What is Stock Market

January 28, 2021
Alok Kumar
What is Stock Market

WHAT IS STOCK MARKET??

The Stock market. Equity market. or Share market is the bunch of buyers and sellers of the stocks (also known as shares), which represent the ownership claims on businesses. This includes securities that are listed on a public Stock exchange and, also as well as stock that can be traded privately, like shares of the private companies which are sold to investors through equity crowdfunding platforms. The investment’s in the Stock market is mostly done via stock brokerages or electronic trading platforms, and investments are usually made keeping an investment strategy in mind.

STOCK CATEGORIES IN STOCK MARKET

Stocks can be categorized based on the country where the company is domiciled. For example, Reliance Industries Ltd and Tata Consultancy Services are the companies that are based in India. And get traded on two major stock exchanges in India. Bombay Stock Exchange India (BSE) and National Stock Exchange India (NSE). That’s why they are considered as part of the Indian Stock Market.

SIZE OF THE STOCK MARKET

The total number of the market capitalization of equity-backed securities worldwide has risen from 2.5 trillion dollars in 1980th to 68.65 trillion dollars at the end of 2018. And the total Stock market capitalization of all stocks worldwide was approximately US$70.75 trillion at the end of December 31, 2019.

In 2016, there were 60 stock exchanges in the world for stock marketing, and in which there were 16 exchanges with a total market capitalization of 1 trillion dollars or more. except for the Australian Securities Exchange, all these 16 exchanges are in either North America, Europe, or Asia.

According to the countries, In January 2020 the largest stock markets were the United States of America with (about 54.5%), Then Japan with(about 7.7%), and then the United Kingdom with (about 5.1%).Capitalization.

stock exchange

stock exchange

STOCK EXCHANGE IN THE STOCK MARKET

The stock exchange is an exchange where both the stockbrokers and the traders can buy and sell shares, like Bonds, and securities. Many giant companies list their stock on a stock exchange. to make the stock more liquid and looks more attractive to investors.
Stock exchanges also act as the guarantor of all the settlements. Some giant companies also list their stocks on more than one exchange in different countries, to attract more international investors.

Stock exchanges also cover some other types of securities, like fixed-interest securities (bonds) or (less frequently) derivatives, which are much more likely to be traded OTC. There are two types of Participants in the stock market one is small individual stock investors and the other are larger individual stock investors, from anywhere in the world no matter from where, which include Banks, pension funds insurance companies, funds, and hedge funds too. A stock exchange trader buys or sells orders on their behalf.

A potential buyer bids a specific price for each stock, and a potential seller also asks for a specific price for the same stock. Buying or selling in the market means that you will accept any asked price or bid price for the particular stock. And when the bid and ask prices match, Then a proper sale takes place. The main purpose of a stock exchange is to facilitate the exchange of securities between both buyers and sellers, The stock exchanges also provide real-time trading information on the listed securities.

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