What is Stock Market?

Stock market is the assembling of buyers and sellers of stocks[ also called shares] is called the stock market or share market, which represents a claim of ownership on businesses.

Moreover, they may include securities listed on a public stock exchange, also stock that is only traded privately, like private companies shares which are sold to investors through equity crowdfunding platforms[ this is the method of raising capital used by startups}. Stock brokerages and electronic trading platforms are most often used for investment in the stock market.


Investment is mostly made with an investment strategy in mind. Stocks can be classified by the country where the company is domiciled. such as nestle and Novartis are traded on the SIX Swiss exchange as they are domiciled in Switzerland, hence they may be considered as part of the Swiss stock market.

While the stocks may also be traded on exchanges in other countries, for instance, American depositary receipts [ADRs] on u.s. stock markets.

What is a stock market index?

Stock market indices are the movement of the prices in global, regional, or local markets are captured in price indices. Stock market indices are many such as the S&P, the FTSE, and the Euronext indices.

Such indices are normally market capitalization-weighted, the contribution of the stock to the index is reflected by weights. The parts of the index are reviewed frequently to include/exclude stocks to reflect the changing business environment.

What are Derivative instruments?

Financial innovation has present many new financial instruments whose values or payoffs depend upon the prices of stock. For instance, stock index, stock options, exchange-traded funds[ETFs], single stock futures[ this is the future contract between two parties], stock index futures.

The single stock futures and stock index futures may be traded on futures, which are distinct from stock exchanges- their history traces back to commodity futures exchanges or marketed over the counter.

All of these products are sometimes considered to be traded in a derivatives market as these products are only taken from stocks, rather than traded in the stock market.

Taxation and Double taxation

Of all investment strategy taxation is a consideration, profit from owning stocks, including dividends received, is subject to different tax rates depending on the holding period and the type of security. Mostly the profit from stock investing is taxed via a capital gains tax[ is a tax on the growth in value of investments].

In numerous countries, the taxes are paid by corporations to the government and the shareholders once again pay taxes when they profit from owning the stock, which is known as ”double taxation”

Upper circuit and down circuit

Due to high volatility, the market getting halted for certain minutes or hours or sometimes the whole day by the exchange. There are certain limits fixed by the stock exchange to the stocks above /below which it cannot trade in the market and these are called upper/lower circuit. Moreover, the limit framed is known as circuit limits.

Stock exchanges try to perfect by keeping certain limits, as we have a lot of unpredictability in the market. Let’s imagine, if the market opened and goes up by 10%, then the exchange will stop trading for certain minutes and reopen later.

If the circuit is again going up for the next 5%, then they will again stop for more periods. The trading will be stopped for the entire day if the third circuit happens.

Likewise, it happens with stocks also. however, there are different kinds of upper and lower circuits defined for different stocks and the exchange.

What are market trends?

A trend is a broad upward and downward movement of a stock’s price over time. An uptrend is the upward movement and the downward movement over a while is known as a downtrend. The investor buys the stock in the uptrend and sells the stocks in a downtrend.

The prices of the stock move in a zig-zag manner. Through technical analysis, we will not recognize a trend simply based on how far up or down a stock price has moved over some time. we look at how high the share price touched the top or how did it fall to the bottom.

Philippine stock exchange

The national stock exchange of the Philippines is The philippine stock exchange, inc. The exchange was created in 1992 from the coupling of the Manila stock exchange and the Makato stock exchange. The exchange has been in operation since 1927. There were 273 listed companies on the philippine stock exchange.

The main index for PSE is composed of thirty listed companies which are PSE composite Index[PSEI]. In the PSEi the selection of the companies is based on a specific set of criteria. There are also six additional sector-based indices. The 15 member board of directors inspect the PSE, chaired by Jose T. Pardo

Above is everything you need to know about the stock market. However, the prices of the stocks get determined in the present because of the future expectations of the company. Stock market investment can be fun and interesting but all the good things come at a price.

If you want to invest in the stock market in India and you hold it for a long period, then the stock will help you in long term goals like retirement.

Let me know more about stock market in the comment section below..

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