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Understanding Equity Markets Overview

The document discusses the equity market, also known as the share market. The equity market is a place where companies' shares, known as equities, are traded. It allows companies to raise capital by selling shares, and investors to own a part of the company. There are two main types of equity markets - the primary market where companies first issue shares through an IPO, and the secondary market where existing shares are traded. Trading occurs through a stock exchange using a computerized trading system, and all trades are cleared and settled according to the defined settlement cycle. The equity market benefits investors by allowing them to own companies, receive higher returns than other investments, get dividend income, and have limited liability.

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Chowdary Purandhar
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1K views8 pages

Understanding Equity Markets Overview

The document discusses the equity market, also known as the share market. The equity market is a place where companies' shares, known as equities, are traded. It allows companies to raise capital by selling shares, and investors to own a part of the company. There are two main types of equity markets - the primary market where companies first issue shares through an IPO, and the secondary market where existing shares are traded. Trading occurs through a stock exchange using a computerized trading system, and all trades are cleared and settled according to the defined settlement cycle. The equity market benefits investors by allowing them to own companies, receive higher returns than other investments, get dividend income, and have limited liability.

Uploaded by

Chowdary Purandhar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

EQUITY MARKET

BY: JASMITHA ORUSU


EQUITY MARKET IS ALSO KNOWN AS
SHARE MARKET

EQUITY MARKET IS A PLACE WHERE A COMPANY'S


SHARES ARE TRADED. THESE SHARES ARE KNOWN
AS EQUITIES.

WHAT IS EQUITY MARKETS ARE A WAY FOR COMPANIES


TO RAISE CAPITAL AND FOR INVESTORS TO
ATTAIN OWNERSHIP
EQUITY IN THE EQUTY MARKET, BUYERS BID FOR STOCKS

MARKET? BY PROPOSING A SPECIFIC PRICE, WHILE SELLERS


DEMAND FOR A PARTICULAR PRICE.

A SALE HAPPENS WHEN THESE TWO PRICES


COINCIDE.
H O W DOES EQUITY MARKET WORK?

Public stocks (listed on the stock exchange) or privately traded


stocks are the two types of securities that can be traded on the
equity market.

When a company is founded, it is a private company. After a set


amount of time, it undergoes an initial public offering (IPO),
which transforms it into a public company that is traded on a
stock exchange. Private equities work a little differently because
they are only accessible to specific investors and employees.

An essential element of the equity market is a stock exchange. It


is a safe location where systematic trading is carried out. Here,
securities are purchased and sold in accordance with well
crafted rules and regulations.

Trading that takes place over-the-counter (OTC), off-exchange, or


on the pink sheet takes place directly between two parties
without the involvement of an exchange.
TYPES OF EQUITY MARKET

PRIMARY MARKET SECONDARY MARKET


A corporation must do its IPO in order to Shares from initial public offerings (IPOs)
make its shares tradable by the general are traded on the secondary market after
public. A portion of the company's equity being listed on exchanges. Investors can
is offered to the general public when it purchase shares on the secondary market
launches its IPO. As soon as the IPO is if they were unable to do so during the
completed, the firm gets listed on India's IPO. Even the original investors have the
principal exchanges, primarily the NSE option to sell their holdings on the
and BSE. secondary market.
PROCEDURES OF EQUITY MARKET

TRADING CLEANING & SETTLEMENT


The Indian stock exchanges provide a fully All trades made during a trading day are cleared
automated, computerised, well-equipped and settled by the Indian exchanges. These
screen-based trading platform. This open exchanges run on clearly defined settlement
trading system is advantageous to all cycles with no room for delays or deviations.
traders since it allows them to purchase or These exchanges function in a way that
sell trades and place orders that best meet guarantees share and money transfers are
their needs. handled properly and without error. The Indian
stock market's exchanges adhere to the T+2
settlement cycle.
COMPANIES
Companies from various industries, market areas, nations, sizes,
etc., issue shares on the equity market for the general public.

RETAIL AND INSTITUTIONAL INVESTORS


PARTICIPANTS Retail Investors are individual investors, investing a smaller chunk.
Institutional Investors make investments in a larger chunk.

OF EQUITY FINANCIAL INTERMEDIARIES


MARKET The equity market has a large number of financial intermediaries, such as
depository, clearing houses, stock brokers, banks, etc., that help the market
run smoothly.

REGULATORY AUTHORITY
Their primary responsibility is to watch out for investor interests in all
regulatory, controlling, and operational matters and to ensure that no fraud
occurs.
BENEFITS OF EQUITY MARKET

01 OWNERSHIP
You become a shareholder or a member of a firm when you purchase shares. You would have voting
rights in addition to receiving a portion of the company's income as an investor.

02 HIGHER RETURNS
When compared to other investment options like bank FDs, investing in equity has the main
benefit of producing significant returns swiftly.

03 DIVIDEND
A company's distribution of excess profits to its shareholders is known as a dividend. For the
investor, dividend income effectively represents additional revenue.

04 LIMITED LIABILITY
When it comes to businesses, there is always a chance of difficulty, such as bankruptcy or
operating losses. However, as a shareholder or investor, your responsibility is limited to the
exact amount of your investment—not a penny more.
Thank you!

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