To understand it better, lets break the term into “Stock” and “Market”. Now, you can understand what stock mean, I am sure everyone house has stock or store room where all types of extra goods are kept, same it here in financial world, companies ownership or share are kept. Market – it refers a place where buyer and seller meet and exchange as per their needs , same in financial world, market is a place where buying and selling of shares or ownership perform. By combining both we can say stock market is a platform where ownership in companies (shares) bought and sold.

Why Do Companies Sell Shares?

Companies sell shares through a process called an Initial Public Offering (IPO). By offering stock to the public, they raise money to:

• Expand their business

• Develop new products

• Pay off debts

• Enter new markets

Instead of borrowing money from banks, companies get funds directly from investors. That means in simple word, companies sell their business % percentage  and make you partner in their business for that money.

How Does the Stock Market Work?

Here’s the step-by-step process:

 

1. Company Lists Shares : A company lists its shares on a stock exchange via an IPO.

2. Investors Buy & Sell: Investors (like you and me) can buy or sell these shares through brokers or trading platforms.

3. Prices Fluctuate: The price of a share goes up or down depending on demand and supply. If more people want to buy, the price rises; if more people want to sell, the price falls.

4. Market Participants: in stock market, everyone is comes under these two terms – Investors and Traders.

   • Investors: Hold shares for the long term.

   • Traders: Buy and sell quickly to profit from short-term price changes.