research communication mba july 2012

Available ONLINE www.vsrdjournals.com

VSRD-IJBMR, Vol. 2 (7), 2012, 387-399

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1Assistant Professor, MBA Department, Shri Balwant Institute of Technology, Sonepat, Haryana, INDIA. *Correspondence : [email protected]

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Indian Capital Market : An Overview with Its Growth

1Juhi Ahuja*

ABSTRACT

This paper presents a review of Indian Capital Market & its structure. In last decade or so, it has been observed

that there has been a paradigm shift in Indian capital market. The application of many reforms & developments

in Indian capital market has made the Indian capital market comparable with the international capital markets.

Now, the market features a developed regulatory mechanism and a modern market infrastructure with growing

market capitalization, market liquidity, and mobilization of resources. The emergence of Private Corporate Debt

market is also a good innovation replacing the banking mode of corporate finance.

However, the market has witnessed its worst time with the recent global financial crisis that originated from the

US sub-prime mortgage market and spread over to the entire world as a contagion. The capital market of India

delivered a sluggish performance.

Keywords : Indian Capital Market; Developments; Regulatory mechanism; Private Corporate Debt Market.

1. INTRODUCTION

Capital Market : A capital market is a market for securities (debt or equity), where business enterprises

(companies) and governments can raise long-term funds. It is defined as a market in which money is provided

for periods longer than a year, as the raising of short-term funds takes place on other markets (e.g., the money

market). The capital market includes the stock market (equity securities) and the bond market (debt).

Two types of Markets : Capital markets may be classified as primary markets and secondary markets. In

primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. In the

secondary markets, existing securities are sold and bought among investors or traders, usually on a securities

exchange, over-the-counter, or elsewhere.

Juhi Ahuja / VSRD International Journal of Business & Management Research Vol. 2 (7), 2012

388

INDIAN Capital Market

Evolution : Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago.

The Bombay Stock Exchange was inaugurated in 1899 when the brokers formally established a stock market in

India. Thus, the Stock Exchange at Bombay was consolidated. After that more & more stock exchanges have

emerged in India & this forms a huge capital market in India.

2. EQUITY MARKET IN INDIA

The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian equity market has

become the third biggest after China and Hong Kong in the Asian region. According to the latest report by

ADB, it has a market capitalization of nearly $600 billion. As of March 2009, the market capitalization was

around $598.3 billion (Rs 30.13 lakh crore) which is one-tenth of the combined valuation of the Asia region.

The market was slow since early 2007 and continued till the first quarter of 2009.

Stock Exchange : Stock Exchange is an Organized and regulated financial market where securities (bonds,

notes, shares) are bought and sold at prices governed by the forces of demand and supply.

The Role of Stock Exchanges : Stock exchanges have multiple roles in the economy. This may include the

following :

Raising Capital For Businesses : The Stock Exchange provide companies with the facility to raise capital for

expansion through selling shares to the investing public.

Facilitating Company Growth : A takeover bid or a merger agreement through the stock market is one of the

simplest and most common ways for a company to grow by acquisition or fusion.

Creating Investment Opportunities For Small Investors : As opposed to other businesses that require huge

capital outlay, investing in shares is open to both the large and small stock investors because a person buys the

number of shares they can afford. Therefore the Stock Exchange provides the opportunity for small investors to

own shares of the same companies as large investors.

Barometer of the Economy : At the stock exchange, share prices rise and fall depending, largely, on market

forces. Share prices tend to rise or remain stable when companies and the economy in general show signs of

stability and growth. An economic recession, depression, or financial crisis could eventually lead to a stock

market crash. Therefore the movement of share prices and in general of the stock indexes can be an indicator of

the general trend in the economy.

Speculation : The stock exchanges are also fashionable places for speculation. In a financial context, the terms

"speculation" and "investment" are actually quite specific. For instance, although the word "investment" is

typically used, in a general sense, to mean any act of placing money in a financial vehicle with the intent of

producing returns over a period of time, most ventured money—including funds placed in the world's stock

markets—is actually not investment but speculation.


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The Indian market has 22 stock exchanges. The larger companies are enlisted with BSE and NSE. The smaller

and medium companies are listed with OTCEI (Over The counter Exchange of India).

Bombay Stock Exchange (BSE) : BSE is the oldest stock exchange in Asia. The extensiveness of the

indigenous equity broking industry in India led to the formation of the Native Share Brokers Association in

1875, which later became Bombay Stock Exchange Limited (BSE).

