India’s share market has grown into a force that shapes the wider economy. By November 2025, the total market capitalisation of listed Indian companies crossed ₹474 lakh crore, a scale that now affects business expansion, household wealth, pension flows, and government disinvestment decisions. This large scale indicates that the market is more than just a stream of prices. It reflects how confidence shifts, choices are made, and capital finds direction. This article explains how the share market works, who drives it, and what moves it.
What Is the Share Market?
The share or stock market is a regulated financial system designed to turn business ownership into something that can be easily shared, priced, and transferred. Instead of relying on private deals or informal arrangements, it brings investors and companies onto a common, transparent platform.
Here’s what that really means in practice:
• Companies raise long-term capital, not loans. When shares are issued, businesses are selling ownership, not promising fixed repayments.
• Investors buy a stake in the future, gaining a claim on profits if the company grows, while also accepting the risk if it does not.
• Returns are uncertain by design, because equity rewards depend on performance, not guarantees.
What separates the share market from informal investing is its structure. Prices are publicly visible. Company disclosures are mandatory. Every trade is recorded and settled through regulated mechanisms. This embeds trust directly within the system rather than relying on external assurance.
How Stocks Are Traded in the Market
Stock trading does not rely on direct negotiation between participants. Orders flow into automated systems that quietly line them up based on rules, speed, and price, turning countless individual decisions into completed trades without the need of direct interaction.
Submitting and pairing orders
When an investor places a buy or sell instruction, it goes through a registered broker into the exchange’s electronic system, where compatible orders are identified and matched automatically.
Price–time sequencing
Orders are processed by favouring the most competitive price first. When prices match, the order that arrived earlier is executed before the rest.
Trade execution and settlement
Once matched, trades are executed almost instantly. In India, settlement follows a T+1 cycle, meaning shares and funds are exchanged one working day later, reducing risk and improving efficiency.
Delivery and intraday trades
Delivery trades lead to shares being credited to the demat account, confirming ownership. Intraday trades are closed within the same session and do not result in ownership transfer.
The Role of Stock Exchanges
A stock exchange functions as a structured marketplace where shares change hands. Its role is not to predict prices or influence investor decisions, but to keep trading orderly and reliable, even when volumes rise or markets turn volatile.
In India, this function is carried out by the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE), both operating under the supervision of the Securities and Exchange Board of India.
Mobilising savings: Exchanges facilitate the flow of excess savings from the unorganised segment to the organised marketplaces.
Assisting in capital formation: The funds generated out of capital markets are injected into a variety of businesses and sectors.
Price discovery: These exchanges make price discovery through continuous order matching of buyers and sellers to reach a price representative of the market expectations.
Market liquidity: One can easily enter positions or get out of them during market hours; this is the flexibility that many traditional assets do not allow.
Protection of investors: Continuing surveillance and enforcement of rules reduce unfair practices and protect confidence.
All together, such functions make stock exchanges passive pillars of stability for capital, trust, and economic momentum.
How the Share Market Works
The share market is a system that converts opinions about the future into prices that are observable today. A transaction is simply a reflection of what parties believe a company is worth based on the information they possess.
As these attitudes continue to shift, so too do prices. Share prices are affected by judgments regarding earning power, financial power, competitive advantage, management, and economic conditions.
Why Prices Move
Prices will keep changing once new information becomes available. Earnings releases, policies, or economic information may increase or undermine confidence, leading to shifts in supply or demand.
A decentralised process
Prices are not determined by individual players. Market levels result from the aggregate decisions of thousands of players made at the same time.
The role of oversight
The fairness and transparency of the aforementioned system, therefore, are ensured by the functioning of the SEBI, which looks after the exchanges, the intermediaries, as well as the listed companies.
Key Players in the Stock Market
The share market is a successful system because different people participate in it with their distinct roles and goals.
The Regulator – SEBI
At the top of the Indian share market ecosystem is the Securities and Exchange Board of India. Founded in 1988, SEBI was later given legal standing through the enactment of the SEBI Act, 1992. The mandate of SEBI is to safeguard investors, promote fair trade, and prevent abuse of powers.
Stock Exchanges
Stock exchanges act as the venues through which trading is conducted. In India, it is primarily facilitated by the NSE and the BSE. These stock exchanges facilitate the matching of buy and sell orders, price discovery, settlement of transactions, and enforcement of norms for inclusion in the stock exchange.
Companies that are listed on stock exchanges must comply with SEBI regulations as well as the provisions of the Companies Act of 2013.
Depositories and Depository Participants
Ownership today is digital, not paper-based. The securities are electronically stored in depositories such as National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), ensuring safe custody and accurate record-keeping of ownership. Investors do not deal with them directly. Depository Participants act as the interface, opening demat accounts and maintaining records securely.
