What is the stock market and how does it work?

 From "ye stock market to ameer ka Khel hai to risk hai to Ishq hai '' India's perspective on the stock market has changed dramatically in recent years. 

It might be fear of missing out, it might be realising the importance of investing or it might be the influence of series like scam 1992. Well, we don't know what it is but there is something that has attracted a lot of new investors to the stock market in the last 1 -2 years. 14.2 million demat accounts were opened that too in the pandemic when the economy was at its lowest. This just indicates how seriously Indians have taken the popular dialogue "risk hai to Ishq hai". But you know what they say, having incomplete knowledge is more dangerous than not knowing. A lot of people have started their stock market journey but there are still numerous myths about the Stock market. Maximum people still think of the stock market as a scheme to double their money overnight. 

But don't worry, we have got you covered in this article. We have put together everything you need to know about the stock market and how it works. 

What is the stock market? 

If you are someone who wants to invest in shares of different companies, want to earn growing returns that can beat inflation but don't know how to buy shares or where are the shares listed, what is the stock market then this article is for you! 

A stock market is a place where shares are bought and sold by investors. Securities issued in a primary market trade in the stock market after listing. The price of these securities is determined by the forces of demand and supply. The prices of these securities can also fluctuate due to changes in the economic policies, politics or any major phenomenon within the country or around the globe for example Covid 19 caused major losses in the secondary market. Investment in the secondary market requires analysis of the institution as it includes risk. In layman's words, it is the platform where buyers and sellers come to buy or sell their stocks. 

How does the stock market work? 

The stock market primarily depends on the forces of demand and supply principle. There are also many more multiple factors on which it can fluctuate. Major changes in the economy, any particular industry, and politics can affect the stock market. An individual has to constantly monitor all these changes simultaneously to succeed in the stock market.

We all know the stock market is a great investment opportunity but selecting The one for you can be quite a task. That's why in this article we have put together everything you need to know about understanding how the market works. 

In India, we have more than 5000 companies listed on stock exchanges like the Bombay stock exchange or the national stock exchange. So it is tough to choose the right stock which will outperform, especially for amateurs. 95 % of people lose money in the stock market. and the reason behind it is the lack of knowledge. People confuse the stock market with gambling and often end up losing their capital. A detailed study of the company and market is mandatory if you want to succeed in the stock market. Now let's understand how the stock market works in detail. 

The stock market is not an alien concept for India, it is something that has been existing here since 1875 but since then some tremendous changes have occurred in the way the stock market works. It has adopted the technology to change itself, online trading, Demat account and a lot more have changed but the basis on which the market works is still the same. Market and its number still revolve around the fundamentals and technical of the listed companies, economy and the industries involved.

Changes in the economy or demand or supply of certain products decide the winds of the market. It is often said that if you observe your daily life you will find many growth stocks. Similarly, sudden trend change in a particular industry can result in the birth of a new growing and multi-bagger industry. For example, the trend of electronic vehicles has led to good returns from many electronic vehicle-related companies like Tata Power due to a sudden increase in demand.

The electronic vehicle industry and pharma industry are some of the examples of how changes in the economy helped industries and markets to grow. Apart from the market winds, the fundamentals of the institution also decide the fate of the market. It is often said that don't invest in the stock, invest in the business because if the business idea is good the company will yield good profits. Research about the business you are investing in. Research about their product, business plans, and memorandum. If the company is fundamentally strong then it is bound to give good returns. 

To put it in a few words, how the market works is still an unsolved puzzle for many but to perform well in the market it's always the economy and the fundamentals of the company. Sentiments of the market are hard to understand but adjusting to the market is easy so just focus on economic conditions and the fundamentals and you are good to go!! To put it in a few words, selecting an industry or stock or understanding how the market works can be difficult but it is very significant to pick the right one to book the profits.

You can use all the different methods given above to understand the market and it's working for you. The stock market is not an easy game to play; it requires research, analysis and a lot of effort. So before you drink to gain double returns in the stock market learn to research and analyze the markets to find your multi-bagger. Now, what are you waiting for, to research wisely, select your favourite sector and start investing!! 

Happy investing!!