BSE is widely recognized due to its pivotal and pre-eminent role in the development of the Indian capital

market.

In 1995, the trading system transformed from open outcry system to an online screen-based order-driven trading

system.

The exchange opened up for foreign ownership (foreign institutional investment).

Allowed Indian companies to raise capital from abroad through ADRs and GDRs.

Expanded the product range (equities/derivatives/debt).

Introduced the book building process and brought in transparency in IPO issuance.

Depositories for share custody (dematerialization of shares).

Internet trading (e-broking).

BSE has a nation-wide reach with a presence in more than 450 cities and towns of India. BSE has always been

at par with the international standards. It is the first exchange in India and the second in the world to obtain an

ISO 9001:2000 certifications.

The equity market capitalization of the companies listed on the BSE was US$1.63 trillion as of December 2010,

making it the 4th largest stock exchange in Asia and the 8th largest in the world. The BSE has the largest

number of listed companies in the world.

As of June 2011, there are over 5,085 listed Indian companies and over 8,196 scrips on the stock exchange, the

Bombay Stock Exchange has a significant trading volume. Though many other exchanges exist, BSE and the

National Stock Exchange of India account for the majority of the equity trading in India.

National Stock Exchange (NSE) : With the liberalization of the Indian economy, it was found inevitable to lift

the Indian stock market trading system on par with the international standards. On the basis of the

recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in

1992 by Industrial Development Bank of India (IDBI), Industrial Credit and Investment Corporation of India

(ICICI), Industrial Finance Corporation of India (IFCI), all Insurance Corporations, selected commercial banks

and others.

Trading at NSE takes place through a fully automated screen-based trading mechanism which adopts the

principle of an order-driven market. Trading members can stay at their offices and execute the trading, since


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they are linked through a communication network. The prices at which the buyer and seller are willing to

transact will appear on the screen. When the prices match the transaction will be completed and a confirmation

slip will be printed at the office of the trading member.

NSE has several advantages over the traditional trading exchanges. They are as follows :

NSE brings an integrated stock market trading network across the nation.

Investors can trade at the same price from anywhere in the country since inter-market operations are

streamlined coupled with the countrywide access to the securities.

Delays in communication, late payments and the malpractice’s prevailing in the traditional trading

mechanism can be done away with greater operational efficiency and informational transparency in the

stock market operations, with the support of total computerized network.

Over The Counter Exchange of India (OTCEI) : The traditional trading mechanism prevailed in the Indian

stock markets gave way to many functional inefficiencies, such as, absence of liquidity, lack of transparency,

unduly long settlement periods and benami transactions, which affected the small investors to a great extent. To

provide improved services to investors, the country's first ring less, scrip less, electronic stock exchange -

OTCEI - was created in 1992 by country's premier financial institutions - Unit Trust of India (UTI), Industrial

Credit and Investment Corporation of India (ICICI), Industrial Development Bank of India (IDBI), SBI Capital

Markets, Industrial Finance Corporation of India (IFCI), General Insurance Corporation and its subsidiaries and

CanBank Financial Services.

Compared to the traditional Exchanges, OTC Exchange network has the following advantages :

OTCEI has widely dispersed trading mechanism across the country which provides greater liquidity and

lesser risk of intermediary charges.

Greater transparency and accuracy of prices is obtained due to the screen-based scrip less trading.

Since the exact price of the transaction is shown on the computer screen, the investor gets to know the exact

price at which she/he is trading.

Faster settlement and transfer process compared to other exchanges.

Derivative Markets : The emergence of the market for derivative products such as futures and forwards can be

traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising

out of price fluctuations in various asset classes. This instrument is used by all sections of businesses, such as

corporate, SMEs, banks, financial institutions, retail investors, etc. According to the International Swaps and

Derivatives Association, more than 90 percent of the global 500 corporations use derivatives for hedging risks in

interest rates, foreign exchange, and equities.

Three broad categories of participants—hedgers, speculators, and arbitragers—trade in the derivatives market.


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Hedgers face risk associated with the price of an asset. They belong to the business community dealing

with the underlying asset to a future instrument on a regular basis. They use futures or options markets to

reduce or eliminate this risk.

Speculators have a particular mindset with regard to an asset and bet on future movements in the asset’s

price. Futures and options contracts can give them an extra leverage due to margining system.

Arbitragers are in business to take advantage of a discrepancy between prices in two different markets. For

example, when they see the futures price of an asset getting out of line with the cash price, they will take

offsetting positions in the two markets to lock in a profit.

