What is Stock Market?
A stock market, share market or equity market is the aggregation of sellers and buyers of stocks. It represents ownership claims on businesses,which include securities listed on a public stock exchange, and also a stock that is only traded privately, such as shares of private companies which are sold to investors through equity crowdfunding platforms
The term stock market refers to numerous exchanges in which stocks of publicly held companies are sold and bought. Such financial activities are carried out via formal exchanges and via over-the-counter (OTC) marketplaces that perform underneath a described set of rules.
Both “stock market” and “stock exchange” are regularly used interchangeably. investors inside the stock market purchase or sell shares on one or greater of the stock exchanges which are a part of the overall stock market.
Overview of Indian stock market
Most of the trading inside the Indian stock market takes place on: theBombay Stock Exchange(BSE) and the national stock Exchange(NSE).The BSE has been in existence since 1875, on the other hand,The NSE was founded in 1992 and started trading in 1994.but, both exchanges follow the same trading mechanism, trading hours, and system of settlement.
Trading mechanism in Indian Stock Market
There are no market makers and the complete process is order-driven in the Indian stock market. That means market orders placed by investors are automatically matched with the best limit orders.That results, buyers and sellers remain anonymous. Through brokers, all orders in the trading system take place, many of which provide an online trading facility to retail customers. Institutional investors can take advantage of the Direct Market Access (DMA) option.Here they use trading terminals provided by brokers. Which is for placing orders directly to the stock market trading system.
Market Regulation in India
The Securities and Exchange Board of India (SEBI), has the overall responsibility of development, regulation, and supervision of the stock market. SEBI was formed in 1992 as an independent authority and of course since then, It has consistently tried to lay down market rules in line greatly with the best market practices. SEBI also enjoys vast powers of imposing penalties on market participants, in case of a breach.
Who Can Invest in the Indian Stock Market?
From the 1990s onwards, India started permitting outside investments. Foreign investments are categorized into two: Foreign Direct Investment (FDI), Which is all investments in which an investor takes part in the day-to-day management and operations of the company and Foreign Portfolio Investment (FPI), this investment in shares without any control over management and operations
To make portfolio investments in India, one should be registered either as a Foreign Institutional Investor (FII) or as one of the sub-accounts of one of the registered FIIs. The registrations are granted by the market regulator, SEBI
The Foreign institutional investors and their sub-accounts can invest directly in any of the stocks which are listed on any of the stock exchanges. The majority of portfolio investments consist of investments in securities in the primary and secondary markets. Which includes shares, debentures, and warrants of companies listed or to be listed on a recognized stock exchange in India.
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The term stock market refers to numerous exchanges in which stocks of publicly held companies are sold and bought
TheBombay Stock Exchange(BSE) and The National Stock Exchange(NSE)
The Securities and Exchange Board of India (SEBI)
Foreign Direct Investment(FDI) and Foreign Portfolio Investment(FPI)