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In simple terms the economy of a nation is wealth generated by the people by making use of the resources available. When the natural resources are utilized to their fullest extent by the people – even the human beings existing in a county are also counted as “human resource” – wealth is generated in many forms. Agriculture, mining, industrialization and other means of generation bring forth wealth in terms of money to the nation. This money is used in commercial organizations for generating further money over the years. This cycle is going on endlessly.
These organizations are formed by people in various sizes and shapes with the objective of making profits. Sole proprietorship, partnership, private limited companies and public limited companies are some of these forms made by the people as separate entities of commercial business. Of these organizations, the public limited companies are formed by pooling the financial resources of hundreds, thousands and millions of people from the public as capital towards the formation of the organization. The total financial outlay is divided into small amounts known as “share capital” and these shares are printed on paper like currencies (obviated by the electronic media of computerized transactions of today). By holding the shares of an organization, the share holder becomes the owner of the organization and such ownership is transferable. The shareholders can sell the shares held by them and buy shares held by others. This exchange of buying and selling is the basic function of Share Market or popularly known as Stock Exchange. The commercial organizations issuing shares to the public divide the profit earned through the operations to the owners – that is the shareholders every year as dividend. Thus the earning of a share is dependant upon the profit made by the organization and its value is enhanced in the Stock Exchange where lot of buyers demand for them. Such demand for shares of profit making organizations when raises as a whole, it reflects that more wealth is generated and the economy of the nation as generated by a majority of commercial and financial organizations is sound and healthy. If the same demand grows year after year in huge numbers, it indicates that the economy of the nation is on the growing path and it can be measured in terms of real monitory values. In a growing economy the financial institutions like banks etc. can carry on their activities like funding the developmental activities of the nation like infrastructure facilities augmentation, trade and commerce with other nations as also the welfare schemes for the people of the nation. Basically the shares and securities traded on a daily basis in the Stock Exchanges act as the Barometer of the economy. If the shares of most of the large companies (popularly known as “blue chip companies”) go up on value steadily over a period it indicates that the economy is healthy. Such upward trend in the sale price of these shares is nicknamed as “Bullish” trend likened to the upsurge of a bull. The investors stand to gain in millions of real money when such bullish trend prevails in the nation’s stock market as the value of shares held by them go up. More and more investment pours into the shares from people observing this bullish trend of Stock markets and the enormous gains it offers to the shareholders.
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