NAME : SHIVAM

KUMAR
ROLL NO : 17/1032
COURSE : B.COM(P) 6 sem.
th

Subject : financial
markets and
institutions
Q.1 Does stock exchange is an exact Barometer of economy
comment.
A. Stock exchange are not only used as a plateform in order
to carry business transactions but they are the barometers
that helps in indicating the general conditions of the business
atmosphere. One can measure the economic and business
conditions with the help of stock exchanges as they provide
real and accurate information about the companies. Price of
securities rise during economic and business prosperity
periods. When economic stagnation occurs or business
activities slow down due to depression in the markets,prices
fall. Security prices change with the change in
economic,social and political conditions.

Barometers are data points that indicate trends in the market. It

is quite common for a stock index or exchange to be used as a
barometer for the national economy.
The different types of barometer are
i)Economic barometer
ii) Market Barometer
iii) Consumer - Level Barometers.
The stock exchange is not only used as a platform
to carry business transactions but as the barometers that help
in indicating the general conditions of the business
atmosphere. One can measure the economic and business
requirements with the help of stock exchanges as they provide
factual and accurate information about the companies.
Q.2. Short note on.
(a) current situation of IPO market in India.
Ans. IPO Market in India
The IPO Market in India has been developing since the
liberalization of the Indian economy. It has become one of the
foremost methods of raising funds for various developmental
projects of different companies.
IPO Market in India - Overview
The IPO Market in India is on the boom as more and more
companies are issuing equity shares in the capital market.
With the introduction of the open market economy, in the
1990s, the IPO Market went through its share of policy
changes, reforms and restructurings.One of the most important
developments was the disassembling of the Controller of
Capital Issues (CCI) and the introduction of the free pricing
mechanism.
This step helped in developing the IPO Market in India, as the
companies were permitted to price the issues. The Free pricing
mechanism permitted the companies to raise funds from the
primary market at competitive price.
IPO Market in India - Regulations
The Central Government felt the need for a governed
environment pertaining to the Capital market, as few corporate
houses were using the abolition of the Controller of Capital
Issues (CCI) in a negative manner. The Securities Exchange
Board of India (SEBI) was established in the year 1992 to
regulate the capital market. SEBI was given the authority of
monitoring and regulating the activities of the bankers to an
issue, portfolio managers, stockbrokers, and other intermediaries
related to the stock markets. The effects of the changes are
evident from the trend of the resources of the primary capital
market which includes rights issues, public issues, private
placements and overseas issues.
IPO Market In India – Glimpses

➢ The IPO Market in India experienced a boom in its activities

in the year 1994.
➢ In the year 1995 the growth of the Indian IPO market was 32
%.
➢ The growth was halted with the South East Asian crisis.
➢ The markets picked up speed again with the introduction of
the software stocks.

list of Current IPOs & Upcoming IPOs in India

Upcoming IPO are those IPO which have been drafted with SEBI
or have been approved by SEBI & their Date of issue is out.
These companies have drafted their prospectus with SEBI or their
red herring prospectus has been revealed.

List of Recent IPOs / Running IPOs of Jan-2020

Issuer Company IPO Size (Rs.) Price Band (Rs.) Issue Date
ITI Limited IPO 1,399.86 Cr 71 – 77 24-Jan-20
Janus Corporation IPO 8 Cr 50 27-Jan-20
Madhav Copper IPO 25.50 Cr 100 – 102 27-Jan-20
Tranway Technologies IPO 4.24 Cr 10 27-Jan-20
ICL Organic Dairy IPO 4.08 Cr 20 31-Jan-20
Chandra Bhagat Pharma IPO 10.20 Cr 51 31-Jan-20
Most Famous Upcoming IPOs of 2020

Issuer Company IPO Size (Rs.) Price Band (Rs.) Issue Date
SBI Cards IPO 9600 Cr. N/A Upcoming
Bajaj Energy IPO 5450 Cr. N/A Upcoming
CAMS IPO 1500 Cr. N/A Upcoming
Lodha Developers IPO 5500 Cr. N/A Upcoming
Montecarlo Limited IPO 550 Cr. N/A Upcoming
UTI Amc IPO 3000 Cr. N/A Upcoming
LIC IPO Coming Soon N/A Upcoming

(b) Problem of derivative market in India.

