An equity market is a market during which shares of companies are issued and traded, either through exchanges or over-the-counter markets. Also referred to as the stock exchange, it’s one among the foremost vital areas of a free enterprise, it gives companies access to capital to grow their business, and investors a bit of ownership during a company with the potential to understand gains in their investment supported the company’s future performance.
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How does the equity market work?
The concept behind how the stock exchange work is straightforward. Consider a firm where buyers and sellers negotiate prices and make trades. Now, substitute the firm and item with equity market and shares. Companies list their shares on exchanges. Investors can purchase shares within the primary market i.e IPOs and secondary markets. The stock exchange is regulated by a financial watchdog. The equity market is maintained by stock exchanges, and various stakeholders like brokers, dealers, clearing corporations, etc. it’s a relative of institutions and this is often truth equity market meaning. there’s no 24 hrs stock trading system yet. the traditional trading time for the equity market is between 9:15 am to 03:30 pm, Monday to Friday in India.
The equity markets comprise structure trading and investment and may be defined in two sorts of platforms, i.e primary and secondary markets.
- Primary market – Each company that plans to supply its shares for public trading must start with Initial Public Offering or OPI. during this process, the corporate offers a neighborhood of its total equity to the general public for raising capital initially. Once the IPO is complete, the stocks so offered are listed on the stock exchange on the stock market for further trading. the whole process of introducing the IPO by a corporation takes place within the primary market. In other words, this market constitutes only the IPO introduction and investment.
- Secondary market – Once shares have already been listed on either of the exchanges, further trading for them is held within the secondary market. Here, the initial investors get a chance to exit their investments via stock sale during this live equity market. These stocks can comprise shares, alongside other sorts of securities which will include convertible bonds, corporate bonds, etc. while investors who did not purchase shares within the primary market can do so here, it also opens a chance for a good range of traders to take a position in such stocks.
This market plays a crucial role during a market-based economy. They supply capital raising, liquidity, and investment options these important functions allow our economy to grow continuously, and that they are the hallmark of capitalism.
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A stock exchange equity market or share market is that the aggregation of buyers and sellers of stock, which represents ownership claims on businesses, these may include securities listed on the general public stock market, also as stock that’s only traded privately, like the share of personal companies which are sold to investors through equity crowdfunding and electronic trading platforms. Investment is typically made with an investment strategy in mind.
Author – Hariharan Krishnan
About the Author – Hariharan Krishnan is currently in second year BAF and is also doing FRM part 1. He is passionate about financial markets and loves to play chess and outdoor games.