Stock Market Basics: A Beginner's Guide

What is a Stock?

A stock represents a share of ownership in a public company. When you buy a stock, you are buying a small piece of that business. Shareholders may benefit from price appreciation (capital gains) and dividends (a share of company profits).

Primary vs Secondary Market

• Primary Market: Where new securities are issued (e.g., IPOs — Initial Public Offerings). The company itself sells shares to investors.
• Secondary Market: Where existing shares are traded between investors on stock exchanges like the NYSE, NASDAQ, NSE, or BSE.

Key Exchanges

• NYSE / NASDAQ — United States
• NSE / BSE — India (Nifty 50 & Sensex are the flagship indices)
• LSE (FTSE 100) — United Kingdom
• TSE (Nikkei 225) — Japan

How Prices Move

Stock prices reflect the collective expectations of buyers and sellers. When demand exceeds supply, prices rise; when supply exceeds demand, they fall. Prices are influenced by:

• Company earnings & fundamentals
• Macroeconomic factors (interest rates, inflation, GDP)
• Sector trends and news
• Investor sentiment

Bull vs Bear Markets

• Bull Market: A sustained period of rising prices, typically +20% or more.
• Bear Market: A sustained decline of 20% or more from recent highs.

Getting Started

1. Open a Demat + Trading account with a SEBI-registered broker (in India) or a licensed broker in your country.
2. Complete KYC verification.
3. Start with index funds or blue-chip stocks to reduce risk.
4. Diversify — never put all capital in one stock.