Class-1: Why Does Stock Market exist?

The first official stock exchange was started in 1773 in London. But in India, it came into existence in the 19th century in the name of the Bombay Stock Exchange (BSE). It was the first official exchange that was set up in India back in 1875.

To understand it better, let's take an example.

There are two categories of people:

Person A: He is earning a good salary and living a lavish life. Even after all of his expenses, he ends up with a good amount of savings. To get a better return, he wants to invest it.

Person B: He doesn't earn much and barely able to fulfill his basic life needs. However, he has a dream to create something which can change millions of lives.

So now this Person B starts arranging funds to achieves his dreams. Initially, he took some financial help from friends and family to kick start the business, and then later after 6 months once his business started making a profit, he begins re-investing it.

To take the business to new heights, he looks to expand the business for which he is required to dilute the equity in the company.

Role of the Stock Market:

Stock Market is a medium between the Businesses and Investors, as it gives opportunities for the companies to raise money.

Have you ever heard about the IPO? It's known as Initial Public Offering.

Whenever a company gets listed on the exchange for the first time, they bring their Initial Public Offer (IPO) to raise the money from the investors and in return these investors become the shareholders of the company.

SEBI (Securities and Exchange Board of India) - it is the regulator of securities and commodity market in India which is owned by the Government.

Once there is an IPO of the company launched by Person B, the common investors like Person A can apply and invest their money to get better returns on their savings.

More granules of knowledge about the same are being provided in the first class of the course. In order to increase your understanding of “Why does the stock market exist”, please watch the video.

In order to know more and learn about trading and investment in the Indian stock market, sign up for a complete video course by Kundan Kishore titled “A Complete Course on Indian Stock Market