What is share market and how to buy shares of a company online | Basics Of Share Market Explained

What is share market and how to buy shares of a company online
Stock Price (Image: Canva)

Before investing in the share market, you should have basic knowledge of the share market and what happens in the share market. A place where something is bought or sold, the stock market means a place to buy and sell shares of listed companies.

Share market is also called stock market. The place where companies are listed and their shares are bought and sold is called stock exchange.

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How to buy shares in india for beginners

There are 2 stock exchanges in India NSE (National Stock Exchange) which was established in 1992. The second stock exchange is BSE (Bombay Stock Exchange) This is a very old stock exchange, it was established in 1875.

SEBI (Securities and Exchange Board of India) is a government agency that regulates the stock market. SEBI regulates the entire Indian stock market.

When any company is started, it takes a lot of money. The directors of the company cannot invest this money, so they list the company on the stock exchange from where millions of shares are issued.

The public buys the shares of that company, from which the company gets money and the public gets the shares.

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For example, if a company issues one lakh shares, then if you buy 500 shares out of it, then you become the owner of the same share of the company.

Then you can hold these shares for as long as you want and you can sell them whenever you want.

Once the shares are bought, if the company makes a profit (the company makes a profit in whatever service it provides or the product it sells or the company makes a big deal), then it increases the share price of the company.

On the other hand, if you bought shares of a company, after that the company suffered a loss (there was no deal to be done or some other problem came in the company), then its share price falls.

So the shares of that company you have, their price will also fall, due to which you will lose.

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Example 1: Reliance Industries a month ago its share price was 1500 rupees but in today’s date its share price is 2000 rupees because Facebook, Google, and many other companies have invested in Reliance. So this has increased the price of the company’s shares.

Example 2: Yes Bank provided a lot of loans and the loan was not recovered (became NPA), it caused a lot of loss to the bank. So the price of one share of Yes Bank was Rs 420, then after that, the price of the share came down to Rs 12.

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How to buy shares from share market

Companies are listed on the stock exchange from where their shares are bought and sold. But you cannot buy and sell shares directly from the stock exchange.

for this, you will need a broker. In earlier times there were offices of stockbrokers, you had to go there to open the account and you had to tell them in which stock to invest money and sell it.

But in today’s time, these brokers have also gone online and you will also find their offices offline such as Angel One, Zerodha, Groww, etc.

So you cannot buy and sell shares directly from the stock exchange, rather you have to take the help of a broker and you will have to open a Demat account through the broker.

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What is demat account

A Demat account is an account just like you open a saving, current account in the bank, in the same way, this Demat account is opened. You keep money in savings and current accounts, similarly shares are kept in Demat accounts.

So the Demat account is opened through a broker. Once you have opened a Demat account, you can buy and sell shares directly. As you buy shares, you can be holding them in your Demat account.

When you sell them, you can sell them directly from your Demat account. After that, you can withdraw money in your bank account.

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This article is only for education purpose and the author has his own views and research, so if you invest in these stocks then do it at your own risk and do the research yourself before investing.

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