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Liquidity
Liquidity has two common meanings. For an asset, it is how quickly you can sell it without cutting the price; cash is perfectly liquid, a flat is not. For the banking system, it is how much spare cash banks have to lend.
Why It Matters
When system liquidity is tight, interest rates rise even if the RBI has not moved.
In India
Shares of large companies like Reliance are very liquid because thousands trade every minute. A small-cap stock that trades a few hundred times a day can be hard to sell quickly at a fair price.