A stock exchange is a marketplace where shares of publicly held companies, government bonds, and other securities are traded. It operates according to rules set by the Securities and Exchange Board of India (SEBI) and provides liquidity and transparency to securities trading. Stock exchanges are important for capital formation as they encourage public savings and channel funds into corporate and government securities. Common stock market indices like the BSE Sensex and NSE Nifty 50 track the performance of major companies listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) respectively. To invest in stocks, one must open a demat account with a depository participant.