The Market: Jungle

Hello Reader, this is Mayank Tanwar and you are reading Green Bull V/S Red Bear. This is a series of blog post which is going to cover all the aspect of the stock Market in the Indian Context. This series is going to help you understand the stock market better and potentially help you make money. Please do take all the information with a pinch of salt as I am sharing the information that I have experienced so far.

In today’s blog we will discuss about the introduction to the stock market.

Definition 

The stock market is a dynamic financial marketplace where both individuals and institutions engage in the buying and selling of shares from publicly listed companies. It facilitates the exchange of ownership in businesses among investors and traders. The values of these shares are shaped by market forces, reflecting the constant interplay of supply and demand. Mainly, the stock market stands as an essential and integral component within the global financial system, playing a key role in the allocation of capital and influencing economic trends. 

(Source: Investopedia)

Stock Market regulators in the Indian Stock Market

The Following are the stock market regulators in the Indian stock market:

1. SEBI
2. NSE & BSE
3. RBI

• SEBI (Securities and Exchange Board of India): Think of SEBI as the guardian overseeing the stock market. Its job is to make sure everyone plays fair – like a referee in a game – and to protect the interests of people who invest in stocks.

• NSE (National Stock Exchange) and BSE (Bombay Stock Exchange): These are like the marketplaces where people buy and sell stocks. You can imagine them as big malls where trading happens. NSE and BSE provide the space for this buying and selling.

• RBI (Reserve Bank of India): While not directly involved in the stock market game,  RBI is like the big bank that looks after the country's money. Its decisions can affect the overall financial conditions, which in turn might have an impact on the stock market.

So, in simple terms, SEBI watches over the fair play, NSE and BSE are the places where trading happens, and RBI takes care of the country's money, indirectly influencing the stock market.

(Source: NSE, BSE, SEBI, RBI)

Now, lets talk about the common terms used in stock market.

Common terms used in Stock market:

• Shares/Stocks: When a company aims to raise funds, it issues shares, each representing a fractional ownership in the company.

• Publicly Listed Companies: Some businesses opt to go public, making their shares available on stock exchanges such as BSE or NSE in India, enabling them to sell shares to the public.

• Buying and Selling: Investors engage in the purchase and sale of these shares through the stock market, effectively gaining partial ownership in the company. The goal is to sell the shares at a higher price than the purchase price, aiming for a profit.

• Stock Exchanges: Platforms like the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) serve as meeting points for buyers and sellers to trade stocks.

• Stock Prices: The value of a stock is determined by the interplay of supply and demand. Increased demand raises the stock price, while higher supply tends to lower it.

• Market Indices: Benchmarks like the Sensex or Nifty in India reflect the overall performance of the stock market, providing a gauge for its health and trends.

• Risks and Rewards: Investing in the stock market involves inherent risks influenced by factors such as company performance, economic conditions, and global events. Despite these risks, it presents opportunities for long-term growth and financial gain.

We can say that stock market is a jungle with 2 main animals as the “kings of the jungle”

The Bull

A "bull investor" is like someone who sees the sunny side of the stock market. They believe that prices will go up, and they're confident about it. These investors are the positive thinkers in the market, expecting good things and looking for opportunities to buy stocks, thinking they can sell them later at a profit. They're the ones who think in the long run, not worrying too much about short-term ups and downs.

The Bear

A "bear investor" is like someone who thinks the stock market or a particular stock is going to have a rough time. They're not feeling optimistic and believe that prices will go down. Instead of buying stocks, they might sell or use clever strategies to make money when things aren't looking great in the market. Essentially, bear investors are the cautious folks who expect a downturn and want to be prepared for it.

In Conclusion

Our journey through the "Green Bull V/S Red Bear" series has unveiled the dynamic realm of the Indian stock market. From understanding its pivotal role and the watchful eye of regulators like SEBI, NSE & BSE, and RBI to decoding common terms and the intriguing dynamics of the "Bull" and the "Bear," we've embarked on a comprehensive exploration. As we conclude this chapter, the stock market emerges not just as a financial marketplace but as a captivating journey of risks, rewards, and strategic financial decisions. Stay tuned for more insights in this series, where the financial landscape unfolds with each turn, offering opportunities for both seasoned and budding investors. 

In the next blog we will be discussing about the market trends as to understand how the price action works and it moves through the graph of the stock.

this blog is just to provide theoretical knowledge about the stock market. Apply the methods in this on your own risk as stock market is subject to market risk.