Simply tell what Stock Markets are?

“When I try to understand about stock markets, every one answering it in a complex manner. Tell me in simple what actually stock markets are…”

Every company wants To Expand Their Business And To Make It Larger Company. For this step companies needs money. The money reserve of companies is not sufficient for this. What they can do in these situations?

Simply two ways before.
Not expanding, staying where they are.. (Or)
Selling the company.

For this second step stock markets are working. Companies’ Can Sell Some Percent Of Their Company In Stock Markets and gets money. Any one can buy the company who want to share the profits earning by the company from stock markets. Here the buyers are stock market investors.

Below example, clarifies you this…

Suppose, you have a four big hotels in mumbai (worth Rs.40 crore). Now you want to expand the business to some more areas in India, suppose to Pune. To construct a new big hotel in Pune it needs atleast 20 crores. Who can give this money?
Can you wait until you get 20 crore profit on your mumbai hotels or take a bank loan…..?
Here’s a simply way to get money, than above difficult steps. The stock markets!
List your mumbai hotels group in stock markets, for 40 crore business you get 40000 shares each of Rs.1000/- cost. Sell the 20000 shares in stock markets, you get 20 crores. Simple..
But now you have only 50% right on your company. You should equally share the profits getting from hotels with the persons who bought your shares.

That buying of these shares is called “Investing in Stock Markets”.

Who buys the shares of good companies get good profits…

So stock markets are centers, where
“Someone needs money for business.
Someone gives to him” after they equally share profits (of course, loss also) getting on their business.
Here who needs money are the companies
Who gives money are our self…stock market investors

From stock markets anyone can buy the shares from any company, starting from a single share. So even common people can invest in big companies like Reliance, Tata etc and equally get profits from them. Stock exchanges (BSE, NSE for India) are middle mans between the companies and people, that safely allow these financial transactions.

Can the article tells you what are stock markets? Comment..

18 comments:

  1. To start this business one has to know the meaning of it.It is simply such a market where no one can is allowed without buying the share companies from the market.As here he has to invests money in a large number.




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  2. Hi Sir,

    I am very new to this field, Can u suggest me for this question.

    My question is the cost of the share is 1000 i agree, but whether the cost of the share is same everytime??

    For eg1: 1share =1000INR in every occasion??
    eg2: 1share =1250INR whether any chance of share will increase????
    eg3: 1share = 850INR whether any chance of share will decrease????

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  7. Stock markets, in simple words, allow the traders to sell or purchase the the equities or exchange them with other equities.

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