What is Stock Market & Stock Exchange? Which shares we buy? Why company sells its shares? Ways to buy shares? What is IPO? What is Secondary Market? - 1

 Why we go to market; because we want to buy something like fruits, vegetables, clothes and many more. As same as why we go to stock market; simply to buy shares. But we don't need to go to stock market physically to buy stocks because it is whole online based procedure. The concept stock and share market is same. The main purpose of stock market is to help you to facilitate your transactions. 

     It helps to find buyer while we're selling shares and if we're buying shares then it helps to find sellers. In simple words we exchange stocks and from that stock exchange concept rises. There are two stock exchanges in India.

1. BSE (Bombay Stock Exchange)
2. NSE (National Stock Exchange)

All of you might have a question; why we buy company's shares?

There are two ways to buy shares: 

1. IPO (Initial Public Offering)

2. Secondary Market/Exchange i.e.  NSE/BSE

     Which shares we buy, that shares are already exist in company. I mean that for us company don't create new shares. These shares are just exchanged from which are already exists. There is another question that, why company sells its shares and why we buy that? We'll discuss about it. Don't worry..... Just stay on that page and read entire page. 

     Now we'll talk about Secondary Market. We're buying all of the shares from those who have already shares of that company. This is called secondary market. That means already someone have bought shares and we're buying it from them. Which shares we buy from NSE/BSE those shares are called as Secondary Market.

     Now think about what is IPO (Initial public offering). This means if company releases some shares and we buy it directly from respective company then we can talk it as we've bought that shares directly form company.  -----Primary Market

     Now some of you are confused about what if we want to buy IPO's of TCS, Infosys, TATA MOTORS, and many other big giants. I'll give answer of it. These companies have released there IPO's before 10-15 years back and if we want to buy shares of those companies then we've to buy it from those people who already have shares of that company. 

    

     Now come to the point; why you are buying that shares and why you want to buy?. If you think that company can grow more in future, can gain more profit and touch to the sky then you buy shares of the respective company. If the company reaches at your expectations then you can sell it and gain profit. 

    

     Some of you may think that can we buy shares directly from BSE/NSE (Secondary Market) or from IPO. Answer is big NO. Because Exchange have made some registered members. Technically we say it as a Depository Participants (Brokers). To buy shares, you have to open an account through broker who is listed in Exchange. It is same concept related with banking system. Means you can't open an account in RBI but you can open your account in any other bank where your eligibility criteria meets. Like that you can't open account in Exchange but can open your trading account through broker. Again we can't transact directly with NSE/BSE but we can make transactions through broker. 

You might have got some basic idea about what is stock market and how it works. I'll give you update in next posts. 

If there are any errors, bad information, misleading information then please let me know in comment section. I'll definitely correct it.