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SECURITIES MARKET IN INDIA- AN OVERVIEW 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. 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 economys abilities to invest and save respectively which thus helps market in enhancing savings and investment in the economy. The Security market denotes buyers and sellers of securities and agencies which help in the marketing of securities.

SECURITIES MARKET IN INDIA- AN OVERVIEW Securities are broadly categorized into debt securities (such as banknotes, bonds and debentures) and equity securities, e.g., common stocks; and derivative contracts, such as forwards, futures, options and swaps.


Stock exchange is that place where trading of shares is done in terms of sale and purchase. An organized market where securities issued by companies, government organizations and semi government organizations are sold and purchased. Securities include shares, bonds, debentures.


According to Securities Contracts Regulation Act, 1956 : Stock exchange means any body of individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. FEATURES:

1. 2. 3. 4.

Organised Market Dealings in securities issued by various concerns Dealing only through authorised members Necessary to obey rules

Name of Indian stock exchanges:

1.Bombay stock exchange 2.National stock exchange(Mumbai) 3.Banglore stock exchange 4.Utter pradesh stock exchange(kanpur) 5.Magadh stock exchange(Patna) 6.Ahmedabad stock exchange 7.vadodara stock exchange(Baroda) 8.Bhubaneswar stock exchange 9.Calcutta stock exchange(kolkata) 10.madras stock exchange

There are 23 stock exchanges in the India. Mumbai's (earlier known as Bombay), Bombay Stock Exchange is the largest, with over 6,000 stocks listed. The BSE accounts for over two thirds of the total trading volume in the country. Established in 1875, the exchange is also the oldest in Asia. Among the twenty-two Stock Exchanges recognised by the Government of India under the Securities Contracts (Regulation) Act, 1956, it was the first one to be recognised and it is the only one that had the privilege of getting permanent recognition ab-initio.

11.Cochin stock exchange 12.coimbatore stock exchange 13.Gauhati stock exchange 14.Hydrabad stock exchange 15.Madhya pradesh stock exchange(indore) 16.Jaipur stock exchange 17.Ludhina stock exchange 18.Mangalore stock exchange 19.Pune stock exchange 20.saurashtrakutch stock exchange

Provides a ready market for buying and selling of securities. Performs an act of magic as it enables long term investments to be financed by funds provided by individuals who are otherwise interested in short term or medium term investment. Directs the flow of capital in the most profitable channels. Includes corporate enterprises to raise their standards of performance. Offers and easily understood evaluation of the financial conditions and prospects of listed firms Facilitates speculation, Promotes the habit of saving and investment thereby helping in capital formation. Promotes industrial growth and economic development.

The Security market includes : 1. The market for new securities 2. The market for existing securities. Activities in originating, distributing and trading in securities. Organizations which facilitate and contribute to activities in the securities market. Persons and organizations who buy and sell securities. Regulations, practices and customs which influence and control the conduct of business in securities market. It will be convenient to study the securities market under two heads: 1. The New Issues Market 2. The Stock Exchange

The market for new securities

The new issue market directs the demand for fresh capital by expressing it in the form of securities. It comprises companies, individual, institutional investors, intermediaries ie underwriters, stock brokers etc. It is concerned with the floatation and disposal of new issue of shares and debentures through their allotment to persons and organizations. It facilitates transfer of investible funds from their owners to productive channels. An effective new issue market encourages savings and flow of savings into industrial enterprises. Its primary role to play in mobilizing the savings of the individual investors and institutional investors.

The market for existing securities

Stock exchange is concerned with re sale of securities. It is the market where stocks or securities are exchanged for investment or speculative purposes.


1. To create liquidity into securities: whenever required investor can invest his money through this market into securities and can reconvert this investment into cash. 2. To facilitate better allocation of capital: it provides proper direction to flow of capital. When co.s having profitable securities enter capital market to meet out the funds, their previous record helps in raising additional capital. 3. To facilitate the valuation of securities: The prices of sec. changes every day due to the sale & purchase. Stock exchanges evaluate the market value of various sec. 4. To promote habit of saving & investment:investors earn interest & dividends as permanent income from such investment. They get 2 benefits from this : advantage can be taken of changing prices and at the time of need sec. can be sold anytime at their market price.


5. To provide safety of dealing: these markets fully protects the interest of the investors. They have their own bye-laws which each member has to follow. Violation may lead to cancellation of membership. 6. To provide full information regarding listed co.s: it collects important information about the co.s listed, while collecting such information main emphasis is on information related to financial strength. 7. To educate the investors: a public relation office is established in every exchange, this office publishes the dailhy quotations of various sec., weekly reports,annual reports etc. Investors can take intelligent decisions about their investment so that maximum profit can be generated.


FROM THE POINT OF VIEW OF COMMUNITY: 1.It assist the economic development by providing a body of interested investors. 2.it uploads the position of superior enterprises and assist them in raising further funds. 3.It encourages capital formation 4.Government can undertake projects of national importance and social value raising funds through the sale of its securities on the stock exchange. 5.It is the stock exchanges that central bank of a country can control credit by undertaking open market operations (purchase and sale of securities)


1.A company whose shares quoted on stock exchange they enjoy better reputation and credit. 2.The market for the shares of such a company is naturally widened. 3.The market price of securities is likely to be higher in relation to its earnings,dividends and property values.This raises the bargaining power of the company in the event of a takeover,merger or amalgamation.


