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What is Share Market?
Introduction to the Share Market
The share market, also called the stock market, is a platform where shares of publicly listed companies are bought and sold. Investors trade shares to gain ownership in companies and earn potential profits. Understanding how the share market works is key to making informed investment decisions.
Primary Market
What is the Primary Market?
The primary market is where new shares are issued and sold to the public for the first time through Initial Public Offerings (IPOs). Companies use this market to raise capital for expansion, and investors purchase these shares to become part owners of the company.
Secondary Market
What is the Secondary Market?
The secondary market is where investors buy and sell shares that have already been issued. Unlike the primary market, transactions in the secondary market involve the exchange of ownership between investors rather than companies. Stock exchanges like NSE and BSE are examples of secondary markets.
Equity Shares
Understanding Equity Shares
Equity shares represent ownership in a company and come with voting rights. They provide potential returns through dividends and capital gains. Equity shareholders bear the highest risk but also stand to gain the most from the company's growth and success.
Preference Shares
What are Preference Shares?
Preference shares offer fixed dividends and have a higher claim on assets than equity shares. While they don't usually come with voting rights, preference shareholders receive dividends before equity shareholders and have priority in case of company liquidation.
Debentures
Debentures in the Share Market
Debentures are long-term securities that companies issue to borrow money. Unlike shares, debentures don't confer ownership, but they provide fixed interest payments. Investors who prefer steady income rather than equity ownership may consider debentures as a safer investment option.
Market Indices
Role of Market Indices
Market indices, such as the Nifty and Sensex, track the performance of a group of shares and reflect the overall health of the share market. They help investors understand market trends, compare the performance of their portfolios, and make informed investment decisions.
