1. What is a Share?
A share represents ownership in a company.
For example:
If you buy 1 share of a company, you become a small owner of that company.
If you buy 100 shares, your ownership stake becomes larger.
Think of a company as a pizza.
| Pizza Ownership | Company Ownership |
|---|---|
| Whole pizza | Entire company |
| One slice | One share |
| Many slices | Many shares |
2. What is a Stock Exchange?
Companies cannot sell shares directly to every investor.
They get listed on a stock exchange such as:
National Stock Exchange (NSE)
BSE (BSE)
The stock exchange acts as a marketplace where buyers and sellers meet.
Simple Example
Reliance wants its shares available to investors.
Reliance gets listed on NSE/BSE.
Investors can now buy and sell Reliance shares.
3. Why Do We Need a Broker?
You cannot directly place orders on NSE or BSE.
You need a broker.
A broker acts as a bridge between:
| Buyer | Broker | Exchange |
|---|---|---|
| You | Trading Platform | NSE/BSE |
Examples mentioned:
Dhan
Zerodha
Angel One
Groww
Without a broker, you cannot buy or sell shares.
4. What is a Demat Account?
A Demat Account stores your shares electronically.
Just like:
Bank Account → Stores Money
Demat Account → Stores Shares
When you buy shares:
Shares are credited to your Demat Account.
When you sell shares:
Shares are debited from your Demat Account.
5. Types of Brokers
| Type | Description |
|---|---|
| Full-Service Broker | Research, advice, relationship manager |
| Discount Broker | Low brokerage, self-service trading |
Most modern traders use discount brokers because costs are lower.
6. How Does Share Ownership Work?
Suppose:
Company = HDFC Bank
You buy 10 shares
You become a small shareholder.
If the company grows:
Share price may increase.
Your investment value may increase.
If the company performs poorly:
Share price may decrease.
Your investment value may fall.
7. Basic Trading Flow
Company
↓
Listed on NSE/BSE
↓
Broker Platform
↓
Your Demat Account
↓
Buy/Sell Shares
Important Terms
| Term | Meaning |
|---|---|
| Share | Small ownership unit of a company |
| Stock Exchange | Marketplace for trading shares |
| NSE | National Stock Exchange |
| BSE | Bombay Stock Exchange |
| Broker | Middleman between investor and exchange |
| Demat Account | Electronic account holding shares |
| Shareholder | Person who owns shares |
Chapter 2 Summary
To start trading or investing:
- Open a Demat account.
- Choose a broker.
- Use the broker's platform.
- Buy shares listed on NSE/BSE.
- Become a shareholder in those companies.
Memory Hack
Company → Exchange → Broker → Demat → Investor
Remember this chain and you'll understand the basic structure of the stock market.