3. DEBT MARKET IN INDIA

Debt market refers to the financial market where investors buy and sell debt securities, mostly in the form of

bonds. These markets are important source of funds, especially in a developing economy like India. India debt

market is one of the largest in Asia.

The most distinguishing feature of the debt instruments of Indian debt market is that the return is fixed. This

means, returns are almost risk-free. This fixed return on the bond is often termed as the 'coupon rate' or the

'interest rate'. Therefore, the buyer (of bond) is giving the seller a loan at a fixed interest rate, which equals to

the coupon rate.

3.1. Classification of Indian Debt Market

Indian debt market can be classified into two categories :

Government Securities Market (G-Sec Market) : It consists of central and state government securities. It

means that, loans are being taken by the central and state government. It is also the most dominant category in

the India debt market.

Bond Market : It consists of Financial Institutions bonds, corporate bonds and debentures and Public Sector

Units bonds. These bonds are issued to meet financial requirements at a fixed cost and hence remove uncertainty

in financial costs.

Advantages : The biggest advantage of investing in Indian debt market is its assured returns. The returns that

the market offer is almost risk-free (though there is always certain amount of risks, however the trend says that

return is almost assured). Safer are the government securities. On the other hand, there are certain amounts of

risks in the corporate, FI and PSU debt instruments. However, investors can take help from the credit rating

agencies which rate those debt instruments.

Another advantage of investing in India debt market is its high liquidity. Banks offer easy loans to the investors

against government securities.

Disadvantages : As there are several advantages of investing in India debt market, there are certain

disadvantages as well. As the returns here are risk free, those are not as high as the equities market at the same


392

time. So, at one hand we are getting assured returns, but on the other hand, we are getting less return at the same

time.

Retail participation is also very less here, though increased recently.

Debt Instruments : There are various types of debt instruments available that one can find in Indian debt

market.

Government Securities : It is the Reserve Bank of India that issues Government Securities or G-Secs on behalf

of the Government of India. These securities have a maturity period of 1 to 30 years. G-Secs offer fixed interest

rate, where interests are payable semi-annually.

Corporate Bonds : These bonds come from PSUs and private corporations and are offered for an extensive

range of tenures up to 15 years. Comparing to G-Secs, corporate bonds carry higher risks, which depend upon

the corporation, the industry where the corporation is currently operating, the current market conditions, and the

rating of the corporation. However, these bonds also give higher returns than the G-Secs.

Certificate of Deposit : These are negotiable money market instruments. Certificate of Deposits (CDs), which

usually offer higher returns than Bank term deposits, are issued in Demat form and also as a Usance Promissory

Notes. There are several institutions that can issue CDs. Banks can offer CDs which have maturity between 7

days and 1 year. CDs from financial institutions have maturity between 1 and 3 years. There are some agencies

like ICRA, FITCH, CARE, CRISIL etc. that offer ratings of CDs. CDs are available in the denominations of ` 1

Lac and in multiple of that.

Commercial Papers : There are short term securities with maturity of 7 to 365 days. CPs is issued by corporate

entities at a discount to face value.

Zero Coupon bonds (ZCBs) : ZCBs are available at a discount to their face value. There is no interest paid on

these instruments but on maturity the face value is redeemed from the RBI. A bond of face value 100 will be

available at a discount say at Rs 80 and the date of maturity is after two years. This implies an interest rate on

the instrument. When the bonds are redeemed Rs 100 will be paid. The securities do not carry any coupon or

interest rate i.e. unlike dated securities no interest is paid out every year. When the bond matures the face value

is returned. The difference between the issue price (discounted price) and face value is the return on this

security.

3.2. Private Corporate Debt Market

The private corporate debt market provides an alternative means of long-term resources (alternative to financing

by banks and financial institutions) to corporate. Corporates in India have traditionally relied heavily on

borrowings from banks and financial institutions (FIs) to finance their investments. Equity financing was also

used, but largely during periods of surging equity prices. However, bond issuances by companies have remained

limited in size and scope. Given the huge funding requirements, especially for long-term infrastructure projects,

the private corporate debt market has a crucial role to play and needs to be nurtured.


