Whenever you are surrounded by a group of seasoned investors, you might end up hearing the terms ‘share market’ and ‘stock market’ more often. People have been using both of these terms interchangeably for quite some time now. But, if you are someone who is looking to enter the investment landscape for the first time, then you must know the distinct difference between these two terms (no matter how synonymously people use them).
Let’s break down what sets the share market apart from the stock market.
On the surface, both the share and stock markets refer to a place where people engage in trading securities. However, what’s different is the security that’s being traded.
Shares can generally be understood as a single unit of ownership in specific companies. For example, if you buy 10 shares of Amazon, it means that you own 10 individual pieces of Amazon.
Stocks, on the other hand, can be understood as a more general and umbrella term that is a collection of shares. Refers to the ownership in one or more companies. For example, if you say you own stocks, then it means that you own equity across multiple companies, and it doesn’t necessarily have to mean which company or how much equity.
Let’s now understand how the Indian stock market and share market actually function.
As mentioned before, the Indian stock market is an umbrella term that refers to the collective market system, which includes many exchanges like the NSE and BSE. Here, investors can buy or sell ownership stakes of multiple companies. They can also closely monitor the index performance and engage in more complicated types of trading, such as intraday or futures trading.
The share market, on the other hand, focuses more specifically on trading shares of individual companies. It is only affected by the performance of the company in the market.
The Role of Trading Apps
With the onset of more and more trading apps in India, it has become increasingly difficult to distinguish between the share and stock markets. A trading app offers seamless and easy exposure to a beginner as well as seasoned investor to buy or sell shares instantly, track the stock market and even participate in more tricky concepts like futures and options without even needing a broker to assist you. This increased democratisation and ease of access have blurred the line between the share and the stock market, as both are available on the same platform.
The larger umbrella is the stock market, where the smaller activity is the share market. It does not matter what you are doing in the Indian stock market, whether it is exploring opportunities, future trading, or even if you are only starting your journey; it is not the terminology but how smartly you invest. Learn how the market functions, make a small investment and employ beginner-friendly trading apps to make the process much easier. After all, there is no way of becoming wealthy in the markets without first knowing the basics.