Short answer: An equity market is a venue where companies raise money by issuing shares, and investors buy those shares hoping to profit from future price gains. The terms equity market, stock market and share market are commonly used to mean the same thing. In India, most share trading happens on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Last reviewed: 9 November 2026
At a glance
| Term | What it means |
|---|---|
| Equity market | A venue where companies raise money by issuing shares |
| Stock market or share market | Terms commonly used to mean the same as equity market |
| Primary market | Where a company first sells new shares to the public through an initial public offering (IPO) |
| Secondary market | Where already-listed shares are bought and sold among investors |
| NSE and BSE | India’s two main stock exchanges for trading shares |
| Stockbroker | A registered intermediary who executes trades for a fee called brokerage |
Where do companies get money from the equity market?
When a company wants to raise money by selling ownership in itself, it can issue shares. The first time it sells new shares to the public is called an initial public offering (IPO), and this stage is known as the primary market. The money raised from this sale goes to the company.
An IPO is the company’s own fundraising event. Buyers in an IPO pay the company for new shares, so the company receives capital it can use for its own purposes. Once that happens, the company’s shares become available for trading later.
How do shares change hands after the IPO?
After shares are listed, investors buy and sell them among themselves. This is the secondary market. The company does not receive money from these everyday trades.
The secondary market matters because it gives existing shareholders a way to exit, meaning sell their holding. It also gives other investors a way to buy in. Without it, a shareholder would have no easy way to turn shares back into cash.
Where do the trades take place?
India’s two main exchanges for trading shares are the NSE and the BSE. Trades on both are carried out on a screen-based electronic system rather than on a physical trading floor.
On that system, a buyer’s offered price and a seller’s asking price are matched. The trade executes when the two prices meet. If a buyer offers ₹100 for a share and a seller asks ₹100, the trade goes through at that price.
How do individual investors place a trade?
Most individual investors do not trade on the exchange directly. They trade through a registered stockbroker, who places the order on their behalf.
The broker charges a fee or commission, called brokerage, for executing the trade. This fee is a cost on top of the share price, and it applies whether the trade makes money or loses it.
How much do fees affect the result?
Brokerage reduces what an investor keeps from a trade. The example below is hypothetical. All figures are invented for illustration.
Suppose an investor, Asha, buys 10 shares at ₹500 each, a total of ₹5,000, and pays ₹20 brokerage. Later she sells all 10 at ₹550 each, a total of ₹5,500, and pays another ₹20 brokerage. Her gross gain is ₹500, and after ₹40 in brokerage her net gain is ₹460.
Now suppose the same shares sell at ₹450 each instead. The sale brings in ₹4,500, so the price fall alone costs ₹500. With ₹40 brokerage added, her total loss is ₹540. The example leaves out any other charges that may apply.
What are the risks?
The equity market works on the hope of future price gains, and that hope is not guaranteed. A share’s price can fall, and an investor who sells after a fall receives less than they paid. The example above shows how a fall turns into a larger loss once fees are added.
Fees are a second catch. Brokerage is charged on each trade, so frequent buying and selling adds up in cost even when individual prices move only a little. Understanding both the price risk and the cost of trading is part of understanding how the market works.
Frequently asked questions
Are the equity market and the stock market different?
No. The terms equity market, stock market and share market are commonly used to mean the same thing. They all refer to the place where shares are issued and traded.
What is the difference between the primary and secondary markets?
The primary market is where a company first sells new shares to the public through an IPO, and the money goes to the company. The secondary market is where already-listed shares are bought and sold among investors.
Do investors trade directly on the NSE or BSE?
Investors usually trade through registered stockbrokers, who charge a brokerage fee for executing trades. The NSE and BSE are India’s two main stock exchanges for trading shares.
Can an investor lose money in the equity market?
Yes. Investors buy shares hoping to profit from future price gains, so a share bought at one price can be sold for less. Brokerage fees add to the cost of any trade.
Sources and last check
Facts in this article were checked against the sources below on 9 November 2026. Rules and figures can change; check the primary source before acting.
- groww.in (broker education)
- dhan.co (broker education)
- icicidirect.com (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.