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Saturday, 5 November 2011

Types of Share Market

There are two types of markets in share market in any country.
1.Primary markets
2.Secondary markets
Primary market: Primary market is the place where the shares are issues for the first time. So when a company is getting listed for the first time at the stock exchange and issuing shares- this process is under taken at the primary market. That means the process of the Initial Public Offering or IPO and the debentures are controlled at the primary stock market.
Secondary market: The secondary market is the stock market where existing stocks are brought and sold by the retail investors through the brokers. Generally when we speak about investing and trading at the stock market we mean trading at the secondary stock market.

           Indian stock markets can be divided into further categories depending on various aspects like the mode of operation and diversification in services.
Bombay Stock Exchange(BSE) : This exchange is a conventional stock exchange with trading floor and operating mostly offline trades.
National Stock Exchange(NSE) : This exchange is completely online stock exchange.

          Both the BSE and NSE have these types of stock markets.
Equity Market or the cash segment: In this type of trading the buyers of the stocks book buying order with a bid price and the order is executed through the broker at a negotiated ask price offered by the sellers at the market. In this type of trading the buyers pays the entire amount of the value of the stocks. Once the buyers pays the entire amount along with the brokerage and taxes of the transaction, the stocks are deposited to the DP account of the buyer.
Derivative Market:  In derivative market trading is done mainly through two instruments.
          1. The future contract
          2. Option contract
In both these types of contracts the stocks are bought and sold in lot. For trading in Derivative Market you have to buy either the future contract or the Option contract. In future contract you are bound to close the deal within a specific time and at a fixed rate. While in case of option contract you can also choose to ignore the contract.


Anand Balaram said...

Nice work. I really appreciate your effort.

worldknowledge said...

thank you very much anand ji...

ChartGuru said...

good job dear

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