1.Liquidity of the investment is increased 2.The securities dealt on a stock exchange are good collateral security for loans. 3.The stock exchange safeguards interests of investors through strict enforcement of rules and regulations. 4.The present net worth of investments can be easily known by the daily quotations. 5.His risk is considerably less when he holds or purchases listed securities.


ABOUT BSE: The oldest exchange in Asia and the first exchange in the country to be granted permanent recognition under the Securities Contract Regulation Act, 1956, Bombay Stock Exchange Limited (BSE) has had an interesting rise to prominence over the past 130 years. The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association", as a voluntary nonprofit making association. Governing Board comprising of 9 elected directors (one third of them retire every year by rotation), two SEBI nominees, a Reserve Bank of India nominee, six public representatives and an Executive Director is the apex body, which decides the policies and regulates the affairs of the Exchange

BSE SENSEX The BSE SENSEX, short form of Sensitive Index, first compiled in 1986 is a market Capitalization-Weighted index of 30 component stocks representing a sample of large, well-established and financially sound companies. The index is widely reported in both, the domestic international, print electronic media and is widely used to measure the used to measure the performance of the Indian stock markets. The BSE SENSEX is the benchmark index with wide acceptance among individual investors, institutional investors, foreign investors, foreign investors and fund managers. The objectives of the index are:

Bombay stock exchange : it has 30 companies scripted. ACC 2.BAJAJ 3.AIRTEL 4.BHEI 5.CIPLA 6.DLF 7.GRASIM 8.GUJRAT AMBUJA 9.HDFC 10.HDFC BANK




On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The National Stock Exchange (NSE) is India's leading stock exchange covering around 400 cities and towns all over India. NSE introduced for the first time in India, fully automated screen based trading. It provides a modern, fully computerized trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest or liquidate investments in securities. NSE started equity trading on November 3, 1994 and within a short span of 1 year became the largest exchange in India in terms of volumes transacted. One of the objectives of NSE was to provide a nationwide trading facility and to enable investors spread all over the country to have an equal access to NSE.

Definition : it involves the buying,holding,selling,short-term selling of stocks,bonds.commodities,currencies,collectibles or any valuable financial instrument to profit from fluctuations in its price as opposed to buying it for use or for income via method like dividends or interest.

Kinds of speculation
Bull Market (Tejiwala): In case of that they purchase the shares at current prices to sell at a higher price in the near future and makes a profit if his expectations come true.he is also called a long buyer. Bear Market (Mandiwala) : He sells security in the hope that he will be able to buy them back at lesser price.It is also called short selling.

Lame duck : When a bear has made contracts to sell securities,find it difficult to meet his commitment due to nonavailability of security,,they always struggling.. Stag : He is that type of speculator who applies for a large number of a shares in a new issue with the intention of selling them at a premium.He is bullish and very cautious.

The members of the stock exchange can be divided into two parts: A.Broker: He is a commission agent who transacts business in securities on behalf of non-members.They may have number of sub-brokers to canvass and secure business for them. B.Jobber: He is an independent dealer securities.He purchase and sells securities in his own name. He is not allowed to deal with non-members directly.He works for profit.

Non-members : The following categories of non members are also permitted to enter trading hall and transact business on the behalf of members. Authorized clerks: They are the assistant or agents.They buy or sell on the behalf of employers.They can not transact business on their own account. Remisers: They are the sub-brokers. He is also called the half commission men.


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. It was constituted and made a statutory body by SEBI act 1992.With the coming into effect of SEBI, some of the powers and function exercised by the central government, in respect of regulation of stock exchanges were transferred to the SEBI.


The SEBI ACT 1992, provided for establishment of a statutory board with 6 members. The Chairman and 2 members are appointed by central government, one member by RBI and 2 members having experience in the securities market are appointed by CG. SEBI has been given an autonomous status by treating it as a body corporate with perpetual succession and common seal. The preamble of the act provides that the board has been established to protect the interest of the investors in securities and to promote the development of and to regulated the sec. market. It is the manager of the managers of financial services.

1.Registring and regulating the working of stock brokers, sub-brokers, share transfer agents, underwriters.who may be associated securities market in any manner. 2.Registering and regulating the working of collective investment scheme including mutual funds. 3.Prohibiting insider trading in securities. 4.Regulating substantial acquisition of shares and takeovers of companies. 5.Calling for information from, undertaking inspection, conducting inquiries and audits of stock exchanges and intermediaries and self regulatory organizations in the securities market. 6.Prohibiting fraudulent and unfair trade practices related to sec. market. 7.Promoting investors knowledge and training of intermediaries .

The major functions of SEBI are: 1Protecting interest of investor in securities a) Prohibiting fraudulent & unfair practices b) Prohibiting misleading statements, inducing purchase & sale of securities. c) Educating investors d) Promoting fair practices and code of conduct e) Stopping preferential allotment

The major functions of SEBI are: 2 Promoting development of securities market a) b) c) d) e) Registration of FII Promoting training of intermediaries of market. Making underwriting optional Debenture trustees to be registered with SEBI Permitting internet trading through registered broker.

3 Regulating securities market a) b) c) d) Regulating business in stock market Regulating intermediaries Registering and regulating working of stock brokers Regulating takeover of companies.