Stock Market Basics · Lesson 1 of 14 · Updated October 2026 · 5 min read
A share is a small piece of ownership in a company. If a company is split into 1 crore shares and you own 100, you own one-lakhth of that business. When the company earns more and grows, each piece can become more valuable. When it struggles, each piece can lose value.
In short: A share makes you a part-owner of a company. Its face value is a fixed number printed in the company’s books. Its market price is what buyers and sellers agree on today, and it changes every second the market is open.
Why companies sell shares
A company needs money to grow: to build factories, open stores or hire people. It can borrow, or it can sell a part of itself to investors. Selling shares means it does not have to repay the money, but it shares future profits and decisions with its owners.
What you get as a shareholder
- A share of profits: some companies pay part of their profit to shareholders as a dividend.
- A share of growth: if the business becomes more valuable, the share price can rise.
- A vote: shareholders can vote on some big decisions at the company’s general meetings.
- Limited loss: the most you can lose on a share you have fully paid for is what you paid. You never owe the company’s debts.
Face value vs market price
This is the mistake many beginners make (Kosh made it too in 2014). The two numbers mean very different things.
| Face value | Market price | |
|---|---|---|
| What it is | A fixed accounting value per share, set by the company | The price at which the share is bought and sold today |
| Typical amounts | ₹1, ₹2, ₹5 or ₹10 | Anything: ₹15, ₹800, ₹12,000 |
| Changes? | Rarely, only on a stock split | Every second during market hours |
| Used for | Accounting, dividend percentages | Buying, selling and valuing your holding |
Example: A company’s share has a face value of ₹10 but trades at ₹2,000. You pay ₹2,000 to buy it, not ₹10. If the company declares a “100% dividend”, it means 100% of the face value, so ₹10 a share, not ₹2,000.
What moves the market price?
In the short term, the price moves with demand and supply: news, results, rumours and the mood of the market. Over long periods, it tends to follow the company’s profits and growth. That is why investors study a business before buying, and why a tip is not a reason to buy.
Common questions
Is a low-priced share cheaper than a high-priced one?
Not necessarily. A ₹50 share can be expensive and a ₹5,000 share can be cheap. What matters is the price compared with the company’s earnings and assets, which you will learn in the valuation lesson.
Do I need a lot of money to buy shares?
No. You can buy a single share. Many good companies have share prices of a few hundred rupees.
Where are my shares kept?
In electronic form in your demat account. You will learn how that works in lesson 3.
Next lesson: How the Stock Market Works in India → · See all 14 stock market lessons
Education, not investment advice. Figures and rules as of October 2026; check the latest before you act.