What is Share Market?

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What is Share Market

Share Market is a marketplace for buying and selling stocks. People make long-term or short-term investments based on their financial goals and ambitions. If you are interested in a career in trading or the stock market then keep reading because we are going to cover the different types of investments like currency, equity, bonds in India, and what is a share market!

Also Read: Short-term Courses in Finance 2021

Share Market vs Stock Market

While defining the share market a lot of people get confused between the share market and the stock market. While a share market only allows shares to be publicly traded, a stock market allows one to trade derivatives, mutual funds, bonds, and shares of listed companies.

There are certain platforms that offer trading facilities that companies can use to trade stocks in the stock market. When one is engaged in the stock market, one can only buy and sell those stocks that are listed on it. India’s renowned stock exchanges are the National Stock Exchange and the Bombay Stock Exchange.

Share Market Certificate Courses

For those who wish to know more about the share market and how it works, they can apply for online certificate courses. Listed below are some top courses offered:

  1. Trading Strategies in Emerging Trends on Coursera
  2. Financial Markets on Coursera
  3. Practical Guide to Trading on Coursera
  4. Stock Valuation on Coursera
  5. Trading Basics on Coursera

Also Read: Functions of Stock Exchange

Universities Country
Massachusetts Institute of Technology USA
University of Edinburgh UK
The University of Auckland New Zealand
Pace University USA
York University Canada
University of Southampton UK
University of Windsor Canada

Types of Share Market

There are two types of share market –

Primary Share Market

In this form of share market, a company has to first register itself with the intent of raising a certain amount of money and shares. The goal of being listed in this share market is to raise money. When a company gets itself registered for the first time, it is known as an initial public offering. 

Secondary Market

Once a company has sold its new securities in the primary market, they are traded to the secondary market then. In this market, the investors have the opportunity to exit their investment or sell their shares. Most of the transactions of the secondary market consists of trades wherein one investor chooses to buy shares from another through a secondary medium. These transactions are mostly conducted through a broker or an intermediary who is known to facilitate such processes. 

Types of Shares

Shares can further be divided into Equity and Preference shares. The point of difference lies in the power given to shareholders:

  1. Equity shares : This form of shares gives the shareholders the power to share the profit in the company. They can also vote in the Annual General Meetings of the company. Any individual who is the holder of equity shares must bear the profits of the company or inversely bear any losses incurred by the company.
  2. Preference shares : This form gives the holder only a fixed amount – dividends, from the earnings of the company. The holder has no voting powers..

When someone refers to “stocks” it essentially implies the ownership certificate of any company in general and when they mention  “share” it implies the same to a particular company. While equity, basically refers to the stock/shares held in a company in its various forms like private equity and so on.

Also Read: How to become a Chartered Accountant?

What is Traded on the Share Market?

The different types of investments in the share market:

  1. Share: It denotes part ownership in a company which is there as a financial asset and provides equitable distribution of profit earned.
  2. Bonds: When a company borrows funds from more than one investor, it is known as bonds. Bonds are traded on the share market and can be repaid through timely investment.
  3. Mutual Funds: Mutual Funds allow individuals to invest indirectly in the share market,
  4. Derivatives: Derivatives are financial instruments that allow individuals to trade at prices fixed by them.

How are Share Prices Determined?

Share prices are determined by the supply and demands of shares in the share market. When a company is expected to earn more and has positive sentiments about it in the market, investors flock in to its own share that leads to a rise in share prices and vice versa. 

Why Does a Company Issue Shares?

Companies raise shares by selling parts of their company to the share market. These shares can be then bought by individuals thus giving them partnership in the company be it as little as 0.1%. In ‘equity financing’ companies mostly generate money by selling part ownership of it in the form of shares to the investors. Through this process, the investors decrease the ownership percentage of promoters and previous shareholders in the company and hence Investors buying shares become the part owners of the business/company.

Must Read: Scope of Financial Management

Raising Capital

A business can raise capital by two methods –

  1. Debt Financing i.e. borrowing money
  2. Raising shares

Debt financing has a major disadvantage as it increases the financial burden on startups and businesses. Hence, companies mostly rely on raising capital by selling shares via the stock market

Must Read: How to Become a Financial Analyst?

How to Invest in the Share Market?

Are you planning to invest in the stock market, well in that case read through this carefully as we have mentioned the steps on how to begin trading as a beginner –

  1. Individuals must get a PAN card as it is required for opening a bank account, investing in the stock market and mutual funds, filing Income Tax returns etc.
  2. Then individuals must get in touch with a broker as an individual trader,one cannot go directly to a stock exchange and trade in the stock market.
  3. Register a demat account to store the securities you buy. A trading account is also needed to trade in the stock market.
  4. Once an individual has both these accounts, they can contact their broker and begin trading.

Also Read: What is difference between CA and CS?

Short- term Trading Courses in Foreign Universities 

University Course
University of London MSc Mathematical Trading and Finance
Regent University MSc Finance and Investment 
University of Essex MSc Algorithmic Trading MSc Finance and Global Trading
Yale University  Financial Markets
Caltech  Pricing Options with Mathematical Models
Princeton University  Bitcoin and Cryptocurrency Technologies
Rice University  Investment and Portfolio Management
University of Geneva Investment Management
University of Michigan Stocks and Bonds
Rice University  Finance for Non-Finance Professionals
Erasmus University Rotterdam Advanced Valuation and Strategy – M&A, Private Equity, and Venture Capital
University of Pennsylvania Finance & Quantitative Modeling for Analysts 

Also Read: What is CFA Course?

We hope you found this to be insightful and informative. For more such content, stay in touch with Leverage Edu!

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