Get to know more about Share market
Share market is an entity that enables to trade the stocks, shares and securities of a company. The Share market is also known as the equity market. In a Share market the stocks and shares are traded at a price that is agreed upon. To regulate the Share market there is an entity which is called the stock exchange. Only those companies which are listed in the stock exchange can trade in the Share market.
The Share market is rapidly developing. Not only in India but worldwide. The Share market brings together people who need money and those who are ready to invest. With the Share market there is a very good allocation of the resource called money.
Participants of the Share market
The Share market has a lot of people dealing and transacting in it. They are retail or small investors, institutional investors and trading corporations that deal with their own shares. Insurance companies, Mutual funds, hedge funds and banks are all institutional investors. Some decades back only people who are wealthy could deal or trade in the market. But then things have changes after the Share market has become organized and come under the control of stock exchanges. The scenario changed from individual investor to institutional investor.
The Share markets began in the 12th century in France. However now there are Share markets almost all over the world. Every developed nation has a Share market. India’s Share market is one of the largest markets in the world. It stands 9th worldwide.
Share markets and Importance
One of the main and vital functions of the Share market is to raise fund for companies. This means the business can be done publicly; companies can raise some extra funds which can be used for the expansion of the business. They can do this by selling their securities in the Share market and letting the public own a part of the business. The Share market improves the liquidity to a great extent. It is because of this the investors can quickly sell securities. This is the most striking element of the Share market.
It is proved quite a number of times that the Share market is the direct indicator of the economy. When there is a depression in the market the prices of the shares fall causing a market crash. Similarly there will be a rise in the price of the stocks and shares when there is a boom in the economy. Similarly when the economy is stable the prices are also stable and there is also growth. The Share market clearly reflects the economic strength of a country.
With the stock exchange the Share market is much more regulated as it has a check on each every transaction. From the point of view of the buyer they collect and also deliver the shares. From the point of view of the seller they see to that they receive the payment for the security that they have sold. In short they minimize the risks both for the buyer as well as the seller.
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With all the above advantages there is an overall growth in the economy as the costs are minimized, risks are lowered to a great extent, more production and output as expansion is made easier, increase in the employment opportunities which ultimately leads to overall growth of the economy and better standard of living for all.
There is an amazing change in the financial system these days. That means funds that are meant for saving goes directly to the equity market instead of the conventional deposit and lending procedure. Public these days trade in the Share market either through the mutual funds or directly. There is clear and evident increase in the financial assets people hold.
When the prices of the stocks and the shares increase the investment in the business increases and the reverse is also true. The prices of the shares also affect the income and the consumption levels of a household. It is because of this the central bank has control over the equity market. It always has an eye on the Share market. It has this check just to ensure that operations in the market are carried our smoothly and also see to that the operations are stable.