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Generally, people enter the financial market to enjoy a bit more income. Thus, they lack knowledge of the money market terms. It is difficult for a newbie to understand terms such as ‘share’, ‘stock’, and ‘equity’. But not having a clear understanding can be a problem.

An investor should be familiar with these terms well before they start investing. Being aware of their meanings helps you invest wisely. In this article, we will talk about stock market vs share market and see what their differences are. A new investor may not always know the difference between stock market and share market. As a result, their vision gets blurry. Let’s break the terms into parts and see their meanings first.

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Meaning of share market

The term ‘share’ is associated with investment options like mutual funds and limited partnership. But both markets are based on the same thing—trading.

  • Shares are units of the total valuation of a company. For instance, if you invest in a company, you will receive a certain number of shares, depending on the money you invest.
  • The share market is a market where a company offers its shares to raise funds and continue the growth of its business. It is a place where an investor can buy part ownership in any company.
  • It is a platform to buy and sell shares.
  • In general, shares refer to stock ownership of a particular company.
  • When you buy the shares of a company, you become a ‘shareholder’ of that company. For example, when someone claims to own shares in a company, it means they have invested in a specific firm and is a shareholder of such a firm.
  • An investor also enjoys a part of profits earned by the company through dividends.
  • If the business does not perform well, the investor also needs to bear the loss.

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Meaning of stock market

The stock market, also known as the stock exchange, is a place where stocks, equities, and other securities and bonds are actively traded.

  • The term ‘stock’ is used to mean the ownership certificate of any company.
  • A stock market provides the infrastructure to trade in a secure and controlled manner. The stock market brings the stock seller and buyer together.
  • The Securities and Exchange Board of India (SEBI) regulates the stock exchanges in India. Hence, fair pricing and transparency of transactions are assured.
  • A stock cannot be bought or sold if it is not listed with a stock exchange. In the stock market, stockbrokers trade companies’ stocks, securities, and bonds.
  • India’s two principle stock exchanges are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
  • The market tracks demand and supply of stocks and sets its price accordingly.

Read more: How to trade in the stock market

Difference between stock market and share marke

Even though these terms are used interchangeably, they differ in their modes of operation. A share market or a stock market is essentially a market where various kinds of bonds and securities are traded. The price of a company’s stock depends on the demand and the supply of that stock. A company can issue shares directly, but it cannot issue stocks in such a manner. When a number of shares are put together, it is called stocks. Also, keep in mind that shares can have a small value, while stocks will always have a significant amount of value. These are the major differences between stock market and share market.

Now that you know the how the stock market is similar to and different from the share market, trading is even easier. Click here to open a demat account and start trading today.

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