Stock Market For Beginners - 2

Hey Buddies..!! I am back with a new blog with the continuation of the stock market series.. Before reading this blog please go through the blog "Stock Market for beginners." which gives you the basics of the stock market.. This blog contains details about IPO, how the share prices are fixed.?, SENSEX, NIFTY in a simplified way..Let's know what happens behind the scene..

Basically, We have 17 stock exchanges across India..Among them, the oldest & most trustable stock exchanges in India are Bombay Stock Exchange(BSE) & National Stock Exchange(NSE). Any Firm/individual to be listed in the stock market..There are certain protocols to be followed even by Ambani too.. There is no exception to any individual..

Firstly, the companies that are in need of finance, estimates its required budget, and approaches the stock exchanges for finance.. The proprietor/owner holds some percentage of shares in their company and issues the remaining shares to the stock market.. Before listing the stocks in the market, the documents of the company are to be verified by the investment bank to determine its value of the share, based on demand, profit to debt ratio, rented(or)owned building, manufacturing cost, growth prospects,etc..Once the verification is done,  shares will be issued in the share market with the price fixed by the investment bank. Issuance of shares at the budding stage of a company is known as "Initial Public Offering(IPO)."

SENSEX: 

Sensex can be defined as the "Sensitive Index" which indicates the values of a share along with profit/loss in the BOMBAY STOCK EXCHANGE(BSE). There are around 1400 companies that are listed in the BSE. But the active trading will be done among the 30 top companies SBI, Infosys, Tata Group, etc.. The trading between the investors & buyers is framed under certain rules & regulations.. Securities & Exchanges Board of India(SEBI) acts as a governing body for all the trading issues in stock markets.

NIFTY:

Nifty refers to National and Fifty which consists of 50 actively traded shares. Nifty is an indicator of all the shares listed on the National Stock Exchange(NSE).

In a stock market, only the IPO(Initial Public Offering) provides the fresh stocks..All the existing stocks are not the new ones.. Existing ones are not sold by the investor, they are sold by some shareholder who is not interested in that particular share anymore.. The sellers & buyers have a certain platform, the sellers announce a particular amount(bid) & the buyer says his buyable amount..By the common understanding, they buy/sell at a comfortable price which fits for both. In this way, the selling/buying takes place in the stock. In this way, the trading goes on in the stock market.. Things related to opening/closing prices, profits/losses in the stock market will be explained in coming blogs.. please do follow my next blog..Stay Tuned..!!

                                                                                  ---- By Mounika Perumalla