Boom of stock market in India

Boom of stock market in India

Introduction-

Many a time we have seen people talking about investing in the stock market, buying shares/debentures/bonds of different companies, creating portfolios, and earning profit. It is not always necessary that one is only making a profit but also has to go through certain losses. Now if the company uplifts, the shareholder earns profit and if the company downgrades itself, the shareholder creates a loss. The stock market has changed the lives of numerous people. It became a new source of income for the poor, making them productive and richer and the ones with money in their pockets invested into the stocks and doubled it up. Hence, we can say that the stock market is a place where we can invest our funds and make our money to the highest possible point. But, before entering this field one must understand the variations in the stock market, their ups and downs, the companies that are listed in the stock market, and how it actually works. Lack of adequate information may lead to the loss of a huge amount. The stock market has helped almost every section of society and has proved to be the backbone of individuals. Many living souls consider the stock market as their career and dream of being a stock trader. Now, the question arises – What are stocks?

Stocks are a part or a share of the company that they provide to outsiders for ownership in their company. The prices of the shares are fixed by the demand and supply of that particular commodity. The shares of the companies are distributed and whoever buys the share becomes the owner of the company, and they are known as ‘Shareholders’. Let us understand the ownership of the shareholders with an example. Mr. A bought 100 shares from the company XYZ and each share costs Rs 10. Therefore, he invested Rs 1000 and the company will provide dividends on earning a profit to Mr A.

Classification of stocks

We need to understand about the different types of stocks available in the market.

• Equity shares

  – Equity shares, which are also famous with the word ordinary shares, are the shares that show ownership of the company. An individual buying equity shares becomes the shareholder and gets the voting rights of the company. The return from equity shares is not fixed as it is much riskier than other stocks. In a growing company, the returns are higher than preference shares and debentures.

• Preference Shares –

  Preference shares do not carry any voting rights. Preferred shareholders are prioritized over equity shareholders and get the dividend before equity holders.

HISTORY OF THE STOCK MARKET IN INDIA

Stock trading in India is growing rapidly and is wisely chosen as a career by many individuals. Many colleges and institutions have included stock trading in their syllabus, making it compulsory for the students to acquire knowledge about it.

‘Native Share and Stock Broker’s Association’ which was formed in the year 1875 was the first share trading association in India, and currently, it is known as ‘Bombay Stock Exchange (BSE)’. In the back 1875, this association started with just 318 members. In 1992, National Stock Exchange was introduced which traded in electronic and modern technology. Even though the stock market proved to be a boom, it also had a negative side to it. Several scams happened in the Indian Stock Market which not only destroyed the pride of the country but also led to losses of funds of thousands of people investing in the stock market. The infamous scam of Harshad Mehta in the year 1990 questioned the exchange boards for regular visits to keep an eye on the activities done in the stock market. Many other scams like the Ketan Parekh scam in the year 2000 and the global financial crisis in the year 2008 led to regulatory changes and significant market correction.