What is Share Market? A Simple Guide for Beginners in 2025
The share market – often called the stock market – is where shares of publicly listed companies are bought and sold. It’s a marketplace that connects investors with companies seeking capital. For beginners, understanding the share market is the first step toward financial literacy and potential wealth creation. This guide explains everything in simple terms with practical examples.
How Does the Share Market Work?
The share market operates through exchanges like the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. Companies list their shares through an Initial Public Offering (IPO), after which investors can trade these shares based on their perceived value.
**Key Participants:
Investors: Individuals/institutions buying/selling shares
Companies: Entities raising capital by selling ownership stakes
Brokers: Intermediaries facilitating transactions
Regulators: SEBI (Securities and Exchange Board of India) ensuring fair practices
Types of Share Markets
1. Primary Market
Where companies issue new shares through:
IPOs (Initial Public Offerings)
FPOs (Follow-on Public Offerings)
2. Secondary Market
Where existing shares are traded among investors through:
NSE (National Stock Exchange)
BSE (Bombay Stock Exchange)
Key Share Market Terms Every Beginner Should Know
Sensex: Benchmark index of BSE tracking 30 established companies
Nifty: Benchmark index of NSE tracking 50 major companies
Demat Account: Digital repository for holding securities
Trading Account: Account used to execute buy/sell orders
Bull Market: Rising market trend
Bear Market: Declining market trend
Dividend: Company profits distributed to shareholders
How to Start Investing in Share Market?
Step 1: Open Necessary Accounts
Demat Account (holds your shares electronically)
Trading Account (executes buy/sell orders)
Linked Bank Account (for fund transfers)
Step 2: Learn Basic Analysis
Technical Analysis: Studying price charts and patterns
Fundamental Analysis: Analyzing company financials and prospects
Step 3: Start with Safe Options
Large-cap stocks for stability
Index funds for diversification
SIPs in equity mutual funds
Benefits of Share Market Investment
Wealth Creation: Potential for high returns over long term
Liquidity: Easy to buy/sell shares anytime
Ownership: Becoming part-owner of companies
Dividend Income: Regular income from profitable companies
Tax Benefits: Long-term capital gains tax advantages
Risks and How to Manage Them
**Common Risks:
Market volatility
Company-specific risks
Liquidity risks
Interest rate risks
**Risk Management Strategies:
Diversification across sectors
Long-term investment horizon
Regular portfolio review
Stop-loss orders
Common Mistakes Beginners Make
Following tips without research
Trying to time the market
Panic selling during corrections
Overconcentration in few stocks
Ignoring fundamental analysis
See Our More Blogs:
Frequently Asked Questions (FAQs)
Q1: What is the minimum amount needed to start investing?
You can start investing in shares with as little as ₹500-1000 through some brokers. Many bluechip stocks are affordable for beginners.
Q2: How much money can I make from share market?
Returns vary based on market conditions and strategy. Historically, Indian equities have delivered 12-15% annual returns over long term.
Q3: Is share market trading gambling?
No. While both involve risk, trading/investing relies on research, analysis and strategy unlike gambling which depends on chance.
Q4: How do I choose my first stock to buy?
Start with companies you understand, having strong fundamentals, consistent profits, and good management quality.
Q5: What time can I trade in Indian share market?
Indian stock markets are open from 9:15 AM to 3:30 PM, Monday to Friday (except holidays).
Disclaimer:
This article is for educational purposes only. The securities market is subject to market risks. Please read all related documents carefully before investing. Past performance is not indicative of future returns. Consider consulting a qualified financial advisor before making any investment decisions.
Ready to Learn More? Join Trading Shastra’s comprehensive learning programs that cover everything from basics to advanced trading strategies.
Trading Shastra Academy
B-11, Sector 2, Noida – 201301
Website: www.tradingshastra.com
Email: info@tradingshastra.com
Phone: +91 9717333285, +91 9717333901
Hours: Monday – Saturday: 11:00 AM – 6:00 PM IST