MONEY AND SHARE MARKET

Share Market is a common pool of investors and companies looking for people to invest money. A company goes public by releasing its shares in the market at a certain price (price being determined by the over all scope of that company;s operations, net worth, assets, future prospects, the kind of business/domain its into etc). Lets take an example: say company xyz wants to raise money for expansion by a public issue. So it decides to raise say 10 Cr by offering shared worth that much. Now by default the face value of each share is Rs.10 - this is not the actual cost of the share since the company will add brand value etc (that is why Infosys shares would open @ 800rs per share - 890rs for brand value etc). Lets say that the share opens in the market for Rs.100 each share. So the total no, of shares in the market are 10,00,00,000/100 = 10,00,000Now the company xyz has managed to raise the required funds from investors - but wait the fun has just begun. Now that its public - its under SEBIs regulations. So it has to reveal all its financial books of a/c etc to the public since the public (share holders) has a vested interest in this company's operations. Similarly you see soo many companies having themselves listed in the stock exchange. Their shares being bought (buy investors) as well as sold in this open market called the stock/share market. (remember there are a limited no. of shares in the market for trading - so some1 has to sell it in order for some1 else to buy the same). This demand and supply determines the growing or falling price of shares. Example: Suppose 10 people have 100 shares (10 shares with each person & each share priced @ Rs.500) but there are 1000 people who want to buy that company's share from the open market. So now there is a demand supply gap. These 10 people can ask for Rs550 per share since demand is higher than supply. Won't you do the same if you had a valuable item which was no longer on sale in the market & 10 of your friends wanted to buy it no matter what the price?Big companies like Infosys, Microsoft etc regularly announce big projects in the market which gets investors interested in buying their shares. Thus their share prices go up. Each company also announces dividends at the year end. think of it as profit sharing. If this company makes profit worth 10 Million $ then it might want to distribute some of it to all its share holders for their faith in this company and more importantly for investing their hard earned money into buying this company's shares.Share market is huge and determined the economy of a country. For instance in India, stock market is booming...