Essay about Recent Changes in Indian Capital Markets

1712 Words Nov 8th, 2012 7 Pages
Recent changes in Indian Capital markets
Introduction
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). Money markets and capital markets are parts of financial markets. Financial regulators, such as the UK's Financial Services Authority (FSA) or the U.S. Securities and Exchange Commission (SEC), oversee the capital markets in their designated jurisdictions to ensure that
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Changes in the capital market
Four sets of changes in the Indian capital market can be identified which set the market of the twenty-first century different from what obtained earlier. These can be categorized as follows:
»Introduction of new institutions
»Introduction of new instruments
»Changes in administrative control and regulatory framework
»Some recent initiatives
Introduction of New Institutions
The composition of the Indian capital market has undergone a total change. Till very recent times, Bombay Stock Exchange dominated the capital market in India. The daily turnover on the Bombay Stock Exchange (BSE) alone exceeded the total turnover of all other exchanges put together. The BSE with the monopolistic claw like control over the market was posing a severe constraint on the spread and diversification of the capital market culture. It was content with practicing non-transparent time and resource consuming trading practices that failed to evoke confidence among new investors, both in primary and secondary market. Its trading practices were becoming somewhat totally out of tune with the ongoing communication revolution in India and worldwide. In response to this, the most important are the OTCEI and NSE. What is more important is that the NSE has worked as a catalyst of change for other exchanges, which are introducing on-line trading systems.
Along with NSE, mutual funds have also emerged in the country. Different types of mutual

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