What is Stock Market? A Simple Guide for New Investors The stock market always seems complicated for those who are new to this market. You must have always heard about the stock market in the news or your friends talking about buying shares and earning profits, but what is the stock market and how does it work. We have explained the stock market in simple language, whether you are a beginner or you have never bought or sold any shares.
What is the Stock Market?
As you all know, the stock market is a market where companies buy and sell shares. What is Stock Market? A Simple Guide for New Investors like Shares are also known as equity. You become a small stakeholder in a company. For example, if you buy a share of a company like Reliance, you become a co-owner of that company. If the share price of Reliance increases tomorrow, your shares will also increase. After that, if you want, you can sell it at a higher price and earn profit. There are two stock exchanges in India where you can buy and sell shares. They are called Bombay Stock Exchange and National Stock Exchange
Why do Companies Sell Shares?
One thing must be coming to your mind that why a company will give its shares to the people, the only answer to this is to raise money.
When a company needs to expand and develop its business or bring new products or hire new people, when the company needs money then the company does this by selling shares to the people which we also know as IPO. When the IPO is completed then the shares start trading on the exchanges.
How does the Stock Market Works?
Let us understand this in simple terms What is Stock Market? A Simple Guide for New Investors
Now let us imagine a vegetable market. Sellers bring vegetables and buyers choose vegetables of their choice. Prices rise and fall due to demand and supply. Stock market also works in a similar way but instead of vegetables, people buy shares.
Buyers and sellers always buy their shares through a good stockbroker like Zerodha. There are online platforms like Angel One, Dhan. These platforms connect you to exchanges like NSE and Buses and give you the facility to buy and sell stocks with just a few clicks.
Open your account on these brokers like
What is Stock Market? A Simple Guide for New Investors What affects share prices
Share prices are not stable; they keep changing due to factors such as:
- Company performance, profit, sales, news
- Market trends and investor sentiment
- Global economic events
- Government policies and interest rates
- Demand and supply of shares
If more people want to buy shares, then its price increases. If more people are selling that share, then the price falls.
Ways to Earn from the Stock Market
If you are interested in What is Stock Market? A Simple Guide for New Investors you can earn money in two ways.
Capital appreciation
Capital appreciation means that if you buy shares at a low price and sell them at a higher price, for example, if you buy Reliance shares at Rs2500 and later sell them at Rs3000, then your profit will be Rs500 per share.
Dividend
Dividend means that some companies share a part of their profit with shareholders. This is called dividend. It is transferred directly to your bank account.
Is the Stock Market Risky?
As you all know that there is some risk in the stock market, What is Stock Market? A Simple Guide for New Investors such as the price of shares keeps fluctuating, you can make profits but you can also suffer losses. This is not the case, if you are investing for a long time then you can get better returns from savings account and fixed deposits.
- You have to manage your risk, such as investing in good companies {also called blue chip stocks}
- You have to diversify your money {do not invest all the money in one company}
- Invest in stocks after doing proper research and taking financial advice
- You should not take emotional decisions based on rumors
Types of Investors in the Stock Market
Ways to invest in the market. What is Stock Market? A Simple Guide for New Investors
There are two types of investors
Long term investors
Long term investors are those who buy shares and keep them with them for a long time. They believe that the company will do well in the future and will get good returns
Traders
Traders are those who buy and sell shares quickly to earn profit, for example, they keep them for a few hours or for a few minutes, hence it is called trading. For this you need skill, experience and focus.
If someone is new to the market, then long term investing proves to be very good for him.
Basic Terms Every New Investor Should Know
Here are some common terms What is Stock Market? A Simple Guide for New Investors
Stocks/Shares: Ownership in a company
IPO: Initial Public Offering – when a company sells its shares for the first time
Bull Market: When share prices are rising
Bear Market: When the market is falling, it is called a bear market
Portfolio: A collection of all your investments
Broker: A platform or person Through which you buy and sell shares
Market Capitalisation: The total value of company shares
Concluding Statements
What is Stock Market? A Simple Guide for New Investors The stock market helps you grow your wealth over time What is the stock market A simple guide for new investors can help you grow your wealth over time Although it can be a bit risky, but with good knowledge and patience it can help you succeed You don’t need to be an expert to invest in the market You just need to start small and keep moving forward Persistent knowledge, discipline and patience
Remember one thing, you are neither too late nor too early to invest Now is the best time to invest
Stock Market for Beginners 2025: Start Investing in India this is my blog if you want to study then click on this link