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What is Stock Market? What Exactly are Sensex & Nifty?


Money investment is a topic that is taken lightly by many people. Presently, the biggest return found on investment is in the Stock Market. Sometimes wrong investment decisions turn life upside down. Because of a lack of financial education, many people do what they see or hear around them.

Various Types of Investment Options

Initially, the meaning of investment was limited to 2-3 ways. The first was FD, which means fixed deposit which provides a 5% return. It takes at least 14 years to make the money double. Then investment in gold gives a 9-10% return which provides a better return than FD. Last but not least, the most common is investing in land. In which sometimes a negative return is also found. But again, investing in land is not cheap. A lot of money is required for this.

Investment Return in Stock Market

But presently, the biggest return that is found on investment is in the Stock Market. Investment in Stock Market provides an average 20-30% return and if smartly invested, then 50-70%. Whether the investment is in the form of stocks, mutual funds or you manage your own portfolio. But this investment for sure requires a little more alertness compared to other ones. Today, every rich person, whether it’s Ambani, Adani, Bill Gates, Warren Buffet, Elon Musk, Jeff Bezos, Tata, Birla, or basically anyone, their major wealth is in the stock market.

Now, for those who don’t know, it’s very important to know what the stock market is. We usually watch and listen to the stock market on TV but no one ever understood or tried to understand it. What does Sensex and Nifty mean? Let’s find out together through this in the finance series of Panjab46’s blog about the most important tool of investment.

What is Stock Market?

A stock market is a place where publicly listed companies like Tesla, Alphabet, Amazon, Apple, Microsoft, Godrej, Reliance, etc. trade their shares means they sell small shares of their companies in the form of shares and every shareholder owns a part of the company.


What are Stocks & How do they work?

Let’s understand it with an example. Now, we all know about Amazon, which was founded by Jeff Bezos in 1994. For three years, the company remained private, that is, no relationship with the stock market or people. Then in 1997, Jeff Bezos publicly listed Amazon on the stock market at $18 per share. When Amazon first came to sell its shares, it had a total of 3 million shares. That is, Amazon is divided into 3 million shares and every shareholder who buys each share will be considered the owner of the company. Now, the more shares there are, the bigger the position of them in the company will be.

Why do companies enter the Stock Market?

Now the question is, why did Amazon come into the stock market? The single reason for any company to come into the stock market is money. The company uses people’s money to launch new products. With this, the company’s sales increase, and the company automatically grows. Profit is generated. Similarly, people’s money is also increased in the company. These things happened 26 years ago.

So, in today’s date, Amazon has grown many times in so many years. Consequently, it became a trillion-dollar company from a million-dollar company. Amazon has launched back-to-back products and is still doing it. Those who invested $1,000 in Amazon in 1997. Their money has grown and today it has become $250,000. That means, if someone had invested Rs. 40,000 in Indian currency, it would have become Rs 2 crores. So, this was the story of a company in the share market. There are numerous such companies present in the stock market. The stock market at the same time is not so complicated that it is not possible to understand.

In the stock market, you can see in multiple ways whether a company can grow or not. Like Rakesh Jhunjhunwala invested in the watches company, Titan. This person created a wealth of Rs. 5,000 to Rs. 32,000 crores just from the stock market.

Similarly, Warren Buffett in the Coca-Cola company. Warren Buffett is the same person who said that if you don’t find a way to make money while you sleep, you will work until you die. That means, if you are not earning money while you sleep, you will have to work all your life until you die.

If you ever want to understand the stock market in deep detail, then read about these two insane investors. Their fundamentals stand along with their patience and just patience.

What are Sensex & Nifty?

Sensex and Nifty, actually tell the overall behavior of the Indian stock market.

For example, there are exit polls before the results of the votes, in which the approximate result is taken by taking the view of a few thousand people before the final result is given to tell people. Which is mostly 60-70% right. Similarly, Sensex and Nifty take the best top companies from the listed thousands of companies and show a trend in the stock market.

If the stock of those major companies is up, then Sensex and Nifty will also show an upward trend. If the stock is down, then downward trend. With this, investors calculate that the market is going up and down. Then they invest accordingly.

For your information, Sensex has a total of 30 top companies and Nifty has 50 companies.

Why your savings aren’t growing?

I have also understood one thing lately the money kept in the bank is not a good decision because of the inflation rate, which increases by 4-6% nowadays means that your $100 kept today in the bank will be equal to $94 after a year. But that same money bank is given to someone else and makes a lot of interest in the form of mortgage and finance. These are those things that nobody is going to explain to you. You will have to take the initiative yourself if you really want your money to grow.

The time you are dependent on someone to take care of your money like a bank or any financial advisor, then remember whether you become rich or not. But banks and financial advisors will definitely be rich. So this is the time to take a few baby steps and start learning about investment.

There are some books which you can go and read like:

Benjamin Graham’s book, The Intelligent Investor

Napoleon Hill’s book, Think and Grow Rich

I am not a finance expert nor do I have any education in this field, but I still care about my hard-earned money as every one of you. That’s why I self-study all these books.

Final Thoughts

Remember one thing, every new job, and a new good habit is hard to start from the beginning, comparatively bad habits. But later, the payoff is also a good habit. So sharpen your brain and use this social media, don’t make it use you. That is all for this blog. In the future, I will definitely keep creating content on finance-related topics. Like mutual funds, bonds, and cryptocurrencies. I will bring the best possible content in the near future. Till then keep learning as well improving.

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Thank you so much.

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