Stock Market Basics

A stock market is the coming together of buyers and sellers of stocks in a single platform.In India, there are two primary exchanges; the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). When a company comes out with an initial public offer (IPO) it is called the primary market. The normal purpose of an IPO is to list the stock in the share market. Once the share gets listed it starts trading in the secondary market. Buying and selling shares is largely like buying and selling any other commodity.Thousands of companies list their shares on the Indian share markets. From these, a few similar stocks are grouped together to form an index. The BSE Sensex includes 30 stocks and the NSE comprises 50 stocks.The market determines the price of the share.Price of share is determined by demand and supply. The SEBI is provided with this power and has the responsibility of developing as well as regulating the markets. The basic objectives include protecting investor interest, developing the share market, and regulating it’s working.The fundamental difference is that trading refers to short term buying and selling of shares whereas investment refers to long term buying of shares. A trader normally tries to churn the money rapidly whereas the investor tries to buy a good stock in the sharemarket and waits for the stock price to appreciate.