What is the Stock Market?
In simple terms, the stock market is where businesses raise capital and investors buy and sell ownership in companies.
Start the lessonIntroduction
A marketplace for pieces of companies
In simple terms, the stock market is a regulated marketplace where people buy and sell shares of listed companies. A share is a small ownership stake in a company. If you own shares, you are a shareholder, but you do not control the entire business unless you own a large enough stake to influence decisions.
Think of it this way
A company can divide its ownership into many small pieces. The stock market helps investors trade those pieces with one another. In India, NSE and BSE are two well-known stock exchanges.
A stock exchange provides the marketplace and rules for trading. A broker gives investors access to that marketplace.
How a stock market trade happens
How does the stock market work?
A simplified view of the journey from placing an order to owning a share.
- 1
A company offers shares
A company may offer shares to the public for the first time through an IPO.
- 2
An investor places an order
Through a broker, an investor chooses a listed share and places a buy or sell order.
- 3
Orders are matched
The exchange matches compatible buy and sell orders at an agreed price.
- 4
The trade is completed
After the trade, money and shares are transferred through the market's settlement process.
One useful difference
In an IPO, a company offers shares to investors. After listing, investors usually trade shares with one another, so the selling investor receives the payment.
Try it with ₹1,000
How many shares could you buy?
At ₹100 per share, ₹1,000 could buy 10 shares before any charges. Change the numbers below to try another example.
Your budget
₹1,000
Price per share
₹100
Shares you could buy
10
If the price later rises or falls, the value of your shares changes too. Share prices can move either way, and returns are not guaranteed.
Try a different amount
Adjust your budget or the example share price. Charges are not included.
Whole shares you could buy
10
Amount used
₹1,000.00
Budget left over
₹0.00
Actual orders may include charges and are subject to market rules. This calculator is educational, not investment advice.
What to keep in mind
A few things to remember
Returns are not guaranteed
A share price can rise or fall, and you can lose money.
A company and an exchange are different
Companies issue shares; exchanges provide a marketplace for trading them.
Understand before you invest
Learn what you are buying and consider whether the risk suits your goals.
Key points
The essentials to remember
- A share is a small ownership stake in a company.
- Stock exchanges bring buyers and sellers together.
- An IPO is where a company offers shares to investors.
- Most later trades are between investors in the secondary market.
- Share prices can rise or fall; returns are never guaranteed.
- Understand the risks before making an investment decision.
This lesson is for education only, not personalized financial, tax, or investment advice. Investments in securities are subject to market risks; read all related documents carefully.
Test yourself
5-question quiz
Choose one answer for each question, then check your score.
Next lesson · 2 of 100
How Does the Stock Market Work?
Follow an order from your broker to the exchange and learn how a trade is completed.