Once the shares have been floated on the stock exchange, the price is open to the public and can move higher and lower depending on supply and demand. While a company can issue more shares, there is always a limited supply, which allows you to know the number of shares in circulation.

When buying shares in a company, you are becoming a part-owner of that company and gain any rights that come with those shares, for example, voting and dividend rights. When you own stock in a company, you own a slice of that company equal to the number of shares you own. As we discuss below, physically buying stocks is different from trading and speculating in stocks with products such as CFDs.

It is important to note that when buying and selling your shares, you are not buying or selling them directly from the company. You will normally make your trades through a registered broker, and you will be buying or selling your shares to another stock investor. The price of a companies stock can move higher for several different reasons, but in the end, it all comes down to supply and demand.

If more people want to buy the shares, then the price will rise. If more people are trying to sell, then the price will fall. Som e of the most common reasons supply and demand are affected include;.

After everything is taken into account, the price of a companies stock comes down to the laws of supply and demand. There are millions of transactions from both buyers and sellers taking place in the market every day. However, on the flip side, when the sellers move in and overwhelm the buyers, we can see price sell-off quickly and aggressively lower.

It has been proven repeatedly that over long periods of time, the stock market can generate substantial returns that are hard to beat. As we discuss in more depth below, not only can you make money from buying low and selling for a profit, but as a shareholder, you can also make money from dividends. When many investors think of the stock market, they either think of day trading or what it would be like to find the next Facebook or Google before it takes off.

However, to make solid profits over long periods of time, you do not need to take such large risks looking for the next big player. Investing in companies that have proven long-term track records of profits can give you long-term capital gains while giving you an income every year from the company dividend. Whilst there are many thousands of stocks on many different stock exchanges worldwide, there are also what are known as stock market indexes.

Stock market indexes show you the price of a basket of stocks for certain indices. For example, when people talk about the Dow Jone, they are talking about the stock market index formed with the 30 largest US publicly traded companies.

There are many different stock market indexes all around the world. Whilst you may not be interested in trading them directly, they are often a good idea to keep an eye on if you are a stock trade because they can give you a quick idea of how an overall market or sector is doing. Some of the biggest and most well know stock market indexes around the world include;.

Whilst making profits through capital gain is a popular way to make money in the stock market, profiting from dividends can also be very lucrative. A dividend is a payment to shareholders from the companies profit. This is normally made once or twice a year, depending on the company.

Some large companies also pay out quarterly dividends. Hence, NSE is a first exchange in India to introduc electronic trading facility thus connecting together the investor base of the entire country. Characteristics of Stock Market : There are some most important characteristics of Stock market which are as below: i Stock Market is a market, where securities of corporate bodies, government and semi-government bodies are bought and sold.

It also deals with existing or second hand securities and hence it is called secondary market. It merely provided the necessary infranstructure and facilities for trade in securities to its members and brokers who trade in securities. It also regulates the trade activities so as to ensure free and fair trade. Securities which do not figure in the official list of stock market or exchange are called unlisted securities.

Such unlisted securities cannot be traded in the stock exchange. Outsiders or direct investors are not allowed to enter in the leading circles of the stock exchange. Investors have to buy or sell the securities at the stock exchange through the authorised brokers only. No deviation from the rules and guidelines is allowed in any case. The prices of different securities traded are shown on electronic boards. After the working hours market is closed.

All the working of stock exchanges is conducted and controlled through computers and electronic system. The securities of profitable and growth oriented companies are valued higher as there is more demand for such securities. The valuation of securities is useful for investors, government and creditors.

The investors can know the value of their investment, the creditors can value the credit worthiness and government can impose taxes on value of securites. B Economic Barometer : Any stock exchange in the world is a reliable barometer to measure the economic condition of any country like India. Every major change in country and economic is reflected in the boom or recession cycle of the economy. Stock market is also known as a pulse of economic mirror reflects the economic conditions of a country.

C Contributes to Economic Growth : In stock market Securities of various companies are bought and sold and this process of disinvestment and reinvestment helps to invest in most productive investment proposal and this leads to capital formation and economic growth. D Safety in Stock Exchange : In stock exchange only the listed securities are traded and stock market authorities include the companies names in the trade list only after verifying the soundness of company.

The companies which are listed they also have to operate within the strict rules and regulations. This ensures safety of dealing through stock market.

To ensure liquidity and demand of supply of securities the stock market permits healthy speculation of securities. F Better Allocation of Capital : The share of profit making companies are quoted at higher prices and are actively traded so much companies can easily raise fresh capital from Stock exchange.

The general public hesitates to invest in securities of loss making companies. So, Stock market facilitates allocation of investor's fund to profitable channels. G Liquidity and Stock Market : The main function of stock market is to provide ready market for sale and purchase of securities.

The presence of stock market gives assurance to investors that their investment can be converted into cash whenever they want. The investors can invest in long term investment projects without any hesitation, as because of Stock market they can convert long term investment into short term and medium term.

H Saving and Investment : The Stock market promotes or offers attractive opportunities of saving and investment in various securities. These opportunities encourage people to save more and invest in Securities of corporate sector rather than investing in unproductive assets such as gold, silver, etc.

Stock Market and Modern Financial System : The financial system under stock market in most of the countries has undergone a remarkable transformation generally in western countries. One features of this development is disintermediation. A portion of the funds involved in saving and financing, flows directly to the financial markets instead of being routed via the traditional bank lending and deposit operations.

The general public interest in investing in the Stock market, either directly or through mutual funds, has been an important component of this process. Statistics show that in recent decades, shares have made up an increasingly large proportion of households' financial assets in many countries as well as India.

The trend towards forms of saving with higher risk has been accentuited by new rules for most funds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to be found in India as well as developing countries. Saving has moved away from traditional government insured "bank deposits to more risky securities of one sort or another".

Therefore, a second transformation is the move to electronic trading to replace human trading of listed securities. The major part of this adjustment is that financial portfolios have gone directly to shares but a good deal now takes the form of various kinds of institutional investment for groups of individuals such as pension funds, mutual funds, hedge funds, insurance investment of premiums through this modern electronic system in the country.