Shares and stocks are two terms used interchangeably by people who operate in the market. However, if you consider the nuances, these two terms have a few differences.
What is stock?
Stock is the total capital or ownership that a company creates in monetary terms. This stock is then sold to different investors in different proportions. A company can fix and revise this capital amount at any time during its operation. If an investor buys a company’s stock, he becomes an owner of the company to the extent of the stock purchased.
The stock also refers to the total capital amount taken together. In the stock market, stocks are regarded as ownership by multiple companies.
Shares are a portion of capital split up into units with the same value. Shares are either sold to investors or traded on the stock exchange. Shares refer to the company’s capital but in terms of individual units having a specific paid-up value. A share is a unit of ownership in one single company.
One difference between the stock and share markets is that shares can refer to fully paid-up claims or partly paid-up shares, whereas stock is always fully paid-up capital.
The share market in India consists of a market where equity shares are purchased and sold. Although equity and preference shares are issued in India, preference shares are usually not traded on the stock exchange. There are two types of share markets in India:
Primary market:
A company looking at listing on the stock exchanges for the first time approaches the primary market. Different categories of investors, such as retail investors, institutions, high net worth individuals, foreign institutional investors, etc., can apply to get the allotted equity shares of a company.
Secondary market:
Once a company has offered its shares in the primary market, it can be traded in the secondary market. To trade in shares, it is necessary to open a trading account with a reputed broker like Kotak Securities, who can provide the essential support you need.
What is the stock market?
In the Indian context, the stock market refers to the broader market where it can trade in shares and other types of instruments. Some of these instruments are
- Mutual funds
- Commodities
- Futures, Options, Swaps
- Currencies
The stock market presents investors to invest in different types of such instruments through other platforms. Investing in each such device requires an investment strategy. There are a lot of other resources online that are available for free. You can check out these resources on other websites, such as Kotak Securities, and plan your investment strategies accordingly.
