[pradypop]

There's a certain value(worth) of a company. Generally this value is ascertained by taking many things into consideration viz;
1. Assets
2. Liquid cash
3. Brand value
4. Future prospects
5. Stability of organization...and few more.

Organizations look to raize capital for futute investments by selling part of stakes to others. They do it by creating shares out of company's nett worth. Lets say a company's nett worth is a billion rupees and company decides to sell 10% of its worth. It creates 100million shares of Re 1/- each(generally) and make an offer to investors at say a range of 450-550/- as an IPO(initial public offer). Now investors may see a good future for the company and may purchase each share at 500/- per unit. Now the company raises huge funds in the deal. The investor gets the share of company's profit proportional to his stakes in the company.

By stock market we mean stocks of shares. The performance of a stock is measured by average gain or loss of the stock. The performance of the market itself is measured by performance of sensex.

The sensex is weighted average of major stocks listed in the market. Weighted because 5% fall in a big company affects market more than a 5% fall in a small company. Sensex generally gives you a very good idea of how markets are moving.

That was a very brief over-view. We can get into specifics at later stages.