Article : 13 : Stock Exchange

The stock exchange is a place or market where shares, stocks, bonds are bought & sold as a result of which a country’s capital is greatly mobilized & channelized. It effectively works for capital formation to give boost to a country’s economy & it becomes its economic barometer. Poor show of the stock exchange indicates weak shape of economy, stunted production, poor job market, low consumers spending, depressing foreign investment, disappointing industrial growth, tumbling GDP, hopeless prices of consumer goods, unfavorable balance of payment. On the other hand, good performance shows the other way round. In short, it is the echo of a country’s economy.

The stock exchange facilitates a company to float its shares, that is, a company intending to sell its share to the public finds it easy to sell them through stock exchange.

The exchange also helps large investors to bring in their money and do business. It helps a common man to buy or sell their securities. He can buy shares to earn divided or sell them when he can fetch higher prices.

It works in such a natural way that blue chips companies & weak companies can easily be identified. Blue chips companies are those whose shares are easily & briskly bought & sold, have an upward trend in prices, and a sustained dividend payout records over years. Weak companies shares, on the other hand, are the ones that have poor demand & are not readily sold, unable to sell at good prices, and have poor dividend records over years. How to tell a good company from a bad one is their share prices quoted at the exchange.