The stock market is a place where shares of companies are bought and sold. It helps companies raise money and gives investors a chance to earn returns. The regulator SEBI and the two main exchanges, BSE and NSE, are regular exam topics.
Primary and Secondary Markets
- Primary market - where new shares are first issued through an Initial Public Offering (IPO).
- Secondary market - where already issued shares are traded among investors.
- Together they make up the capital market.
SEBI - The Regulator
- Securities and Exchange Board of India (SEBI) regulates the stock market.
- It was established in 1988 and given statutory powers in 1992.
- Its headquarters is in Mumbai.
- SEBI protects investors and ensures fair trading.
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BSE and NSE
- Bombay Stock Exchange (BSE) - established in 1875; the oldest stock exchange in Asia. Its index is the Sensex of 30 companies.
- National Stock Exchange (NSE) - established in 1992; began trading in 1994. Its index is the Nifty 50.
- Both are located in Mumbai.
- Sensex and Nifty show the overall direction of the market.
Key Market Terms
- Bull market - prices are rising; bear market - prices are falling.
- Share/equity - a unit of ownership in a company.
- Dividend - part of company profit paid to shareholders.
Quick Revision Points
- SEBI regulates the stock market; statutory in 1992.
- BSE (1875) = oldest in Asia; index Sensex (30).
- NSE (1992); index Nifty 50.
- Primary market = new shares (IPO); secondary market = trading.
- Bull = rising; bear = falling market.
- SEBI and both exchanges are based in Mumbai.