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Significance of the Corporate Debt Market : From the perspective of developing countries, a liquid corporate

bond market can play a critical role in supporting economic development as it supplements the banking system

to meet the requirements of the corporate sector for long-term capital investment and asset creation. It provides

a stable source of finance when the equity market is volatile. Further, with the decline in the role of specialized

financial institutions, there is an increasing realization of the need for a well-developed corporate debt market as

an alternative source of finance. Corporate bond markets can also help firms reduce their overall cost of capital

by allowing them to tailor their asset and liability profiles to reduce the risk of maturity and currency

mismatches. A private corporate bond market is important for nurturing a credit culture and market discipline.

In many Asian economies, banks have traditionally been performing the role of financial intermediation. The

East Asian crisis of 1997 underscored the limitations of weak banking systems. The primary role of a banking

system is to create and maintain liquidity that is needed to finance production within a short-term horizon. The

crisis showed that over-reliance on bank lending for debt financing exposes an economy to the risk of a failure

of the banking system. Banking systems, therefore, cannot be the sole source of long-term investment capital

without making an economy vulnerable to external shocks. In times of financial distress, when banking sector

becomes vulnerable, the corporate bond markets act as a buffer and reduce macroeconomic vulnerability to

shocks and systemic risk through diversification of credit and investment risks. By contributing to a more

diverse financial system, a bond market can promote financial stability.

State of the Corporate Debt Market in India : In India, banks and FIs have traditionally been the most

important external sources of finance for the corporate sector. India has traditionally been a predominantly

bank-based system. This picture is generally characteristic of most Asian economies.

In the 1990s, the equity market in India witnessed a series of reforms, which helped in bringing it on par with

international standards. However, the corporate debt market has not been able to develop due to lack of market

infrastructure and a comprehensive regulatory framework. For a variety of reasons, the issuers resorted to

‘private placement’ of bonds as opposed to ‘public issues’ of bonds. The issuances of bonds to the public have

declined sharply since the early 1990s. From an annual average of Rs.7,513 crore raised by way of public debt

issues during 1990-95, the mobilization fell to Rs.5,526 crore during 1995-2000 and further to Rs.4,433 crore

during 2000-05. In 2005-06, the mobilisation of funds by public issue of debt shrank to a measly sum of Rs.245

crore, while the resources raised by way of private placement of debt swelled to Rs.96,369 crore. The share of

resources raised by private placements in total debt issues correspondingly increased from 69.1 per cent in 1995-

96 to 99.8 per cent in 2005-06. This trend continued in 2006-07 also & further.

3.3. Private Placement Market in India

In private placement, resources are raised privately through arrangers (merchant banking intermediaries) who

place securities with a limited number of investors such as financial institutions, corporate and high net worth

individuals. Under Section 81 of the Companies Act, 1956, a private placement is defined as ‘an issue of shares

or of convertible securities by a company to a select group of persons’. An offer of securities to more than 50

persons is deemed to be a public issue under the Act.

Corporate access the private placement market because of its certain inherent advantages. First, it is a cost and


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time-effective method of raising funds. Second, it can be structured to meet the needs of the entrepreneurs.

Third, private placement does not require detailed compliance of formalities as required in public or rights

issues.

The private placement market was not regulated until May 2004. In view of the mushrooming growth of the

market and the risk posed by it, SEBI prescribed that the listing of all debt securities, irrespective of the mode of

issuance, i.e., whether issued on a private placement basis or through public/rights issue, shall be done through a

separate listing agreement. The Reserve Bank also issued guidelines to the financial intermediaries under its

purview on investments in non-SLR securities including, private placement. In June 2001, boards of banks were

advised to lay down policy and prudential limits on investments in bonds and debentures, including cap on

unrated issues and on a private placement basis. The policy laid down by banks should prescribe stringent

appraisal of issues, especially by non-borrower customers, provide for an internal system of rating, stipulate

entry-level minimum ratings/quality standards and put in place proper risk management systems.

The private placement market in India, which shot into prominence in the early 1990s, has grown sharply in

recent years. The resource mobilization by way of private placements increased from Rs.13,361 crore in 1995-

96 to Rs.96,369 crore in 2005-06, recording an average annual growth of over 25 per cent during the decade.

Further, the private placement market appears to be growing at the expense of the public issues market, which

has some distinct advantages in the form of wider participation by the investors and, thus, diversification of the

risk.

With the intent of the development of the corporate bond market along sound lines, some initiatives were taken

by the SEBI in the past few years. These measures largely aimed at improving disclosures in respect of privately

placed debt issues.

