What is share market and how it works ?

The share market or stock market is a place where an investor can do trade in a financial instrument, Like a supermarket where people buy goods and things of their interest and need.

The process is the same as a Supermarket but the stock market is a digital market where buying or selling takes place electronically.

Now, the first thing comes in mind what to buy or sell and what are the financial instruments?

So, friends Here financial instruments are a share of companies, derivatives of shares/stock, bonds issued by companies, Funds issued by companies, IPO offered by companies, Commodity.

First companies come with IPO and list it with the primary market and then that shares are available for trade-in secondary market for buying/selling.

The stock market is an intermediary which allows investors to buy or sell financial instrument are also known as the stock exchange. In India, there are two main stock exchanges National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).



Now let's take it further and come to the point how the stock market works?

Before we go to invest our money we need to understand a few terms Regulators, Exchanges, Stock Brokers and Stock market participants.

The Regulator of Stock exchanges in India is "The Securities and Exchange Board Of India" is also known as SEBI.

The Main role of SEBI as a Regulator is to make rules and norms to ensure the development of the stock market and protect market get manipulate by unfair practices.

The SEBI ensures that the Stock exchanges NSE & BSE, Stock Brokers work fairly, Companies do not manipulate the market to benefit themselves.
The large investors and fund companies are not able to manipulate a stock's  in the market with unfair practices. And protect the interest of retail investors in the stock market.

There are other Financial intermediaries work in a cluster to build these market ecosystems are stockbrokers, banks, depository, and depository participants and Clearing services (NSCCL & ICCL).

Stock Brokers are the most important part of this financial market ecosystem, registered under stock exchanges are the platform that allows participants to execute buy/sell orders of shares as per SEBI norms. Stockbrokers basically provide a trading account to investors in fulfilling the purpose of the market.

Banks are the financial institutions from where we carry fund transactions to the trading account to accomplish a trade.

Depository and Depository participants are the intermediaries provides a Demat account also known as digital vault have all your share anyone bought in digital format. A share represents the ownership of the owner of share in the company. So anyone buy shares of any company have to store in demat account in digital form. And Depository makes sure the owner buy shares have the ownership of the company by providing share certificate to owner.

National Security Clearing Corporation Ltd. (NSCCL) AND Indian Clearing Corporation Ltd. (ICCL) are the main clearing intermediaries/depositories owned by National stock exchange and bombay stock exchange.
The main role of NSSCL and ICCL is to make sure the buy/sell transaction and trade get settled properly.
And the Both buyer and seller get the amount/share credited with confirmation and guaranty.

This is all how Stock market works with its intermediate Participants. I hope this will help many of peoples to understand the Stock market.