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1 SECURITIES MARKET IN INDIA- AN OVERVIEW

  • 1.1 INTRODUCTION:

Basically, Securities markets provide a channel for allocation of savings by an individual or an organization to those who have a productive need for them. So, a security market can be said a location where the savers meet the real investors who need the fund. The savers and investors are constrained by the economy’s abilities to invest and save respectively which thus helps market in enhancing savings and investment in the economy. Stock Market is therefore affected by the dynamics of the economic, political, cultural and environmental activities within the country and rest of the world.

The securities markets in India have witnessed several policy initiatives, which has refined the market micro-structure, modernized operations and broadened investment choices for the investors.

  • 1.2 BRIEF HISTORY:

Indian Share Market is the oldest Asian stock market incorporated in 1875. The name of the first share trading association in India was Native Share and Stock Broker's Association which later came to be known as Bombay Stock Exchange. This association started with 318 members.

The National Stock Exchange (NSE) is India’s latest exchange which commenced from June 30, 1994. The main objectives of the NSE are to provide speedy transactions, fast settlements and to benefit the small investors who find it difficult to sell shares at BSE.

The past decade has been quite remarkable for the Securities market in India with the boom in the economy fueled by better banking system. It has grown exponentially and the market has also witnessed fundamental institutional changes. There have also been significant improvements in efficiency, transparency and safety.

  • 1.3 THE REGULATORY AUTHORITY: SEBI

The rise in number of investors was also leading to an increase in malpractices on part of the companies, brokers, merchant bankers, investment consultants and various other agencies involved in new issues. This led to erosion of investor confidence. The Government and the stock exchanges were helpless as the existing legal framework was just not enough. Realizing this, Securities Exchange Board of India (SEBI) was constituted by the Government of India in April 1988.

The major functions of SEBI are:

? To promote fair dealings by the issuers of securities and ensure a market place where funds can be raised at relatively low costs.

? To provide protection to the investors and safeguard their rights and interests such that there is steady flow of savings into the market.

? To regulate and develop a code of conduct and fair practices by the intermediaries involved in the stock market.

Primary Market

Primary Market What Does Primary Market Mean? A market that issues new securities on an exchange.Hide links within definitions Definitions ( 2 ) 1. An investment instrument , other than an insurance policy or fixed annuity , issued by a corporation , government , or other organization which offers evidence of debt or equity . The official definition, from the Securities Exchange Act of 1934 , is: "Any note , stock , treasury stock , bond , debenture , certificate of interest or participation in any profit-sharing agreement or in any oil, gas , or other mineral royalty or lease , any collateral trust certificate , preorganization certificate or subscription , transferable share , investment contract , voting-trust certificate, certificate of deposit , for a security, any put , call, straddle , option , or " id="pdf-obj-1-4" src="pdf-obj-1-4.jpg">

What Does Primary Market Mean? A market that issues new securities on an exchange. Companies, governments and other groups obtain financing through debt or equity based securities. Primary markets are facilitated by underwriting groups, which consist of investment banks that will set a beginning price range for a given security and then oversee its sale directly to investors.

Also known as "new issue market" (NIM).

Primary Market What Does Primary Market Mean? A market that issues new securities on an exchange.Hide links within definitions Definitions ( 2 ) 1. An investment instrument , other than an insurance policy or fixed annuity , issued by a corporation , government , or other organization which offers evidence of debt or equity . The official definition, from the Securities Exchange Act of 1934 , is: "Any note , stock , treasury stock , bond , debenture , certificate of interest or participation in any profit-sharing agreement or in any oil, gas , or other mineral royalty or lease , any collateral trust certificate , preorganization certificate or subscription , transferable share , investment contract , voting-trust certificate, certificate of deposit , for a security, any put , call, straddle , option , or " id="pdf-obj-1-13" src="pdf-obj-1-13.jpg">

Investopedia explains Primary Market The primary markets are where investors can get first crack at a new security issuance. The issuing company or group receives cash proceeds from the sale, which is then used to fund operations or expand the business. Exchanges have varying levels of requirements which must be met before a security can be sold.

Once the initial sale is complete, further trading is said to conduct on the secondary market, which is where the bulk of exchange trading occurs each day. Primary markets can see increased volatility over secondary markets because it is difficult to accurately gauge investor demand for a new security until several days of trading have occurred.

security

Primary Market What Does Primary Market Mean? A market that issues new securities on an exchange.Hide links within definitions Definitions ( 2 ) 1. An investment instrument , other than an insurance policy or fixed annuity , issued by a corporation , government , or other organization which offers evidence of debt or equity . The official definition, from the Securities Exchange Act of 1934 , is: "Any note , stock , treasury stock , bond , debenture , certificate of interest or participation in any profit-sharing agreement or in any oil, gas , or other mineral royalty or lease , any collateral trust certificate , preorganization certificate or subscription , transferable share , investment contract , voting-trust certificate, certificate of deposit , for a security, any put , call, straddle , option , or " id="pdf-obj-1-23" src="pdf-obj-1-23.jpg">

privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a 'security'; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or banker's acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited."

2. Property which is pledged as collateral for a loan.

issue

<a href=privilege on any security, certificate of deposit , or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency , or in general, any instrument commonly known as a 'security'; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase , any of the foregoing; but shall not include currency or any note, draft , bill of exchange , or banker's acceptance which has a maturity at the time of issuance of not exceeding nine months , exclusive of days of grace , or any renewal thereof the maturity of which is likewise limited ." 2. Property which is pledged as collateral for a loan . issue Hide links within definitions Definition A stock or bond which has been offered for sale by a corporation or government entity , usually through an underwriter or in a private placement . secondary market Hide links within definitions Definition A market in which an investor purchases a security from another investor rather than the issuer , subsequent to the original issuance in the primary market . also called aftermarket . " id="pdf-obj-2-64" src="pdf-obj-2-64.jpg">
<a href=privilege on any security, certificate of deposit , or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency , or in general, any instrument commonly known as a 'security'; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase , any of the foregoing; but shall not include currency or any note, draft , bill of exchange , or banker's acceptance which has a maturity at the time of issuance of not exceeding nine months , exclusive of days of grace , or any renewal thereof the maturity of which is likewise limited ." 2. Property which is pledged as collateral for a loan . issue Hide links within definitions Definition A stock or bond which has been offered for sale by a corporation or government entity , usually through an underwriter or in a private placement . secondary market Hide links within definitions Definition A market in which an investor purchases a security from another investor rather than the issuer , subsequent to the original issuance in the primary market . also called aftermarket . " id="pdf-obj-2-90" src="pdf-obj-2-90.jpg">

STOCK EXCHANGE

SUMMARY

India's oldest and first stock exchange: Mumbai (Bombay) Stock Exchange.

Established in 1875. More than 6,000 stocks listed.

Total number of stock exchanges in India: 22

They are in: Ahmedabad, Bangalore, Calcutta, Chennai, Delhi etc.

There is also a National Stock Exchange (NSE) which is located in Mumbai.

There is also an Over The Counter Exchange of India (OTCEI) which allows

listing of small and medium sized companies.

The regulatory agency which oversees the functioning of stock markets is

the Securities and Exchange Board of India (SEBI), which is also located in

Bombay. SEBI's website location is at http://www.sebi.gov.in but you need a password to access it.

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