Role of

Stock market!!!!
On The Innovation & Growth Of

Presented By

Indian Economy

SONIA ROY SANCHITA CHETIA

DEEPAK SUBBA
ANITA BESRA JITENDRA MAHATO

WHAT IS STOCK MARKET

A stock market or equity market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.

HISTORY OF STOCK MARKET(PRE INDEPENDENCE)

YEARS EVENTS

1874 1875 1894 1908 1936 1937 1947

rapidly developing share trading business "The Native Share and Stock Brokers' Association" (also known as "The Bombay Stock Exchange") was established in Bombay Establishment of "The Ahmadabad Share and Stock Brokers' Association" "The Calcutta Stock Exchange Association" was formed Merger of the Lahore Stock Exchange with the Punjab Stock Exchange

Re-organisation and set up of the Madras Stock Exchange Limited (Pvt.)

"Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and Shares Exchange Limited" were established and later on merged into "The Delhi Stock Exchange Association Limited"

POST INDEPENDENCE
In the 1950s, Century Textiles, Tata Steel, Bombay Dyeing, National Rayon, and Kohinoor Mills were the favorite scrips of speculators. The 1980s witnessed an explosive growth of the securities market in India. The decade of the 1980s was characterized by an increase in the number of stock exchanges, listed companies, paid up-capital, and market capitalization. The Capital Issues (Control) Act, 1947 was repealed in May 1992. Major capital market scams took place in the 1990s. Trading of futures commenced from June 2000, and Internet trading was permitted in February 2000.

Existing structure of the stock exchanges in India

NSE BSE OTHERS

STOCK MARKET

BOMBAY STOCK EXCHANGE

Established in 1875 Oldest stock exchange in Asia & has the 3rd largest number of listed companies in world, with 4900 listed as on Feb 2010. It became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act.1956. Equity market capitalisation of the companies listed on the BSE was US$ 1.28 trillion.

NATIONAL STOCK EXCHANGE

Established in 1992 It has market capitalization of around Rs 4701923 crores(7th August 2009) It is the largest stock exchange in India & 3rd largest in the world in terms of volume of transactions. Its key index is the S & P Nifty, known as the Nifty, an index of fifty major stocks weighted by market capitalisation.

INNOVATIONS OF STOCK MARKET (NSE)

Set up the first clearing corporation "National Securities Clearing Corporation Ltd. Depository- securities are held in electronic form CDSL & NSDL Setting up of S&P CNX Nifty. commencement of Internet Trading in February 2000

CONTD

first and the only exchange to trade GOLD ETFs (exchange traded funds) in India BOLT & NEAT Financial Innovation bringing new instruments: Equity swaps, stock index etc.

ROLE OF SEBI
Power to make rule for controlling stock Exchange To provide license to dealers and brokers To Stop fraud in Capital Market To Control the Merge, Acquisition and Takeover the companies To audit the performance of stock market To make new rules on carry - forward transactions To Require report of Portfolio Management Activities To educate the investors

IMPORTANCE OF STOCK MARKET

Provides a source of funding for organisations. An investment avenue. A source of income for investors. A source of revenue for government in the form of taxes. A source of employment opportunities. Meeting place for investors and organisations.

PRELIBERARALIZATION OF INDIAN ECONOMY

Indian financial system, till the early 90`s, was a closed system. FOREX markets were fully controlled with a very few opportunities Interest rates for some sectors were very high The overall economic and monetary system was very weak

POST LIBERALIZATION OF INDIAN ECONOMY

Foreign Investment Approvals-In 1991 foreign investment shot up to Rs.534 crores from the low of Rs. 128 crores in 1990. India has emerged as one of the fastestgrowing economies in the developing world By 2035, it was projected to be the third largest economy of the world, behind US and China.

RELATIONSHIP
The macro economic variables (GDP,PER CAPITA GNP) & stock market variables (SENSEX,NIFTY) are positively correlated.

SENSEX

GDP

PER CAPITA GNP

CONCLUSION
STOCK MARKET is the mirror of the Indian Economy.