What is share market in India

 Share Market

  In this blog, we are going to see what is share market? , how does it work? I am not going to explain it like 5 mark or 10 mark question. I am trying to explain with real-life examples.

What is the share market?

A share market is also called a stock market. In the stock market, we can buy shares from companies. I hope many of you already know about it. I give a real-life example of it. We knew about share auto. In India, it is the most popular transportation vehicle. We can easily compare it with the share market. In share auto, we assume share auto driver is the company and passengers are shareholders. 

Again we assume that the travel cost is $40. If 10 passengers are traveled in a share auto, 1 passenger will pay $4 is enough. Like this story, obviously, the company also needs money to develop its business. By purchasing stocks people also invest their money in a particular company.

How do shares work?

For example, Company had $5000 only but to start a business they need $10000. In that situation, they converted the needed amount of that company as shares. In this example, the company needs $5000. That company converted this amount as shares like $100*50. So this company has 50 shares. You can buy 10 or 15 shares of this company. I gave an example with a small amount but in real life that was huge. We couldn’t buy all of the stocks, if we are a millionaire we can. Ok, again come for our example. We assumed that we had 10 shares from that company. After some days, the company earns $12000. $2000 was a profit of that company.

  

  Other people also think that ok this company got a profit we also buy a share from it. If demand is increasing, share value also will increase. If you bought a share for $100, the share value increased to $120 or higher value (based on the company’s performance).  In that, you can sell your shares or you can hold the shares.  

    Suppose that company met with complaints. That may lead to loss. Stock value started to decrease. In that time, you need to sell that share. If not, you may meet lost. (Example: $100 stock value reduced to $90 or$85) If you sell your stock early you meet a small amount of loss. That company needs to improve their production process or new trade agreements to show their company looks we are improving our pieces of stuff. 

History of Share market

In the 1600s share market concept was invented by the Dutch East India company. During the 1600s, the Dutch East India company wants to trade Gold, money, treasures from all over the world. But it was not the cheapest process they needed more money.  For that, they requested to citizens for money. They gave money to that mission. The company considered them as shareholders. After trading money, the company gave more money to shareholders. In that practice company and shareholders were benefited. So Dutch east India company unknowingly invented the concept of the stock market. Since then, companies have collected funds from willing investors to support all kinds of businesses.

   The modern stock market is significantly more complicated. We will learn more and more to understand it completely. It may take decades. Don’t worry, just open your Demat account and start trading and investing in the stock market with a small amount of money