How The Stock Market Works India's First Free Online / On-call Financial Advisory / Best Free Financial Advice India’s First Free Online / On-call Financial Advisory / Best Free Financial Advice

Markets go crawling up, fortunes are built, and fortunes are lost. Just name it as people have seen it all.

As everybody might expect to stay profitable over the years, traders have studied the markets and followed trends very carefully to devise the right methods and strategies to make consistent profits through trading.

Whenever a company wants to raise funds for further expansion or setting up a new business venture, they have to take a loan from a financial organization or they have to issue shares through the stock market. In fact, the stock market is the primary source for any company to raise funds for business expansions.

If a company wants to raise some, capital for the business it can issue shares of the company that is part ownership of the company. To issue shares for the investors to invest in the stocks a company needs to be listed to a stocks exchange and through the primary market of the stock exchange they can issue the shares and get the funds for business requirements. There are certain rules and regulations for being listed at a stock exchange and they need to fulfil some criteria to issue stocks and go public.

The stock market is primarily the place where these companies are listed to issue the shares and raise the fund. In case of an already listed public company, they issue more shares to the market for collecting more funds for business expansion. For the companies, which are going public for the first time, they need to start with the Initial Public Offering or the IPO. In both the cases, these companies have to go through the stock market.

This is the primary function of the stock exchange and thus they play the most important role of supporting the growth of the industry and commerce in the country. That is the reason that a rising stock market is the sign of a developing industrial sector and a growing economy of the country.

Of course, this is just the primary function of the stock market and just an half of the role that the stock market plays. The secondary function of the stock market is that the market plays the role of a common platform for the buyers and sellers of these stocks that have a listed at the stock market. The secondary market of the stock exchange constitutes of retail investors and institutional investors buy and sell the stocks. In fact, these stock market traders raise the fund for the businesses by investing in the stocks.

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