Arjun’s friend Deepak once told him, “Maine Reliance ke shares kharide hain.” Arjun nodded along, pretending to understand, but in his head, he had no idea what buying a “share” actually meant. Did he buy a piece of paper? Did he now own part of Reliance’s office building?

Confused, that night Arjun finally asked Deepak to explain it like he was five years old. Deepak’s explanation, in the end, was surprisingly simple.

What is a share, really?

Imagine a company like Reliance is a big cake, cut into millions of tiny pieces. Each piece is called a “share.” When you buy a share, you’re buying a tiny piece of ownership in that company. If the company grows and becomes more valuable, your tiny piece becomes more valuable too. If the company struggles, your piece loses value.

Companies sell these shares to raise money for their business — expanding factories, launching new products, and so on — instead of only borrowing from banks.

What is the stock market, then?

The stock market is simply a marketplace — like a mandi — where people buy and sell these shares. In India, the two main marketplaces are the NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). You don’t visit them physically; buying and selling happens through apps or platforms connected to these exchanges.

How do you actually buy a share?

You need two things: a Demat account (which holds your shares digitally, like a bank locker for shares) and a trading account (which lets you place buy/sell orders). Most banks and investment apps let you open both together in a few minutes with your PAN card and Aadhaar.

Why do share prices go up and down?

A share’s price changes based on how much people are willing to pay for it at that moment — driven by how the company is performing, its future prospects, overall economic conditions, and sometimes just investor sentiment. This is why prices can swing even when nothing has actually changed about the company itself in the short term.

Should a beginner buy individual stocks?

This is where many beginners get burned — buying individual company shares requires research, tracking, and the ability to handle sharp ups and downs. For most beginners, a safer starting point is mutual funds or index funds, where your money is spread across many companies at once, managed by professionals or tracking a market index. (Read our Index Fund explainer — Coming Soon, Jun 23)

What Arjun decided

After understanding the basics, Arjun didn’t rush to buy individual stocks like Deepak. Instead, he started a small SIP in a mutual fund — getting exposure to the stock market’s long-term growth, without needing to track individual companies every day.

Key Takeaways

  • A share is a tiny piece of ownership in a company
  • The stock market is where these shares are bought and sold, mainly via NSE and BSE in India
  • You need a Demat + trading account to buy shares
  • Share prices move based on company performance, economic conditions, and investor sentiment
  • Beginners are usually better off starting with mutual funds or index funds rather than individual stocks

FAQ

Q: Is investing in the stock market risky?
A: Yes, individual stock prices can be volatile in the short term. Diversifying across many companies (through mutual funds) and staying invested long-term reduces this risk significantly.

Q: How much money do I need to start investing in stocks?
A: You can buy shares of many companies for a few hundred rupees, and start a mutual fund SIP for as little as ₹100-500 a month.

Q: What’s the difference between NSE and BSE?
A: Both are stock exchanges in India where shares are traded. NSE is generally larger by trading volume, but most major companies are listed on both.

Also Read

Calculators

— DhanMaitri Desk
Simple financial wisdom for every Indian