Stock Market is a public market for the trading of listed company stocks (shares) and derivatives at an agreed price by traders through stock brokers. "Equity Market" or "Share Market" or "Capital Market" are alternative names to "Stock Market" in India
Stock Market Function and Purpose
"Stock Market" is the most important source for companies to raise money for various business plans. This allows businesses to be publicly traded, additional capital raise for expansion by selling shares of the company in a stock market. The liquidity enables investors to quickly and easily sell securities in "Stock Exchange". This is an important feature of investing in stocks than such as real estate. Stock Market Index is often considered as the primary indicator of a country's economic strength and development.
Stock Exchanges clearing each and every transaction, meaning that they collect and deliver the shares to clients and guarantee payment to the seller of a shares. This eliminates the risk of an individual buyer or seller.
Stock Market Index
The movements of the stock prices in a market is captured in price indices called "stock market index". Stock markets mostly maintains many indices to show the performance of various sectors. Indices are usually market capitalization weighted methodology, which reflecting the contribution of the stock to the index. Some bourses following "Free Float Market capitalization Methodology" to calculate indices. For example, NSE Nifty follows market capitalization weight, BSE Sensex free float market capitalization method.
Stock Market - Risk Management System
Risk management is the key factor to protect "Investor" wealth in stock market system. Stock prices fluctuate widely than bank deposits or bonds. This is affect not only the retail investor or trader, but also the economy of country on large scale. Stock market regulatory authorities regulate the trading system to avoid sudden losses for newcomers have entered the stock market. Average returns of stock market investments, annual return is 8.5% and compound annual return is 3 percent. Investors should plan to build best portfolio to get best annual compound returns.
New issuance of shares
Companies offer the shares to public to raise capital via "Primary Market". After the completion of primary market process shares allowed to list in the stock exchanges to "Trade". "Secondary Market" provides facilities to sell the shares buying in primary market.
Margin Trading Method
In "Margin Trading", the trader borrows money (at interest for delivery) to buy a stock. A margin trading call is made if the total value of the trader's account cannot support the loss of the trade. The investor is responsible for any shortfall of Margin buying.
Stock Market Crashes
A stock market crash is defined as a sharp dip or fall in share prices of equities listed on the stock exchanges. Stock market crashes occur due to panic, investing public's loss of confidence and speculative economic bubbles create negative sentiment. There have been famous stock market crashes that have ended in the loss of billions of cash and wealth destruction on a massive level.
Most famous stock market crashes started October 24, 1929 - Black Thursday. Another famous crash took place on October 19 of 1987 – Black Monday. Largest one-day decline in stock market history - the Dow Jones fell by 22.6% in a single day. After the crash of 1987, Computer systems were upgraded in the stock exchanges to handle larger trading volumes in a more accuracy.
Stock Market Function and Purpose
"Stock Market" is the most important source for companies to raise money for various business plans. This allows businesses to be publicly traded, additional capital raise for expansion by selling shares of the company in a stock market. The liquidity enables investors to quickly and easily sell securities in "Stock Exchange". This is an important feature of investing in stocks than such as real estate. Stock Market Index is often considered as the primary indicator of a country's economic strength and development.
Stock Exchanges clearing each and every transaction, meaning that they collect and deliver the shares to clients and guarantee payment to the seller of a shares. This eliminates the risk of an individual buyer or seller.
Stock Market Index
The movements of the stock prices in a market is captured in price indices called "stock market index". Stock markets mostly maintains many indices to show the performance of various sectors. Indices are usually market capitalization weighted methodology, which reflecting the contribution of the stock to the index. Some bourses following "Free Float Market capitalization Methodology" to calculate indices. For example, NSE Nifty follows market capitalization weight, BSE Sensex free float market capitalization method.
Stock Market - Risk Management System
Risk management is the key factor to protect "Investor" wealth in stock market system. Stock prices fluctuate widely than bank deposits or bonds. This is affect not only the retail investor or trader, but also the economy of country on large scale. Stock market regulatory authorities regulate the trading system to avoid sudden losses for newcomers have entered the stock market. Average returns of stock market investments, annual return is 8.5% and compound annual return is 3 percent. Investors should plan to build best portfolio to get best annual compound returns.
New issuance of shares
Companies offer the shares to public to raise capital via "Primary Market". After the completion of primary market process shares allowed to list in the stock exchanges to "Trade". "Secondary Market" provides facilities to sell the shares buying in primary market.
Margin Trading Method
In "Margin Trading", the trader borrows money (at interest for delivery) to buy a stock. A margin trading call is made if the total value of the trader's account cannot support the loss of the trade. The investor is responsible for any shortfall of Margin buying.
Stock Market Crashes
A stock market crash is defined as a sharp dip or fall in share prices of equities listed on the stock exchanges. Stock market crashes occur due to panic, investing public's loss of confidence and speculative economic bubbles create negative sentiment. There have been famous stock market crashes that have ended in the loss of billions of cash and wealth destruction on a massive level.
Most famous stock market crashes started October 24, 1929 - Black Thursday. Another famous crash took place on October 19 of 1987 – Black Monday. Largest one-day decline in stock market history - the Dow Jones fell by 22.6% in a single day. After the crash of 1987, Computer systems were upgraded in the stock exchanges to handle larger trading volumes in a more accuracy.
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