What is the Stock Market?

What is the Stock Market?

The stock market refers to public markets that exist for issuing, buying, and selling stocks that trade on a stock exchange or over the counter. Stocks, also known as equities, represent fractional ownership in a company, and a stock market is a place where investors can buy and sell ownership of such investible assets. An efficiently functioning stock market is considered critical to economic development, as it gives companies the ability to quickly access capital from the public.

History of Stock Trading

It is a place where regular activities of buying, selling, and issuance of shares of publicly-held companies take place. In the stock market, one can also trade in financial instruments such as derivatives, bonds, and mutual funds, along with shares of a listed company.

A stock exchange is a meeting place for buyers and sellers for trade. In India, the prime stock exchanges are the National Stock Exchange and the Bombay Stock Exchange.

The First Shares and the First Exchange

Company shares were issued on paper, enabling investors to trade shares back and forth with other investors, but regulated exchanges did not exist until the formation of the London Stock Exchange (LSE) in 1773. Although a significant amount of financial turmoil followed the immediate establishment of the LSE, exchange trading overall managed to survive.

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