Equity Trading

Equity

An equity market, also referred to as stock/share market is a place where equity shares of a company are traded. Bonds and other types of equities are also traded and exchanged in the stock market. The stock market is divided into two sections - primary market and secondary market.

Primary Market

The primary market is a part of the capital market which deals with issuing of new securities. The companies sell new issues through initial public offerings (IPO). In the primary market, securities are purchased directly from the seller. The companies use the money raised in primary markets to either set-up a new business, expand the existing business or pare off debt.

Secondary Market

The secondary market is where the securities issued in primary market are bought and sold on the stock exchanges - Bombay Stock Exchange (BSE), National Stock Exchange (NSE) etc. BSE and NSE are the most widely traded exchanges in India with a market capitalisation of Rs 1,25,18,954 crore and Rs 12,282,127 crore respectively.

How can one buy/sell stocks?

An individual can buy or sell stocks only through secondary market. The stocks are bought and sold in a dematerialised form which are deposited in an account known as demat account. One needs to open a trading demat account with a stock broker which is registered with the exchange. A lot of other entities are also involved in the process of buying/selling a stock.

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