A share market is considered to be a platform across which all the securities including shares, debentures and bonds are actively traded. The buyers and the sellers of the market enter into the sale transactions. The securities are transferred from one demat account to the other demat account. The prices of various shares keep on fluctuating throughout the trading hours. The share market is a destination wherein the important indices collaborate to develop the market capitalization of the country.
With this being the structure of the share market, it is important to equally pay heed to the important principles on the basis of which the share market operates. These principles have been given in the following way:
Understanding the Bullish and the bearish phase
There are two most important timings of the share market. The first one of them is the bullish period while the second one of them is the bearish period. The bullish period is the one in which the share prices are soaring high.
The market value of the important indices pike Sensex and Nifty 50, rises to a great height. But on the other hand, the bearish period denotes the falling share prices. The former may denote the excessive demand of the shares while the latter denotes the lack of demand in the market.
Understanding the internal and external factors
Many internal and external factors govern the prices of the shares on the share market. A share market is not only affected through the internal policies of the companies. But rather, many external factors which are beyond the control of the company have well affected the pricing of the shares.
War-like situations, pandemic, natural calamities, internal changes of the government etc all try to leave an impact on the stock market. Share market is the biggest aggregator of the maximum of these variables.
Understanding the right time to invest
Investment in the share market is not only risky but also deadly. No person or a layma without the sufficient knowledge of the share market can take the risk. Understanding the behaviour of a given stock is important before investing.
The time of the investment plays an important role in deciding the return which would be obtained over the period of time. An investment in a stable share during the bearish period may be more useful and profitable as compared to the investment in the risky share during the bullish period. A lot of analysis has to be driven side by side.
Conclusion
It has to be concluded that the share market is a huge ocean. If the people of countries start investing in share markets after taking inspiration from the above-mentioned rules, then poverty would be eradicated in just a few years. The concluding part would once again impress upon the need to understand the basics of the share market before investing. These basics will be helpful in maximising the return which would be obtained pursuant to that.