Stock exchanges contribute in a huge measure to the growth and expansion of national business and to the ultimate benefit and well-being of the national economy and its people. They provide an ideal conduit through which enormous amounts of capital flows through the interconnected network of financial organizations to all corporate enterprises in the country. Thus, stock exchanges ensure liquidity and transferability of financial assets that are dealt with.
Stock exchanges and organized market provide a place for the investors to buy and sell securities freely. The market offers perfectly competitive conditions where a large number of sellers and buyers participate. Further, stock exchanges provide an auction market in which members of the exchange participate to ensure continuity of price and liquidity to investors.
The efficient functioning of the stock exchange is responsible for creating a conductive climate for an active and growing primary market for new issues. Moreover, an active and a healthy secondary market in existing securities leads to a better psychology of expectations, considerably broadening the investment enquiries and thereby, rendering the task of raising resources by entrepreneurs easier. Good performance and outlook for equities in the stock exchanges imparts buoyancy to the new issue market.