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

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).

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

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
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.
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.

Top