What Is The Stock Market And How Does It Work?

 

Investing in the right avenues is important for wealth creation. The stock market is one of the most important entities for making money. You can deal in shares and various other financial instruments, including derivatives in the stock market. It becomes a rewarding source of wealth accumulation with knowledge and experience.

When companies want to scale up, expand their businesses, or fulfill capital requirements for other purposes, they can issue and list their shares in the stock market through Initial Public Offering (IPO) process to raise funds. Companies follow the rules set by the Securities Exchange Board of India (SEBI) to list their IPOs on stock exchanges. SEBI is the market regulator working to avoid fraudulent transactions and activities in the stock market. Stock exchanges are the subset of the stock market that allows institutions and individuals to buy these listed shares through a Demat account. There can be numerous stock exchanges in a nation. 

Stock exchanges need benchmarks to express the stock market trend that helps investors pick the best stocks performing well. These benchmarks are indexing/indices like NIFTY, SENSEX, BSE500, NIFTY Midcap, BSE Small Cap, etc. NIFTY and SENSEX are the primary indexes. Following these indexes, you can look at the stock prices and performance to decide to buy or sell these listed stocks. Let us elaborate to bring more clarity to the topic.