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What is the stock market and why does it exist?
A stock market is a marketplace where buyers and sellers trade shares of publicly listed companies. Think of it as a supermarket, but instead of groceries, you buy and sell ownership stakes in companies like Reliance Industries, TCS, Apple, or Microsoft.
Key Insight
When you buy a share of a company, you become a part-owner of that business. Your wealth grows as the company grows.
Companies list their shares on stock exchanges to raise capital for expansion, repay debt, or fund new projects. When Reliance Industries listed on BSE in 1977, it raised capital to build its textile business. Today it is one of the largest companies in India worth over Rs 19 lakh crore.
Real-World Example
Tata Motors raised thousands of crores through the stock market to invest in electric vehicles and Jaguar Land Rover. Without the stock market, such massive capital raising would be nearly impossible.
Investors buy stocks to grow their wealth over time. Historically, the Indian stock market (Nifty 50) has delivered approximately 12-15% annual returns over the long term, significantly beating inflation and fixed deposits.
Wealth Creation Examples
| Company | IPO Year | IPO Price | Current Price (Approx) | Return |
|---|---|---|---|---|
| Infosys | 1993 | ₹95 | ₹1,800+ | 1800%+ |
| Reliance | 1977 | ₹10 | ₹2,900+ | 29000%+ |
| Apple | 1980 | $22 | $190+ | 86000%+ |
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