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Stock Market
A.VENKATESH – Assistant Professor, Department of B.Com ISM & CA
The definition of “stock market” indicates an array of platforms where shares of publicly traded firms may be bought and sold. Such monetary transactions take happen on official stock exchanges and in over-the-counter (OTC) marketplaces that conform to an established set of regulations.
Purpose of Stock Market
The main objective of stock market is to help companies in acquiring money for funding their operations and creates and sustains wealth for individual investors by selling shares of their stocks. Companies provide ownership assets to investors as a way to raise money on the stock market. Shares of stock are the name for these equity investments. The stock market allows buyers and sellers are able to interact and do transactions on the stock market. The markets offer price discovery for equity in companies and serve as an indication for the performance of the national economy. Since market participants compete on the open market, buyers and sellers may be sure that they will get a fair price, an elevated level of liquidity, and transparency.
Working of Stock Market
Market participants are able to trade shares and other preparing financial instruments in an environment of safety and regulation with minimal to no operational risk on the stock market. The stock markets act as primary markets and secondary markets, respectively, and function according to with the regulator’s established guidelines. The stock market, which acts as a main market, allows enterprises to publicly offer their shares to the general public for the first time through an initial public offering (IPO). This method helps companies to get the funding they want from investors.
A business splits itself up into several shares and offers part of those shares for sale to the general public at a fixed price per share. A company requires a market where these shares may be sold to expedite this process, and the stock market provides that. In the future, a listed business may also make new, extra shares available through follow-on offers or rights issues. They may even buy back shares or take them off the market. Investors acquire shares in a firm with the hope to boost share value, collecting dividend payments, or both. The company and its financial partners pay the stock market a fee for its services as a facilitator of this capital-raising process. Investors can also purchase and sell assets they already hold via stock exchanges, which is known as the secondary market.
Functions Of Stock Market
The stock market ensures price transparency, liquidity, price discovery, and fair dealings in trading activities .The stock market guarantees all interested market participants have access to data for all buy and sell orders, thereby helping in the fair and transparent pricing of securities. The market also ensures efficient matching of appropriate buy and sell orders. Stock markets need to support price discovery where the price of any stock is determined collectively by all of its buyers and sellers.
The stock market ensures price transparency, liquidity, price discovery, and fair dealings in trading activities .The stock market guarantees all interested market participants have access to data for all buy and sell orders, thereby helping in the fair and transparent pricing of securities. The market also ensures efficient matching of appropriate buy and sell orders. Stock markets need to support price discovery where the price of any stock is determined collectively by all of its buyers and sellers.
