Relationship Between Stock Market Returns And Inflation

Abstract

One of the most important ways for corporations to raise their capital is from Stock Market. A Company establish new portfolio or expand its existing business may borrow money from financial institutions or either may float share into stock market. When a company incorporated into publically listed corporation under Companies Ordinance 1984, SECP allow them to float their share in stock market, and that capital is authorized by SECP. Stock market play dynamics role in economic growth. Stock brokers are the intimidator between the company and the investor. Individual cannot directly purchase or sell share from company they may involve third party that may be agent or stock brokers. Share are traded in market with very integrated and efficient electronic trading system in which price to the share changes every second and stock broker quote the price through computers. There are so many factors to determine the price of the stock like, dividend history of firm, new projects, demand and supply of share. The shock Exchange offers a prospective source of investment avenues for investors to create wealthy activities of companies and for economy. Whenever we buy or sell share from stock market our main aim is to generate maximum profit, the profit can produce through Capital gain and dividends. Company give dividends at the end of their financial period, but the capital gain is like short term investment in which a clever investor buy share at low price and sell at high price. Every year firm decides to retain some part of its profit to finance its operations or start a new business. Companies which are expanding their business retain their profits and offer low or no dividend. For those companies the share price is low as compare to those who offer high dividend. Stock market is very important source for government to generate funds. Government borrows money by issuing risk free instruments to investor and uses those funds for the welfare of the society

Karachi Stock exchange is Pakistan