Introduction to Stock Market

The Stock Market is complex network of trading activities where shares of publicly held companies and other financial instruments are bought and sold. Here price of stock is decided by market. Below Mentioned entities are involved in stock market:

1. Public limited companies

2. Regulators

3. Stock Exchange

4. Broker

5. Trading Entities

6. Buyer and sellers

• Public Limited Companies:

  The Company which have offered their shares in an Initial Public Offering (IPO) becomes the public limited company. For that they must be listed on stock exchange by following stringent regulations and financial disclosure laws. The main purpose of listing at stock exchange is to raise money for business growth, to pay off debts, fund growth initiatives, raise their public profile, or to allow company insiders to diversify their holdings or create liquidity by selling all or a portion of their private shares as part of the IPO.

• Regulators:

  In the country like India the apex body which regulates the stock market is SEBI. SEBI means Securities and exchange board of India. It is the regulatory body for securities and commodity market in India under the Union Ministry of Finance. It was established b the SEBI act 1992.

  The SEBI is managed by following Members:

• The chairman was nominated by the Union Government of India

• Two members, i.e., Officers from the Union Finance Ministry

• One member from the Reserve Bank of India

• The remaining five members are nominated by the Union Government of India. Three of the five members should be full-time members.

  SEBI has power to regulate below mentioned things:

• Depositories, participants and custodians

• Debenture trustees and trust deeds

• Insider trading, FII’s merchant bankers and mutual funds

• Portfolio managers, investment advisors, registrars to capital issues and share transfer agent

• Stockbroker, sub-brokers, underwriters, bankers to the issues and venture capital funds

• Substantial acquisition of shares and takeovers.

• Stock Exchange:

  It is a secure place where trading is done in systematic way as per well structured rules and regulations. In India we have two main stock exchange, one is BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).

  Role of Stock Exchange in Stock market

• It facilitates the trade in security. It also known as secondary market

• It facilitates liquidity

• It is a leading indicator of economic growth

• It ensures the safety of investors

• Stock-broker:

  It is a individual or institution. Its main role is to obtain buy and sell orders and execute them It provides below mentioned services:

• Buy and sell securities on behalf of client

• Advisory services, research report, stock recommendations and other investments

Trading Entities:

• Bonds

• Equity

• Mutual fund

• Exchange Traded Fund

• Securities

• Buyer & Seller

  Buyer and seller may be individual or institution which are interested in buying and selling trading entities