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How Does Indian Stock Market Works?

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By Author: Rashmi Dey
Total Articles: 17
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We all know the value of investing in the stock market as it assists many investors to grow wealth. Needless to say, stock market trading is a lucrative option that provides huge returns over the years. However, to receive greater gains, it is ideal to know about its working first.

Let’s Understand How Does Indian Stock Market Works:

Participants of the Stock Market

The stock market is a place where trading takes place in shares, derivatives and bonds. There are four participants involved in stock trading.

1. SEBI:

SEBI is the regulator of stock market India. SEBI ensures that all the securities must work in order. SEBI lays down regulatory framework where exchanges, brokerages and other participants have to abide by to protect investor’s interest.

2. Stock Exchanges

It is a place where investors trade in shares, derivatives and bonds. The trading is facilitated by two major exchanges of India, i.e Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

3. Stock Brokers

A stock broker, also known as an intermediary executes buy and sell orders for investment ...
... and in return charge a percentage of commission. Also, a stock broker provides advisory services and research tips.

4. Investors and Traders

Investors and traders are the one who are actively involved in buying and selling of financial securities. Investors who purchase shares, actually own a small portion of a company.

To get deeper into the stock market, let’s learn about the primary and secondary market first.

5. Primary Market

The primary stock market is an important part of the stock market where companies and businesses register themselves. In primary market, a company issues its shares in the public called IPO.

IPO stands for initial public offering which means a company issue first time its shares to the public. Few investors know that IPO opens for a particular period.

6. Secondary Market

After the successfully issuing stocks through IPO, companies started its trade in secondary market where stocks are publicly traded in the stock market. It is a place where buyers purchase stock or bundle of stocks and sellers sell their existing securities in the stock market.

Trading in the Stock Market

Once the stocks get listed on major exchanges such as Bombay Stock Exchange and National Stock Exchanges, companies have started to trade their stocks in the stock market in order to generate profits. The buying and selling of stocks listed on stock exchanges are done by stock brokers that act as an intermediary between investors and stock exchanges.

How to Evaluate a Stock Before Investing in it?

Technical Analysis:

Technical analysis involves the prediction of stock price movements by examining economic and financial factors such as intra-price correlation, stock market cycles through analysis of chart patterns.

Fundamental Analysis:

Fundamental analysis involves the measurement of a stock’s intrinsic value by evaluating balance sheet, microeconomic indicator and consumer behaviors.


Needless to say, stock market is all about buying and selling of shares in Indian Stock Market. The first step of doing stock trading is to open a Demat account and a trading account with a stock broker.

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