Brokers and Sub-Brokers
Brokers link the investors to the exchanges. They place buy or sell orders for the investors. Also, they offer platforms for the buying or selling processes to occur. Sub-brokers aid in spreading the services to even smaller towns or cities.
Investors and Traders
Investors and traders are the market’s driving force. Retail investors represent households deploying personal savings. India currently has over 20 crore demat accounts, reflecting wider participation.
Together, these players give the share market depth, liquidity, and resilience.
Understanding Stock Market Indices
Instead of tracking each stock one by one, the stock market indices trace a carefully chosen group and reflect their combined price movement. When an index gains or loses ground, it reflects the price movement of represented companies according to their contribution to the market.
Investors follow indices to get an idea about the direction the market is taking, to compare portfolio performance, and find out whether the movements in prices are general or driven by just a few stocks. The two most commonly followed indices in India are:
- Nifty 50 represents the top 50 companies that are actively traded on the NSE.
- Sensex consists of the top 30 companies actively traded on the BSE.
How to Read Stock Market Quotes
Stock market quotes can feel crowded at first glance, but each element plays a specific role. When read together, they show not just where a stock is trading, but how active and balanced the market around it is.
Identification Details
- Company name and ticker symbol: Identifies the company and its unique shorthand used for tracking on the exchange.
- Exchange: Indicates whether the stock is traded on the NSE or the BSE.
Price Information
- Last traded price: Indicates the most recent price at which a transaction was completed.
- Net change: It represents the difference in the current market level from the previous close, in both points and percentage.
Market demand and supply
- Bid price: The highest price that the bidders can currently offer.
- Ask price: The minimum price at which sellers are willing to offer the stock.
The spread between the two prices gives information about the market’s “liquidity”.
Trading activity and range
- Volume: The total shares exchanged in a trading session.
- Day’s high and low: It determines the range of prices within a session.
- 52-week high and low: The yearly trading range of the stock, which serves to put the current price into perspective.
Factors Influencing Stock Market Movements
Market movements are typically a number of factors coming into play at once. Prices react to changes in expectations.
1. Company performance
Over time, earnings and outlook drive the value of a stock. Positive performance encourages optimism, while poor performance calls for rethinking.
2. Liquidity
Short-term market moves depend on how freely money flows. High liquidity encourages risk-taking, while tight liquidity increases caution and sharper price reactions.
3. Economic indicators
GDP growth, inflation, and interest rates drive market valuation. Higher rates or inflation could be challenging to prices, whereas growth would be market-friendly.
4. Government Policy and Regulations
Policy changes will impact markets. Sectors will be repriced quickly. Taxes, incentives, or laws can change profit prospects.
5. Global Events And Trends
Oil prices, exchange rates, and geopolitical events influence the capital flow. Investor participation may accentuate the change during the volatile period.
Markets move based on the evolution of expectations rather than on changes in data.
How to Get Started with Investing in the Stock Market
Entering the share market is more about preparation than urgency. It begins with setting up the basics: a demat account to hold securities, a trading account to act on decisions, and a linked bank account to keep transactions smooth and traceable. Getting this structure right matters more than rushing into trades.
For stock market beginners, diversified routes like index funds or equity mutual funds offer a calmer entry point. With time and confidence, some move toward direct stocks, guided by financial strength, earnings discipline, and how responsibly companies are run.
Conclusion
The share market sits where expectations, structure, and choice meet. Prices move as views on value and risk change, not because outcomes are certain. Rules steady the system, participation gives it depth, and collective judgement drives movement. Risk remains, but it becomes visible rather than vague. Over time, the market tends to favour those who observe carefully, think independently, and act with restraint instead of urgency.
FAQ‘s
The share market functions by enabling the buying and selling of company ownership through regulated stock exchanges. Prices are not fixed in advance; they emerge from demand, supply, and how investors assess future business performance.
A stock exchange provides the infrastructure that allows trading to happen in an orderly manner. It supports mobilisation of savings, liquidity, price discovery, and capital formation.
Stock prices change as investors revise expectations based on earnings results, economic conditions, policy announcements, and global developments. Prices adjust as confidence strengthens or weakens.
The main participants include the SEBI, depositories and their participants, stock exchanges, brokers and sub-brokers, investors, and traders.
A stockbroker places orders for investors through authorised trading platforms. A trader actively takes positions in securities to benefit from price movements.
You can buy and sell shares through registered brokers using trading platforms linked to a demat account for holding securities and a bank account for fund settlement.
Prices are influenced by company performance, liquidity conditions, economic indicators, government policy decisions, global events, and changes in investor expectations.
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