The market capitalization of a particular stock exchange can be defined as the value or worth of the entire stock market at a particular point in time. We all know that the business of the stock exchange is just nothing but buying and selling of shares and other financial instruments, and as long as there is the law of demand and supply, the price if goods, equities or anything that is traded cannot remain stagnant. Either it is up or it will be down according to the forces that is at play, and that is the same thing with the stock exchange .As long as shares and other instruments of money are traded at the floor of the stock exchange, prices must continue to move either up or down. Some companies must loose money and some must gain and for that reason, the market capitalization has to be determined daily, it is not steady.At the close of business every day, the sum total of the capitalization of all the quoted companies on the exchange will be compiled together to arrive at the market capitalization for that particular day. I.e. the sum total of every individual firm quoted on the floor added together will give you the real capital value of that particular exchange. Whether a company records gain or loss, has a few trades or none at all, is on technical or indefinite suspension, all their values will be added up together to get the capitalization of the exchange for that particular day.
If at the end of the day’s business, the value (capitalization) goes down, it means that the stock exchange lost some value or better said that the market is depressed, but if it goes up, it means that there is a general rise in the capitalization of the exchange. During this period of daily trading, you will notice that the individual will be recording either gains or losses, the tide of the value of the exchange for that day, will swing to the side that carries the day, whether the gainers or the losers and that is what determines whether the market capitalization has dipped or whether it has appreciated. The highly capitalized equities normally dictate the pace in the control of the market capitalization. If these firms losses more money daily, the market capitalization may likely dip, and if they gain the capitalization is likely to appreciate, though it is not always so. That is why it is very important to really know the balance sheet of a company before investing because prices are very volatile in the market and investing without understanding is very risky because one can loose all his money if he invests blindly.
Invest wise.
