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What are financial markets?
Markets connect buyers and sellers of financial assets. Prices can change as new information, demand and expectations change.
1. What Is the Stock Market?
Key concept
A stock market is a regulated place and network where investors buy and sell shares and other securities. A share represents a small ownership interest in a company. Prices change as buyers and sellers respond to business performance, expectations, news and broader economic conditions.
Example: Example: if a company has 10 million shares and you own 100, you own a very small fraction of that company. Owning a share does not guarantee profit or a dividend.
Practical checklist
Before investing, understand what the company does, how it earns money, its debt, valuation and the risks that could affect its business.
Remember: This lesson is for general education. It does not recommend buying or selling any security. Consider your own circumstances and consult a qualified professional where appropriate.
2. Stocks, Indices and Exchanges
Key concept
A stock is a company share. An index tracks a selected group of securities to give a snapshot of part of the market. An exchange provides the regulated trading infrastructure; in India, NSE and BSE are major stock exchanges.
Example: An index may rise even when some of its constituent stocks fall, because the overall movement depends on how its constituents are weighted.
Practical checklist
Do not assume that an index represents every company or that an index rising means every investor has made money.
Remember: This lesson is for general education. It does not recommend buying or selling any security. Consider your own circumstances and consult a qualified professional where appropriate.
3. Primary and Secondary Markets
Key concept
In the primary market, securities are issued to investors for the first time or through a new issue. In the secondary market, investors trade securities with one another after issuance. IPOs are one example of primary-market activity.
Example: When you buy an already-listed share through a broker, you generally trade in the secondary market; your money typically goes to the seller, not directly to the company.
Practical checklist
Read offer documents carefully, understand the use of proceeds and risks, and do not apply to an issue just because it is popular.
Remember: This lesson is for general education. It does not recommend buying or selling any security. Consider your own circumstances and consult a qualified professional where appropriate.
4. Market Orders and Limit Orders
Key concept
A market order seeks execution promptly at the best available prices, but the final price may differ from the last displayed price. A limit order specifies the maximum price you will pay to buy or minimum price you will accept to sell; execution is not guaranteed.
Example: If a share is displayed at ₹100, a market buy may execute at a slightly higher price in a fast market. A limit buy at ₹98 will not execute above ₹98.
Practical checklist
Check order type, quantity, price and product settings before confirming. Thinly traded securities can have wider bid–ask spreads.
Remember: This lesson is for general education. It does not recommend buying or selling any security. Consider your own circumstances and consult a qualified professional where appropriate.
5. Demat and Trading Accounts
Key concept
A demat account holds securities electronically. A trading account is used to place buy and sell orders through a broker. A bank account is commonly used to move money to and from the broker, subject to the broker and product process.
Example: Buying a delivery share usually involves a trading order and securities being credited to the demat account after settlement. Intraday products may work differently.
Practical checklist
Use registered brokers and official apps, keep KYC details current, enable account security and never share OTPs or passwords.
Remember: This lesson is for general education. It does not recommend buying or selling any security. Consider your own circumstances and consult a qualified professional where appropriate.
6. Price, Volume and Liquidity
Key concept
Price is the level at which a trade occurs; volume measures how many units traded over a period. Liquidity describes how easily an asset can be bought or sold without materially moving its price.
Example: A share with low trading volume may show a quote of ₹50 but have few buyers nearby, so a larger order can execute at very different prices.
Practical checklist
Look beyond the displayed price. Check volume, bid–ask spread, order-book depth and whether the instrument suits your needs.
Remember: This lesson is for general education. It does not recommend buying or selling any security. Consider your own circumstances and consult a qualified professional where appropriate.
7. Dividends, Splits and Corporate Actions
Key concept
A dividend is a distribution a company may make to shareholders, subject to its decisions and applicable rules. A stock split changes the number of shares and per-share price proportionately in principle; it does not by itself create extra wealth.
Example: In a 2-for-1 split, 10 shares may become 20 while the theoretical per-share price halves, leaving the total value broadly unchanged before market movements.
Practical checklist
Read official exchange and company announcements; dates, eligibility and tax treatment can matter.
Remember: This lesson is for general education. It does not recommend buying or selling any security. Consider your own circumstances and consult a qualified professional where appropriate.
8. Risk, Return and Diversification
Key concept
Return is the gain or loss on an investment. Risk includes the possibility of loss, volatility, liquidity problems and events that damage an investment thesis. Diversification spreads exposure across different assets or sectors, but cannot eliminate all risk.
Example: Putting all savings into one company creates concentrated risk. Holding a range of suitable investments can reduce dependence on one outcome, though values can still fall together.
Practical checklist
Keep emergency savings separate, match investments to goals and time horizon, and avoid investing money you cannot afford to lose.
Remember: This lesson is for general education. It does not recommend buying or selling any security. Consider your own circumstances and consult a qualified professional where appropriate.
Educational content only; this is not financial advice or a recommendation to buy or sell any investment.