Stocks or shares are partial owner ship of the company.
Stock market is the meeting point for buyersand sellers of stocks. Let us take example of dosa business. Yes, same yummy dosa with kara chutney or coconut chutney! Tempting isn’t it? if you are a bachelor and staying away from home and feeling hungry.
Lets come to the point through a story.
Story of Dosaman.
Imagine Mr Dosaman makes excellent Dosa.He owns a street side shop(Thattukada) in malayalam. He keep his tattukada neat and tidy always.He started getting customers. Now the poor man could cater his immediate family needs ,like a visit with family to a movie at PVR and getting them a pack of popcorn.
But he noticed the taste of his food grew far and wide. More people started flowing in his restaurant.
Unfortunately he do not have enough equipment to make up with huge demand of dosa. But he don’t want to miss this lucrative opportunity.
After lot of cigarrette smoking he got an Idea!
yes, same idea that can change your life.
What he has done is he issued a document entitling for profits of company.He then sold it to his relatives and friends and raised his capital.
With that money he brought new equipments and grew his business.When that business grew he earned huge profits. He distributed these profit among the people owning this document but keeping money to expand his business more.
Now what happened was exciting. As his business grew more people want to own a part of his business. That was only possible by getting this document. So people started bargaining with owners of this document for higher price. This document my friends are Shares.
Now imagine a place where a lot of people come together to buy and sell shares. That is stock market/equity market in brief.