4. REGULATORY FRAMEWORK

The Securities and Exchange Board of India (SEBI) is the regulatory authority established under the SEBI Act

1992, in order to protect the interests of the investors in securities as well as promote the development of the

capital market. It involves regulating the business in stock exchanges; supervising the working of stock brokers,

share transfer agents, merchant bankers, underwriters, etc; as well as prohibiting unfair trade practices in the

securities market.


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Securities and Exchange Board of India

SEBI Bhavan, Mumbai headquarters

4.1. History

Initially SEBI was a non statutory body without any statutory power. However in 1995, the SEBI was given

additional statutory power by the Government of India through an amendment to the securities and Exchange

Board of India Act 1992. In April, 1998 the SEBI was constituted as the regulator of capital market in India

under a resolution of the Government of India.

4.2. The basic objectives of the Board were identified as :

to protect the interests of investors in securities;

to promote the development of Securities Market;

to regulate the securities market and

For matters connected therewith or incidental thereto.

4.3. Responsibilities

SEBI has to be responsive to the needs of three groups, which constitute the market:


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the issuers of securities

the investors

The market intermediaries.

4.4. Role Functions of SEBI

The role or functions of SEBI are discussed below :

To protect the interests of investors through proper education and guidance as regards their investment in

securities. For this, SEBI has made rules and regulation to be followed by the financial intermediaries such as

brokers, etc. SEBI looks after the complaints received from investors for fair settlement. It also issues booklets

for the guidance and protection of small investors.

To regulate and control the business on stock exchanges and other security markets. For this, SEBI keeps

supervision on brokers. Registration of brokers and sub-brokers is made compulsory and they are expected to

follow certain rules and regulations. Effective control is also maintained by SEBI on the working of stock

exchanges.

To provide suitable training to intermediaries.

To register and regulate the working of mutual funds including UTI (Unit Trust of India). SEBI has made rules

and regulations to be followed by mutual funds. The purpose is to maintain effective supervision on their

operations & avoid their unfair and anti-investor activities.

To promote self-regulatory organization of intermediaries. SEBI is given wide statutory powers. However, self-

regulation is better than external regulation. Here, the function of SEBI is to encourage intermediaries to form

their professional associations and control undesirable activities of their members.

To regulate and control the fraudulent & unfair practices which may harm the investors and healthy growth of

capital market.

To issue guidelines to companies regarding capital issues. Separate guidelines are prepared for first public issue

of new companies, for public issue by existing listed companies and for first public issue by existing private

companies. SEBI is expected to conduct research and publish information useful to all market players (i.e. all

buyers and sellers).

To conduct inspection, inquiries & audits of stock exchanges, intermediaries and self-regulating organizations

and to take suitable remedial measures wherever necessary. This function is undertaken for orderly working of

stock exchanges & intermediaries.

To restrict insider trading activity through suitable measures. This function is useful for avoiding undesirable

activities of brokers and securities scams.


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4.5. Powers

For the discharge of its functions efficiently, SEBI has been invested with the necessary powers which are :

To approve by laws of stock exchanges.

To require the stock exchange to amend their by laws.

Inspect the books of accounts and call for periodical returns from recognized stock exchanges.

Inspect the books of accounts of financial intermediaries.

Levy fees and other charges on the intermediaries for performing its functions.

Delegate powers exercisable by it.

Prosecute and judge directly the violation of certain provisions of the companies Act.

5. EFFECT OF INFLATION ON CAPITAL MARKET

Prices of stocks are determined by the net earnings of a company. It depends on how much profit, the company

is likely to make in the long run or the near future. If it is reckoned that a company is likely to do well in the

years to come, the stock prices of the company will escalate. On the other hand, if it is observed from trends that

the company may not do well in the long run, the stock prices will not be high. In other words, the prices of

stocks are directly proportional to the performance of the company. In the event when inflation increases, the

company earnings (worth) will also subside. This will adversely affect the stock prices and eventually the

returns.

Effect of inflation on stock market is also evident from the fact that it increases the rates if interest. If the

inflation rate is high, the interest rate is also high. In the wake of both (inflation and interest rates) being high,

the creditor will have a tendency to compensate for the rise in interest rates. Therefore, the debtor has to avail of

a loan at a higher rate. This plays a significant role in prohibiting funds from being invested in stock markets.

When the government has enough funds to circulate in the market, the cost of goods, services usually go up.

This leads to the decrease in the purchasing power of individuals. The value of money also decreases. In a nut

shell, for the economy to flourish, inflation and stock market ought to be more conforming and predictable.


