Equity is also known as stock or share, which is part (share) of the company. A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings. When an investor buys shares of a company, (s) he basically owns a part of that company. Stocks are a type of financial instrument issued by a corporate organization with a view to raise capital.
Equity markets are the meeting point for buyers and sellers of stocks. It is the market in which shares are issued and traded. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital, and investors a slice of ownership in a company with the potential to realize gains based on its future performance.
The place where stocks in the equity market are traded is the stock exchange. There are many stock exchanges around the world, and they can be either physical places or virtual gathering spots.
In the equity market, share investors bid for shares by offering a certain price, and sellers ask for a specific price. When these two prices match, a sale occurs in stock exchange. Often, there are many investors bidding on the same share. When this occurs, the first investor to place the bid is the first to get the share. When a buyer will pay any price for the equity, (s) he is buying at market value; similarly, when a seller will take any price for the share, he or she is selling at market value.
Most of the share-trading in the Indian stock market takes place on its two stock exchanges: the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The BSE has been in existence since 1875. The NSE, on the other hand, was founded in 1992 and started trading in 1994. However, both exchanges follow the same trading mechanism, trading hours, settlement process, etc.
Stock Brokers are middlemen between the buyers/sellers and the stock exchange. They have the authority to carry out a transaction on the behalf of the buyer or seller. It is mandatory for the investor to have a broking account in order to trade/invest in stocks. Share Brokers charge an additional fee for the service they provide, which is known as brokerage.
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