History of Stock Market: Do you know how the stock market started in the world? While today I tell you that it was about the year 1602, Dutch East India Company, I am not talking about the English East Company because it was started in the year 1600.
After two years it, the Dutch East India company started, they used to do similar work, they used to sell ships in the different corners of the world for the trading of gold, spices, and of ceramic utensils then now I am telling you about August 1602 that Dutch East India Company made an offer in front of people and specially in front of Rich people that you give money to our company and our company will send ships to different places and we will earn money and when we will earn money than the profit of that ships.
And we will give a share of that profit to you and now we will give you share and in return of it you give us money, now some rich people made investment and ships made profit, now people saw that the people who have invested money in starting and they are getting benefit then more people started investing and like this right Dutch East India company gave birth to the stock market, and it was happening in Amsterdam and world-first Stock exchange made in Amsterdam and which we called Amsterdam Stock Exchange.
How it Works:
now in today’s date, its name has changed but as I told you how world’s first Stock Market started and how the stock exchange started the shares given in exchange of profit, we call it IPO, and IPO means initial public offering when the first time any company offers its share to public then first IPO happened in the year 1602 as I told you that East India Company did,
Now in this way can we also understand the example of (the Indian stock market) the answer is yes, now if any company will offer shares.
To people in the world suppose there is an Indian company that makes Snacks and pickles and for the first time, it thinks that we will also offer shares of our company to people. Now why do we give shares of our company suppose your father did business in your home then why he is the partner in the business, either he invest money in the business?
If he invests, then the business can grow and that’s why the company that makes Snacks and Pickle we call this company S&P company, and this Snacks and Pickle company wants people to give money to it. So that they will start their new factories and we will open more distribution units and we will invest money in the marketing and we will invest in the advertisement.
We have a requirement of money and because we want money then why someone will give us money and in return, we will give them shares of the company when any company first time gives their shares on exchange then we call this process IPO, and as you understood that how first IPO happened, then Dutch East India Company did it and at that time everything used to be on paper and people get papers and because I am talking about 1602, and then shares was given to people in the coffee shops and on bar and think how much simplified it got today, only by sitting at home.
How to Trade in Stock:
You will Open an account on an app like (Demat) account on (Upstox) your account will open for free and you can invest in the top companies of India, and let’s say you can invest in Reliance, and you can invest in Tata, and in the ITC, you can make your investment and if people will ask me then I will tell them that if you want to learn the stock market then the easiest way to learn stock market is that you start investment in the stock market.
And until you will not get into the water, you won’t learn to swim, but still, it is my job to explain the concept, then I was telling you the concept that IPO came in this way, and when IPO came then these shares, these shares must be listed, then for the buying and selling of shares, there is an exchange, as there is a Market for everything, so the stock market is a market for stocks.
Similarly, we call the vegetable market the market of vegetables and like this, there are different markets of everything and the exchange in India, we talked about the Amsterdam exchange, so there are two stock exchanges one is BSE, which started first Bombay stock exchange and the second is NSE, national stock exchange, there are more than 5000 companies listed in our Indian stock market and new companies keep coming and if new companies will come then it must bring IPO first, initial public offering as you must have heard that LIC is about to Bring its IPO and Oyo is about to bring its IPO and Snap deal is about to Bring its IPO and these companies are not listed.
But many companies are listed just like Asian Paints, Pidilite, Tata Motors, and Reliance there is a very important question for people we purchase these shares but why do they go up and down Daily Suppose today I bought a share suppose you buy a share today at the price of ₹100 and sometimes you see it at ₹101 and sometimes you see it at ₹102 and sometimes you see it is at ₹99 and why does it go up and down and what is the reason behind it and today I tell you it’s reason that there is a principle which we call demand and supply.
Demand and Supply in the Stock Market:
Now let’s understand this demand and supply, there is a simple meaning of demand and supply if there is a huge demand for anything, and if its supply is less than its rate will Increase investment in Listed companies, and when the company comes the first time and you will invest the first time.
Suppose there is a fight between India with Russia, God forbid, but I am taking the example that there is a fight with Russia or there is a fight with the Arabic countries and there is a fight with UAE or with Saudi and if there is a fight by chance then it is a different thing that what will happen in a fight and if there is fight and if there is a simple misunderstanding and they stop giving crude oil and they stop giving petroleum products then I am giving you for example if there will be no import and we import petroleum products more in India and if there will no import then there is very demand of petrol in India and everyone want oil in their car and if oil will be less than its rates will increase demand and supply principle and it works the same way in the share market.
Now let’s see, the example we took here is this of S&P company, now that S&P company took money from the people. The money came and Suppose they have 100 crore rupees and they took 100 crores from people and now after taking out from people, the company set up a new factory and the company did marketing and it did advertisement and everyone gets to know that Snacks and pickle of P&A company are very good then after that company grows.
The company’s Profit increases and the revenue of the company increases and because the company revenue and profit increased and the company grew then the people who have invested money than their share price has also increased and if the share price increases, then you understand this factor that the price of share increases when business grows and when the growth comes, then it has become a thing and this is the only one factor.
Now share price will also grow in other ways, see how, as people see company growth in the market and people see share price increasing then more people also start demanding that we also want the share of this company and as soon as the demand comes, the share runs like the rocket, then first concept says that company was growing very well and that’s why price of share increased, but share price does not depend only on it and if more people will keep coming and they will ask for this company share that we want it. The share of P&A company then after that share price will start touching the sky and the sky’s the limit now assume that people have problems with Snacks and Pickle in the S&P company and people do not like its taste and people start buying less and they start purchasing of other company and now sale will be reduced and if the business will not do good then people who have shared, they will start selling those shares and when they will sell then supply will come and there is no demand then share can fall to any limit then share, then share increases and it also decreases and such regular events keep happening in the market.