock market trading refers to buying and selling of shares through a stock exchange.
A Stock Exchange is the place where investors buy and sell their shares of public
listed companies.
Once a company goes public it gets listed on a stock exchange. A company may go
public by inviting the general public to buy the shares of the company through an
Initial Public Offering (IPO) or through a Follow-on Public Offer (FPO), thus giving
them the opportunity to become part-owners of the company
After listing, the shares of the company are available for trading. The new investors,
who want to buy the shares of the company, can buy them from shareholders who want
to sell their shares.
In India, we have two major stock exchanges, the National Stock Exchange (NSE) and
the Bombay Stock Exchange (BSE). Investors can buy and sell shares directly from
the stock market, or can invest through a Mutual Fund or an Exchange Traded Fund
(ETF).
Stocks are characterised by volatility, in other words their price in the stock
market is likely to experience large swings in value. However, long-term investing
in Indian stocks has proved to be the most profitable for investors. Stock prices
have increased substantially over the long-term despite short-term speculative swings.
Stock markets give investors an opportunity to invest in companies belonging to
different sectors and industries. This helps the investor to gain from a surge in
a sector and also to diversify his risk over a variety of industries in the economy.
|