A stock is in equilibrium when the intrinsic value of the stock is equal to the market value. In this situation there is no pressure on changing the stock price for trading them.

Equilibrium is defined as state at which demand is equal to the supply. In stock market the demand is made by the buyer and supply is done by the sellers. Intrinsic value is the share?s actual value that is determined on the basis of return and risk characteristics. It cannot be actually measured but only estimated. Most stock in market trade very close to their intrinsic value and can be termed as to be on equilibrium. And when the stock is on equilibrium, there is no motivation in the market to sell or buy that particular stock.

On the contrary, most of the stocks either are close to the intrinsic value or equilibrium. In such conditions, the stock is undervalued or overvalued. Therefore, stocks at some point may be at equilibrium and at some point are undervalued or overvalued.