What Is Stock Market ?

What Is Stock Market

The stock market is defined as a collection of markets & exchanges in which primarily the selling and buying of shares of companies take place. The stock market is also called an equity market.

Consider the following example. Let’s say you have entered a vegetable market . In any vegetable market . you can see different vegetable vendors in different shops. It’s not uncommon to see vendors of different shops selling the same vegetables, right ? The vegetable market is the place where the vendors present their vegetables in the shops.

In the same vegetable market , you can observe vendors selling spices, fruits in their representative shops So, the vegetable market is used a collective term that represents shops of vegetables, spices, fruits, buyers , vendors, warehouse, etc. In the same way, the stock market operates with a network of stock exchange. The stock exchanges are a part of the stock market in which the listing and trading if stocks take place according to the regulations. Just like different shops in the vegetable market can sell the same vegetable, different stock exchanges in the stock market can have stocks in common. For example, the National stock exchange (NSE) Bombay stock exchange (BSE) are two major stock exchange of India.

The Big companies like Tata Motor's, Reliance, DLF etc are available in both exchanges. Just like shops in the vegetable market would also sell other products like spices and fruits, the stock market also has exchanges that deal with products other than stock such as commodities , Bonds, etc.

One such example is the multi commodity exchanges (MCX) which is a commodity exchange in India. MCX don’t deal with stock , but instead, facilitate the trading of commodities of the categories- Metals, Bullion, Agro commodities , energy. So, in a way, we can say just like vegetable markets, operate through shops in which vendors sell their goods to buyers. The stock market operates through stock exchange in which the shares transfer from seller to buyers.

And that is how the whole concept of stock market works, in the most simplest way