The market that purchases sell and issues regular stocks is known as the Stock Market. This sort of activity takes place through Exchange Traded Fund or Over The Counter Market (OTC). Exchange-Traded Market is the market for buying and selling stocks listed on the stock exchange such as NYSE, NSE, BSE, etc. Stock Exchange is another term for the Stock Market, the Share Market Subset. The major inventory exchange is the NYSE(New York Stock Exchange), Nasdaq, BSE(Bombay Stock Exchange) and NSE(National Stock Exchange).
In Stock Market Trading not only of shares or equity but also of other economic assets such as exchange-traded funds (ETF), corporate bonds and stock-based derivatives, commodities, currencies, Fixed Income Securities, etc.
Purpose of the Stock Market
Two very significant purposes are served by the share or stock market. The first is to provide businesses with capital that helps them use the fund and grow the company. For instance, if a company issues 5 million shares that initially issue an IPO (Initial Public Offerings) with a face value of $20 per share, then the company receives some Investment Bank charges of $100 million of the capital to arrange such offers.
The secondary purpose of the Stock Market Service is to offer investors profit in the form of a regular dividend in order to gain profit there is another way in which investors can gain earnings by selling stocks greater than the Stock Exchange Purchase Price.
How Stocks are Traded in Exchanges and OTC
Stocks are mostly traded on stock exchanges such as the New York StockExchange(NYSE) or the USA NASDAQ, NSE(National Stock Exchange) in India. Stock Exchange is the marketplace where investors buy and sell stocks or shares. Stock exchanges are regulated in the United States by government agencies such as SEC(Securities and Exchange Commission), SEBI(Securities Exchange Board Of India), which protects investors from fraud and keeps the exchange market smoothly functioning. You know about the scam of Harshad Mehta, an Indian stockbroker involved in a huge manipulation of stock.
While most stocks are traded in stock exchanges, some are traded on Over The Counter Market, where buyers and stock vendors are frequently traded through a dealer. OTC Market is not controlled by Govt Agencies
Types of Market
1.Primary Market: It is the market where the first time on the market-fresh issuance of shares is traded. Under the Companies Act, 1956, if it results in a fraction of securities for 50 or more economic experts, a problem is referred to as open. Nonetheless, it is recognized as a personal scenario when the backer makes a securities problem to a select collection of individuals that do not exceed 49 and is neither a rights issue nor an open problem.
2.Secondary Market: Secondary market is the market where shares are already issued that are traded or listed on the stock exchange on the primary market. Secondary market comprises equity, derivatives and debt markets. The secondary market is controlled by two media, namely the market of Over-the-Counter (OTC) and the market of Exchange-Traded. OTC markets are unofficial markets that negotiate trades.
Key Securities Market Indicators.
Index: An index is used to provide information on the budgetary, commodity or some other market value trends of products. The purpose of financial exchange documents is to capture the overall behavior of the value markets. The exchange of securities file is produced by selecting a collection of stocks that illustrate the entire market or a predetermined region or market section. NSE’s bluechip record is CNX Nifty.
Market Capitalisation: Market capitalization is described on the exchanges of the country as the value of all listed stocks. It is calculated daily. A specific company’s market capitalization on a specific day. The number of excellent shares and the closing cost of the share can be calculated as the product. The amount of excellent shares here relates to the stock’s problem size.
Market capitalization = share price closure * Outstanding number of stocks
Market Capitalisation Ratio: The market capitalization ratio is described as GDP/divided stock market capitalization. It is used as a stock market size metric.
Turnover: By multiplying the traded quantity with the price at which the trade takes place, the turnover for a share is calculated. Similarly, we aggregate the traded value of all the businesses traded on the Exchange in order to calculate the turnover of the businesses listed on the Exchange.
Turnover Ratio: The turnover ratio is defined as the total value of shares traded on the stock exchange of a country for a specific period divided at the end of the period by market capitalization. It is used as a measure of stock market trading or liquidity