Guide to Equity Market: Meaning, Types, Timings, Benefits

Need of Equity Market

Every company needs capital to expand its business operations. The company can arrange the capital through two routes, Debt or Equity.

Debt is the borrowed funds for which the company has to pay interest over a fixed period of time. Returns are relatively low compared to market-linked investments but provide stable returns. The popular debt instruments are debentures, bonds or a bank loan.

Whereas, in the equity market, a company's promoter or owner dilutes ownership to raise capital. Here, the company pays dividends to shareholders as dividends. However, paying dividends is not mandatory, it's a choice.

In the equity market, a company’s promoter or owner dilutes ownership to raise funds from the public. To raise funds, the company goes through an initial public offering (IPO), in which the company get listed in the stock exchange, and shares begin to trade in the stock market.

With the equity market route, the company get the funds from the general public, and investors get the opportunity to participate in the company's growth.

Timings of the Indian Equity Market

In India, the equity market opens at 9:00 am and closes at 3:30 pm IST. The first fifteen minutes from 9:00 am to 9:15 pm is considered a pre-open session, where the ideal opening price is decided. The regular trading session for all market participants resumes at 9:15 am.

The post-market session, also known as the closing session, runs from 3:40 pm to 4:00 pm, facilitating settlements of trades and the discovery of the closing price.