Stock Market

Ajai Sahni
Executive Director, Institute for Conflict Management & South Asia Terrorism Portal

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	<strong>Basic explanation of stock market:</strong></h4>
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	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, mutual funds, along with shares of a listed company.</div>
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	A stock exchange is the meeting place for buyers and sellers for trade. In India, the prime stock exchanges are the National Stock Exchange and the Bombay Stock Exchange.</div>

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	<strong>Types of markets:</strong></h4>
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	One can trade in either one of the two market segments: the primary market and secondary market.</div>
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	<strong>Primary market:</strong></div>
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	The primary market is where a company first gets registered to raise money and issues a certain number of shares or bonds. It&#39;s in this market that firms float new stocks and bonds to the public for the first time. When a company decides to list its shares for the first time this is known as an initial public offer (IPO).</div>
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	Another way for a company can raise capital in the primary market is through rights offering or issues. A rights offering (issue) allows companies to raise additional equity through the primary market after having securities in the secondary market.</div>
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	<strong>Secondary market:</strong></div>
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	After stocks or securities of a company have been sold in the primary market, they are then traded in the secondary market. Investors trade previously issued securities without the companies&#39; involvement. In the secondary market, the investor buys shares from another investor at the prevailing market price or whatever price both the buyer and seller agree upon.</div>
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	In India, primary and secondary markets are governed by the Security and Exchange Board of India (Sebi).</div>
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	<strong>What is traded in the stock market?</strong></h4>
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	In the stock market, various kinds of financial instruments are traded which are shares, bonds, mutual funds, derivatives.</div>
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	A share is a single unit of ownership in a company or financial asset.</div>
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	Bonds are a way in which a company opts to borrow funds from a variety of investors, which is also paid off through timely interest payments.</div>
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	Mutual funds are investments that allow one to indirectly invest in the share market.</div>
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	Derivatives are instruments that allow one to trade at a price that has been fixed by the person trading.&nbsp; It means that one enters an agreement where they choose to either sell or buy a share or any other instrument at a certain fixed price.</div>
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	<strong>What is a bull market?</strong></h4>
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	A bull market means the share market is rising and investor sentiment is confident, further encouraging other investors to buy. Generally when the sharemarket is &lsquo;bullish&rsquo;, the economy is strong and unemployment is low.</div>
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	<strong>What is a bear market?</strong></h4>
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	Essentially a bear market is the opposite of a bull market. That means if the market falls by 20% or more from the 52 week high, it has become a bear market. A bear market is generally marked by investor pessimism which can cause prices to continue falling, adding to further negative sentiment.</div>
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	<strong>What is a stock market correction?</strong></h4>
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	Sometimes a steep fall in market prices can be a market correction rather than a bear market. Generally speaking, a fall of 10-20% is considered a market correction, with a fall beneath 20% considered a bear market.</div>
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	However, whereas a bear market is usually a sign of negative investor sentiment, a market correction is often a temporary price reversal before the market continues moving upwards.</div>
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Get answers to questions like what is a stock market, what are different types of stock markets, what is a primary market and secondary makert, how stock market trading is done, what is a bull market, what is a bear market and what is market correction with business-satandard.com

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