Importance of Share Market

The stock market provides a platform for companies to raise money. It allows companies to trade shares in public, and help the companies in the public market to raise additional financial capital for expansion by selling part of their ownership. Stock exchanges provide liquidity to investors for the trading of securities, so that they can be sold quickly and easily. Importance For Companies and Investors: Companies issue shares for the purpose of raising capital for the business. Investors buy any shares for this so that they can become a partner in the development and profit of the company and if the demand for that stock increases, then they can sell at higher prices. Stock market companies and investors provide a platform for all of this. The importance of the stock market is the same for companies and investors. Provides liquidity: After a company's stock is listed in the stock market, buyers and sellers are almost always available in it. The stock market is the platform on which stocks always remain available and liquidity. Due to this liquidity, investing in the stock market makes it easy to invest and benefit from it. Such liquidity is not available while selling other properties. Effects Economy of Country: The price of stocks and other properties is an important part of the dynamism of economic activity and can be an indicator of social mood. An economy where the stock market is increasing can be considered as emerging economies. The stock market is often considered to be the primary indicator of economic strength and development of any country. For a long time, the rising stock market signals increasing economic activity in the country and falling markets can mean that economic activities are shrinking. Control: Prices of shares can affect domestic investment and consumption. Therefore central bank like RBI monitors the smooth operation of the stock market's control, behavior, and financial system functions. Actually monitoring the financial stability in the country is the main task of RBI.