Market Liquidity refers to the ease and speed with which an asset can be bought or sold in the market without causing a significant change in its price. A highly liquid market—such as large-cap Indian equities on NSE—features tight bid-ask spreads, high trading volumes, and minimal price impact. Conversely, illiquid assets like small-cap stocks or real estate may require significant price concessions to execute large trades. Market liquidity is a critical consideration for institutional investors and is directly linked to overall market health and investor confidence.
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