WHAT IS SHARE MARKET?SHAARE MARKET BASICS.
The share market, also known as the stock market or equity market, is a platform where buyers and sellers trade ownership shares in publicly traded companies. It provides a means for companies to raise capital by issuing shares, and for investors to buy and sell those shares, thereby becoming partial owners of the company.
In the share market, shares of publicly listed companies are bought and sold through exchanges, such as the New York Stock Exchange (NYSE), NASDAQ, London Stock Exchange (LSE), and others. These exchanges serve as centralized marketplaces where buyers and sellers can come together to execute trades.
Investors participate in the share market with the goal of generating profits. They can make money through two primary methods: capital appreciation and dividends. Capital appreciation occurs when the price of a share increases, allowing the investor to sell it at a higher price than what they initially paid. Dividends, on the other hand, are a portion of a company’s profits that may be distributed to shareholders periodically.
Share markets play a crucial role in the economy by facilitating the flow of capital to businesses and enabling investors to build wealth. They are influenced by various factors, including economic conditions, company performance, investor sentiment, and geopolitical events. Investors analyze these factors and use different strategies to make informed decisions about buying and selling shares.
It’s important to note that investing in the share market carries risks, as share prices can be volatile and influenced by many factors beyond an individual’s control. Therefore, it’s advisable for investors to conduct thorough research, diversify their portfolios, and, if needed, seek advice from financial professionals before participating in the share market.
WHAT IS DOW JONE?DOW JONE INDEX EXPLAINED
The Dow Jones Industrial Average (DJIA), often referred to as the Dow Jones, is one of the most widely recognized stock market indices in the world. It represents the performance of 30 large, publicly traded companies listed on stock exchanges in the United States.
The Dow Jones Industrial Average was created by Charles Dow, a co-founder of Dow Jones & Company, and first published on May 26, 1896. Initially, it included just 12 industrial companies, but it has since expanded to its current composition of 30 companies from various sectors of the economy.
The DJIA is a price-weighted index, which means that the components are weighted based on their stock prices rather than their market capitalization. This means that higher-priced stocks have a greater influence on the index’s movements.
The Dow Jones is often regarded as a barometer of the overall health and performance of the U.S. stock market. It is frequently cited in financial news as an indicator of market trends and investor sentiment. Changes in the index are closely watched by investors, analysts, and economists to assess the direction of the stock market.
However, it’s important to note that the Dow Jones represents only a small portion of the entire U.S. stock market and does not reflect the performance of all sectors or companies. Other popular stock market indices, such as the S&P 500 and the NASDAQ Composite, provide a broader view of the U.S. market.
WHAT IS NASDAQ INDEX ?
he NASDAQ Composite is an index that represents the performance of a broad range of stocks listed on the NASDAQ stock market. It includes thousands of companies, primarily in the technology, telecommunications, biotechnology, and other growth sectors.
The NASDAQ Composite is different from the Dow Jones Industrial Average (DJIA) in several ways. While the DJIA represents the performance of 30 large, blue-chip companies, the NASDAQ Composite is a market-capitalization-weighted index, meaning that the components are weighted based on their market value.
The NASDAQ Composite is often associated with technology stocks because many prominent tech companies, such as Apple, Microsoft, Amazon, and Google (Alphabet), are listed on the NASDAQ exchange. However, it also includes companies from other sectors, making it a more diverse index than the DJIA.
The NASDAQ Composite is considered a benchmark for the performance of the broader technology and growth sectors of the U.S. stock market. It is widely followed by investors, traders, and analysts as an indicator of trends and sentiment within the technology and growth sectors.
Like other stock market indices, the NASDAQ Composite is subject to fluctuations and influenced by various factors, such as economic conditions, company earnings, investor sentiment, and geopolitical events. It is important for investors to conduct thorough research and consider multiple indices when analyzing the overall market performance.