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6. THE INDIAN CAPITAL MARKET : GROWTH WITH GOVERNANCE

A report released by PricewaterhouseCoopers (PwC) and ASSOCHAM, charts the journey of the Indian capital

market from the pre-reform era to the liberalised market of this decade. The report emphasises the importance of

SEBI, as the supreme regulator of the Indian capital market, and the various steps taken by SEBI to maintain

investor confidence in the market. The report states that while, India has achieved the desired acceptability on

the global map, however the change must continue, to address the challenges of modern day, newer products

needs to be introduced to ensure that innovation continues, while ensuring market best practices to take Indian

capital markets to the next level of globalisation. The imperative need to bring forward 2nd generation financial

sector reforms will propel the Indian capital markets to possibly double digit GDP growth.

The capital market plays a vital role in fostering economic growth of the country, as it augments the quantities

of real savings; increases the net capital inflow from abroad; raises the productivity of investments by improving

allocation of investible funds; and reduces the cost of capital in the economy.

7. REFORMS IN CAPITAL MARKET OF INDIA

The major reform undertaken in capital market of India includes :

Establishment of SEBI : The Securities and Exchange Board of India (SEBI) was established in 1988. It got a

legal status in 1992. SEBI was primarily set up to regulate the activities of the merchant banks, to control the

operations of mutual funds, to work as a promoter of the stock exchange activities and to act as a regulatory

authority of new issue activities of companies.

Establishment of Creditors Rating Agencies : Three creditors rating agencies viz. The Credit Rating

Information Services of India Limited (CRISIL - 1988), the Investment Information and Credit Rating Agency

of India Limited (ICRA - 1991) and Credit Analysis and Research Limited (CARE) were set up in order to

assess the financial health of different financial institutions and agencies related to the stock market activities. It

is a guide for the investors also in evaluating the risk of their investments.

Increasing of Merchant Banking Activities : Many Indian and foreign commercial banks have set up their

merchant banking divisions in the last few years. These divisions provide financial services such as

underwriting facilities, issue organizing, consultancy services, etc.

Rising Electronic Transactions : Due to technological development in the last few years. The physical

transaction with more paper work is reduced. It saves money, time and energy of investors. Thus it has made

investing safer and hassle free encouraging more people to join the capital market.

Growing Mutual Fund Industry : The growing of mutual funds in India has certainly helped the capital

market to grow. Public sector banks, foreign banks, financial institutions and joint mutual funds between the

Indian and foreign firms have launched many new funds. A big diversification in terms of schemes, maturity,

etc. has taken place in mutual funds in India. It has given a wide choice for the common investors to enter the

capital market.

Growing Stock Exchanges : The numbers of various Stock Exchanges in India are increasing. Initially the BSE


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was the main exchange, but now after the setting up of the NSE and the OTCEI, stock exchanges have spread

across the country. Recently a new Inter-connected Stock Exchange of India has joined the existing stock

exchanges.

Investor's Protection : Under the purview of the SEBI the Central Government of India has set up the Investors

Education and Protection Fund (IEPF) in 2001. It works in educating and guiding investors. It tries to protect the

interest of the small investors from frauds and malpractices in the capital market.

Growth of Derivative Transactions : Since June 2000, the NSE has introduced the derivatives trading in the

equities. In November 2001 it also introduced the future and options transactions. These innovative products

have given variety for the investment leading to the expansion of the capital market.

Commodity Trading : Along with the trading of ordinary securities, the trading in commodities is also recently

encouraged. The Multi Commodity Exchange (MCX) is set up. The volume of such transactions is growing at a

splendid rate.

These reforms have resulted into the tremendous growth of Indian capital market.

8. REFERENCES [1] Stock Exchange Official Directory, Vol.2 (9) (iii), Bombay Stock Exchange, Bombay

[2] http://business.mapsofindia.com/india-market/debt.html

[3] Bank for International Settlements, 2006

[4] RBI; National Stock Exchange of India Limited

[5] http://www.equitymaster.com

[6] http://www.businessdictionary.com/definition/stock-exchange.html

[7] http://www.yeahindia.com/c-india1.htm

[8] http://en.wikipedia.org/wiki/Capital_market

[9] http://kalyan-city.blogspot.com/2010/09/reforms-developments-in-indian-capital.html

[10] http://www.pwc.com/in/en/publications/india-captial-market-11-feb.jhtml

[11] http://business.gov.in/business_financing/capital_market.php

[12] http://www.economywatch.com/market/capital-market/indian.html

research communication mba july 2012

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