CAPITAL MARKETS

Introduction

The stock market offers to fund for the country's economic economy. Along with the Reserve Bank of India, the Securities and Exchange Board of India (SEBI) is the two controlling bodies for the Indian securities market to protect investors and strengthen the microstructure of the Indian capital markets. Through the expanded usage of information technology, stock exchanges' trading platforms are accessible from their trading terminals from anywhere in the world.

Capital Markets in India

India has a reasonable share of the global economy, but India's financial markets or stock markets make up a substantial part of the world economy. For the financial economy, the stock market is important.

There are two major kinds of capital markets. The Primary and Secondary Industries. Companies, governments or public sector agencies may collect funds from bond issues in a primary market. Via an initial public offering (IPO), Alos, Companies will sell new stock and raise capital from that. Thus, the group explicitly buys shares of a company in the main sector. Underwriting is also the method of issuing new securities to buyers.

The securities, shares, and bonds etc. are acquired and exchanged by the clients in the Secondary Markets. The exchanges of stocks such as NSE, BSE etc. are examples of secondary capital markets. In these markets, stock and bonds etc. are exchanged and bought by parties or persons using the technologies of the present time.

Broad Constituents in the Indian Capital Markets

Fundraisers

Fundraisers are companies which, both public and private, raise funds from domestic and foreign sources. The sources below help corporations collect money.

Fund Providers

Fund Providers are companies that make transactions in the financial markets. These can be classified as owners, institutional and individual owners, both domestic and international. The list contains main market issue subscribers, secondary market owners, brokers, speculators, FIIs / sub-accounts, hedge funds, venture capital companies, NRIs, investors in the ADR / GDR, etc.

Intermediaries

Intermediaries are financial service providers, including traders, sub-brokers, financiers, merchant bankers, underwriters, depository officers, registrars and transfer agents, FIIs / sub-accounts, investment funds, venture capital funds, portfolio officers, custodians, etc.

Organizations

Different institutions include organizations such as MCX-SX, BSE, NSE, other state stock exchanges, and the two National Securities Depository Limited (NSDL) and Central Securities Depository Limited (CSDL) depositories.

Market Regulators

The Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Department of Company Affairs (DCA) are Market Regulators.

Role and Importance of Capital Market in India

The stock market is of vital importance for the development of stock. Effective capital accumulation is important for speedy economic growth. In an economic growth, the importance of the stock market is explained below:

Mobilization of Savings and Acceleration of Capital Formation:

The importance of capital markets is self-evident in developing countries like India. Various types of securities in this economy are helping to mobilize savings from diverse segments of the population. The twin characteristics of equal return and stock market liquidity are substantial rewards for people to invest in securities. This increases capital development in the country.

Raising Long-Term Capital

The presence of a stock exchange requires permanent capital to be collected by corporations. Investors are not in a position to devote their assets for a permanent period, but businesses indefinitely need funding. The stock exchange resolves this interest gap by giving buyers an option to purchase or sell their shares, while the company's permanent capital remains untouched.

Promotion of Industrial Growth

Stock markets are a centralized marketplace in which commodities are passed to the economy's business sector. Such an institution's presence allows individuals to engage in efficient networks. It thus boosts the country's industrial growth and economic development through the mobilization of investment funds for corporate securities.

Ready and Continuous Market

The stock exchange has a single, convenient location where shares can be conveniently purchased and traded by buyers and sellers. As compared to other commodities, fast marketability invests in shares more liquid.

Technical Assistance

Technical assistance is a significant scarcity faced by entrepreneurs in developed countries. Financial intermediaries in the capital sector play a significant role by delivering consultancy services in the preparation of feasibility studies, assessing development opportunities and educating entrepreneurs in project management.

Reliable Guide to Performance

The capital market serves as a credible reference to the company's success and financial status, thus promoting productivity.

Proper Channelization of Funds

The predominant market price of protection and relative yield are the leading forces for individuals in a given business to channel their funds. This guarantees the successful use, in the public interest, of funds.

Provision of Variety Of Services

A variety of services are offered by financial institutions working in the stock market, such as the awarding of long-term and medium-term loans to companies, the provision of underwriting facilities, assistance in business development, investment in equity investments, specialist advice, etc.

Development of Backward Areas

Capital Markets provide funding in backward regions for programmes. The industrial growth of poor areas is thereby encouraged. Development programmes in backward and rural areas are also funded with long-term funds.

Foreign Capital

Capital markets allow for the production of international capital. Indian businesses, through bonds and other assets, can raise foreign funds from overseas markets. The government also liberalized the country's Foreign Direct Investment ( FDI). This brings in not only global resources but also foreign technology that is important for the country's economic growth.

Easy Liquidity

Investors may sell off their assets with the aid of secondary markets and turn them into liquid assets. Commercial banks often encourage borrowers, if and when they need money, to withdraw their deposits.