What is stock market..!
Stock market is not gambling. It is a system of buying ownership rights in companies. If a company wants to raise money from the public to expand its business, it divides its company into smaller parts (shares) and sells them in the market. A person who buys those shares becomes a partner in that company.
For example, suppose a company has a net worth of ₹10 crore. If it is divided into 10 lakh shares:
₹10,00,00,000 ÷ 10,00,000 = ₹100 per share
If you buy 100 shares:
100 × ₹100 = ₹10,000 investment
Now if the company grows and the total value is ₹15 crore:
₹15,00,00,000 ÷ 10,00,000 = ₹150 per share
Your investment is worth:
100 × ₹150 = ₹15,000
Profit:
₹15,000 – ₹10,000 = ₹5,000
It is the profit from the development of the company.Stock market prices change daily. It is called “Demand.The entire stock market situation cannot be understood by a single company. That is why indices are created. Mainly Nifty 50 and Sensex are popular indices in India.Nifty 50 refers to the performance of 50 leading companies in the country. Sensex is the average performance of 30 leading companies in BSE.
For example:
If Nifty rises by 2% in a day — it means that the market as a whole is in good spirits.
If 2% falls — it means there is more fear in the market.
That is, indices are like a thermometer of market health.
How the Stock Market Worked Earlier vs Today
Investing in the stock market was a very difficult task in earlier times. No mobile phones, no internet. Trading should only be done through a broker. Share certificates were in paper form.
A person needs to call a broker to invest ₹50,000. Place an order. It could take hours or days to execute.
Now the situation has completely changed.
- Mobile app
- Live market data
- Low brokerage
- Order execution in seconds
For example, suppose you invest ₹20,000 and buy a share at 9:15 am. If it increases by 2% in 10 minutes:
- ₹20,000 × 2% = ₹400 profit
- So fast is possible now.
- Let’s say the brokerage before was 1%:
- ₹50,000 × 1% = ₹500 per trade cost
Most apps now charge a flat fee of ₹20.This change made the stock market accessible to all. But the greater the convenience, the greater the risk. Because buying and selling can be done at the click of a button.
Digital convenience = opportunity responsibility.
Role of Investors in Market Movement
It’s not just the companies that drive the market — it’s also the mindset of investors.
There are two main forces in the market:
- Bulls (those who expect prices to rise)
- Bears (those who expect prices to fall)
For example, if a company announces good results, 10,000 people will try to buy. But if there are only 5,000 sellers, demand will be high → price will rise.
Imagine it like this:
- Buyers = 10,000
- Sellers = 5,000
Demand is high → price will rise.
If there is bad news about this same company:
- Sellers = 12,000
- Buyers = 4,000
Supply increases → price falls.
It is purely a market mechanism.
Hence emotions (Fear & Greed) influence the market. Even a small piece of news can lead to big changes.The market never goes straight up or down. It is often oscillating. Those who understand this will benefit in the long run.
Impact on Middle-Class Investors
Middle class people are careful about money. Their income is limited. So think 10 times while investing.For example if a person earns ₹30,000 per month and has expenses of ₹25,000:
₹30,000 – ₹25,000 = ₹5,000 Savings
How much should be invested in that ₹5,000? Putting the amount is a risk. If not put, there is no development.
This is why methods like SIP are useful.
If ₹3,000 is invested every month:
₹3,000 × 12 = ₹36,000 per annum
10 years (assume 12% return) → Compounding increases the value significantly.
Stock market can be a wealth creation tool for middle class people. But proper understanding, patience and long term vision are required.A portion of the company’s profits distributed to the shareholders is called dividend.
Advantages and Wealth Creation Power
The stock market is a system that has the power to increase wealth in the long run.
Example:
An investment of ₹1,00,000
Average 15% return
After 1 year:
₹1,00,000 × 15% = ₹15,000 profit
Amount = ₹1,15,000
Compounding for 10 years:
(Simply estimated) → Around ₹4,00,000+
This is higher growth than bank FD.Wealth creation in the stock market is possible but requires disciplineThe total market value of a company is called market capitalization.
Principle:
Total number of shares × price per share = market cap
Example:
A company has 1,00,00,000 shares.
If the price per share is ₹200:
1,00,00,000 × ₹200 = ₹200 crore market cap
There are three types of companies:
- Large Cap – Large companies that are stable
- Mid Cap – Medium growth companies
- Small cap – more growth opportunities but more risk
Risks and Emotional Discipline
The biggest risk in the stock market — emotions.
If a person invests ₹1,00,000 and loses 20%:
Loss of ₹1,00,000 × 20% = ₹20,000
If you sell in a panic, the loss is sure. But if the company is strong then there is a chance to grow again.
Hence:
- Stop Loss
- Risk management
- Diversification
- Patience
- These are mandatory.
Trading with emotion can turn into gambling. It’s like a business if done with a plan.
- There should be an emergency fund
- All money should not be invested in a single share
- Do not borrow and invest
- Objective and time frame should be clear
Conclusion
Stock market is a word that usually scares many people. For some it looks like gambling, for others it looks like a way to get rich overnight. But in reality the stock market is neither of these two. It is a system. A platform where companies can raise funds from the public for their business expansion. At the same time common people can become partners in those companies and share in their development.
To be successful in the stock market we must first change our mindset. It is difficult to move forward steadily if you have a mindset of hoping for a quick profit, or fearing even a small loss. The market never goes up, it never goes down. It moves like a bicycle. Those who understand this cycle will benefit in the long run.
Stock market is a great wealth creation tool for middle class people. Time and compounding power combine to produce wonderful results if invested regularly, even if only a little per month. Even small sums can turn into big sums in 10–15 years. But it is possible with patience, discipline and proper planning.
External Links
https://www.investopedia.com/terms/s/stockmarket.asp
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