The origin of stock markets can be traced back to the discovery of new lands and European voyages dating back to the early 1600s. Ships were needed to facilitate trade and required large amounts of money for crew and resources. These ship owners often looked for investors to provide capital often in the form of stock or dividend, which was later repaid using a part of the trade proceedings. The first official stock market was initiated in London named respectively as London Stock Exchange; however, this was crippled with a vast array of laws.
The New York Stock Exchange subsequently followed around 19 years later, which has only developed rapidly with the monumental growth of the early 19th-century American economy. Other stock exchanges that have been birthed since then include Tokyo, NASDAQ, Nifty, and the very own Indian version of NYSE at Dalal Street. Why should one take the risk and initiative of investing in the market place? To begin with, the time value of money and inflation plays a very major role. Investment is done to basically make up the loss incurred due to rising inflation.
The history of the Indian stock market can be traced back to the early 1800s with Dalal Street being a fixed location. Bombay Stock Exchange was commonly tagged as the Native Share and stockbrokers association. With the advent of the 1900s, BSE became the first stock exchange to be listed under the Securities Contract Act. In 1993 NSE was recognized as a stock exchange. By 2000 internet trading was also introduced. A share market is basically a market place for trading stocks. A stock market basically acts as a place of communication between stock sellers and buyers. There are two types of stock markets: primary stock markets and the secondary stock market.
The primary share market basically deals with a company registering itself for a particular amount of money to raise shares. A secondary stock market deals with new securities that have been let out for sharing in the stock market. Secondary market transactions are generally labeled as trades. The first step to engage in the stock market is to set up a trading account and a Demat account. These accounts should be linked to your bank account for the easy facilitation of money. Next, you could also opt for a trading tool such as KEAT PROX, Fastlane, Xtralite, etc. Stock markets can be classified into four major financial instruments- shares, bonds, derivatives, and mutual funds.
Stock markets are generally a very fluctuating and risky affair. So to enable its seamless functioning, the Security Exchange Board of India was established in 1992. SEBI is an autonomous entity and helps to act as the regulatory body for both primary and secondary stock markets. SEBI is responsible for the transparency that accompanies the trade along with initiating development and ensuring fair practices are carried out. With more and more companies venturing to go public and with an ever-changing market scenario, investing in the stock market, if done with care can reap huge profits in the long run.