Though showing volumes, But equity derivative market is not growing
as fast as it should in terms of price discovery, the temporal spread of
contracts and the range and diversity of contracts and instruments.
The problems relating to the market are manifold.

➢ The India’s financial system between market operators and

regulators is too prone to political pressure and regulatory
capture . this has sub stained the market from opening further.
➢ Low average per capita income, inadequate physical and
institutional infrastructure, primitive public services and
dysfunctional political and legal systems have made India lag
behind many developed financial markets across the globe.
➢ Uncertainty in Indian tax laws and rules whereby derivative
transactions are treated as ‘speculative’ discourages active
investor participation in the market.
➢ Another problems which the investors face is the lack of
proper training to deal in this market, where, unlike the cash
market, certification is required.
➢ RBI stipulations restricting entry of players into some part of
derivative market and other stringent regulations restrict Free
trade in the derivative markets.
 ➢ Price recovery and narrow risk-bearing capacity on the part of
option-writers is yet another concern as it makes risk hedging
for more than one calendar quarter very difficult for investors.
➢ Prospects:–.The derivatives market in India, which hangs
between nascence and maturity stage, holds high prospects.
➢ Introduction of index derivatives which are less volatile
and difficult to manipulate as compared to individual stock
prices have large prospects for small retail investors.
➢ since index future do not represent physically deliverable asset
,they are cash settled all over the world on the premis that
index value is derived from the cash market, hence these
require less margin capital which induces more players to join
the market.

(c) Debt market regulation.

Indian Capital Markets are regulated and monitored by the Ministry
of Finance, The Securities and Exchange Board of India and The
Reserve Bank of India.
The Ministry of Finance regulates through the Department of
Economic Affairs - Capital Markets Division. The division is
responsible for formulating the policies related to the orderly
growth and development of the securities markets (i.e. share, debt
and derivatives) as well as protecting the interest of the investors.
In particular, it is responsible fo
➢ institutional reforms in the securities markets.
➢ building regulatory and market institutions.
➢ strengthening investor protection mechanism.
➢ Providing efficient legislative framework for securities
markets.
The Division administers legislations and rules made under the.
➢ Depositories Act, 1996,
➢ Securities Contracts (Regulation) Act, 1956 and
➢ Securities and Exchange Board of India Act, 1992.

The Regulators
Securities & Exchange Board of India (SEBI)
The Securities and Exchange Board of India (SEBI) is the
regulatory authority established under the SEBI Act 1992 and is the
principal regulator for Stock Exchanges in India. SEBI’s primary
functions include protecting investor interests, promoting and
regulating the Indian securities markets.
All financial intermediaries permitted by their respective regulators
to participate in the Indian securities markets are governed by SEBI
regulations, whether domestic or foreign. Foreign Portfolio
Investors are required to register with DDPs in order to participate
in the Indian securities markets.
Reserve Bank of India (RBI)
The Reserve Bank of India (RBI) is governed by the Reserve Bank
of India Act, 1934. The RBI is responsible for implementing
monetary and credit policies, issuing currency notes, being banker
to the government, regulator of the banking system, manager of
foreign exchange, and regulator of payment & settlement systems
while continuously working towards the development of Indian
financial markets. The RBI regulates financial markets and systems
through different legislations. It regulates the foreign exchange
markets through the Foreign Exchange Management Act, 1999.
National Stock Exchange (NSE) – Rules and Regulations
In the role of a securities market participant, NSE is required to set
out and implement rules and regulations to govern the securities
market. These rules and regulations extend to member registration,
securities listing, transaction monitoring, compliance by members
to SEBI / RBI regulations, investor protection etc. NSE has a set of
Rules and Regulations specifically applicable to each of its trading
segments. NSE as an entity regulated by SEBI undergoes regular
inspections by them to ensure compliance.