Are you willing to know the detailed information about Capital market in India? Here is the article which provides you the clean and clear information about the Capital market in India. It is a Market, where buyers and sellers engage in trade of financial securities Such as bonds and stocks, etc. These Buyers and sellers are undertaken by some of the individuals and Institutions. This type of markets trade in Long-term Securities.
It Provides the support to the system of capitalism of the country. The Securities and Exchange Board of India, along with the Reserve Bank of India are the two regulatory for the Indian Security Market, To protect Investors and Improve the Microstructure of the Capital of Markets in India. The Capital Markets are of two types, They are:-
Primary Markets:- In these markets, companies, Governments (or) Public Sector Institutions can raise the funds through bond issues. Corporations can sell new stocks through initial public Offerings and Raise Money through that. Thus the way Private Market directly buys shares of a company.
Secondary Markets:- In these markets, the stocks, share and the bonds, etc. which were bought and sold by the customers. In these types of markets, Using the technology of the current time, the shares and bonds, etc. are sold and purchased by parties (or) people.
These are some of the board constitutions in the Capital Market in India, they are:-
Fund Raisers:- These are the Companies that raise funds from domestic and also foreign sources, Both in the Public and Private Sources, these help the companies to raise fund.
Fund Providers:- These are the institutions who invest in the Capital Markets. They can be classified ad Domestic and Foreign Investors, Institutions and Retail Investors.
Intermediaries:- Who acts as mediator link between parties to a business deal, investment decisions, negotiations, etc. They are the Service Providers in the market which includes the Stockbrokers, sub-brokers, Financiers, Merchant Bankers, Underwriters, Depository Participants, register and Transfer agents, sub-accounts, Mutual Funds, Venture capital Funds, Portfolio Managers and Custodians, etc.
Organizations:- It helps us in understanding the organizational structure of the Capital Market in India. These include various institutions such as MCX-SX, BSE, NSE, and many other regional stock exchanges, and also two depositories of National Securities Depositories Limited and Central Securities Depository Limited.
Market Regulators:- They Include the securities and exchange board of India, the RBI and the Department of Company Affairs.
Role and Importance of Capital Market in India:-
This Capital Market has a determining Significance to the Capital Formation. For rapid growth in economic development, the Sufficient formation of economic growth is necessary. Thes are some of the significances in the Capital Market for Economic Development, they are:-
Mobilization of savings and acceleration of Capital Formation:- The Importance of Capital Market is Manifest/ Evident. In this market, there were various types of securities which helps to mobilize savings from various sectors of the population. These are the twin features of reasonable returns and liquidity in stock exchange are definite incentives to the people who invest in securities.
Raising Long-Term Capital:- The reality of the stock exchange allows the company to raise permanent capital. Here the investors cannot issue their funds for a permanent period but the companies require funds permanently.
Promotion of Industrial Growth:- Here in the Central Market, it has the Stock exchange, in which the resources are transferred to the industrial sector of the economy. In this way, it simulates the industrial growth and economic development of the country by mobilizing funds for the investment in the corporate securities.
Ready and Continuous Market:- The stock exchange provides a central convenient place for all the buyers and sellers who can easily purchase and sell securities.
Technical Assistance:- The shortage faced by the tycoons in developing countries is technical assistance. Here in this technical assistance, the financial intermediaries in the capital market play an important role.
Reliable Guide to Performance:- Capital Market serves as a reliable guide for the performance and financial position of corporate, and it also promotes efficiency.
Proper Channelization of funds:- When it overcomes the market price of a security and relative yield are the guiding factors for the people to guide their funds in a particular company.
Provision of Variety of Services:- The financial institutions which are functioning in the capital market that provides a variety of services like, the grant of long-term and medium-term loans to the tycoons, allocations of underwriting facilities, assistance in the promotion of companies, and also participation in equity capital, giving expert advice, etc.
Development of Backward Areas:- It provides funds for the projects in backward areas. This type of facilities is for the economic development for the backward areas.
Foreign Capital:- It makes possible to generate foreign capital. Indian firms are able to generate funds from abroad markets by way of bonds and other securities. The government has liberalized FDI(Foreign Direct Investment).
Easy Liquidity:- With the help of the Secondary market, the investors can sell off their holdings and convert them into liquid cash.
