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43069863-Equity-Market

43069863-Equity-Market

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Published by: madapana on Jan 22, 2011
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EQUITY MARKET
DEFINITION
Equity market, or stock market, is a system through which company sharesare traded.
Equity market
is a public market for the trading of companystock (shares) and derivatives at an agreed price; these are securities listedon a stock exchange as well as those only traded privately. The equitymarket offers investors an opportunity to participate in a company's successthrough an increase in its stock price.An equity market is a public market for the trading of company equity stock and derivatives at an agreed price. The equity market which comprises of  primary market as well as secondary market is one of the most importantsources for companies to raise money. This allows businesses to be publiclytraded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities.This is an attractive feature of investing in stocks, compared to other lessliquid investments such as real estate.The worldwide equity market grew rapidly in the late 20th century, risingfrom $1 trillion in market capitalization in 1974 to $16 trillion in 1997. Theworldwide equity market benefited from freer markets, government privatizations, and companies seeking an alternative to debt
.
 
 
 
Indian Equity Market
 
The Indian Equity Market is more popularly known as the Indian Stock Market
. The Indian equity market has become the third biggest afterChina 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 March2009, the market capitalization was around $598.3 billion (Rs 30.13 lakhscrore) which is one-tenth of the combined valuation of the Asia region. Themarket was slow since early 2007 and continued till the first quarter of 2009.A stock exchange has been defined by the Securities Contract (Regulation)Act, 1956 as an organization, association or body of individuals establishedfor regulating, and controlling of securities. The Indian equity marketdepends on three factors -
y
 
F
unding into equity from all over the world
y
 
Corporate houses performance
y
 
MonsoonsThe stock market in India does business with two types of fund namely private equity fund and venture capital fund. It also deals in transactionswhich are based on the two major indices - Bombay Stock Exchange (BSE)and National Stock Exchange of India Ltd (NSE).The equity market is also affected through trade integration policy. Thecountry has advanced both in foreign institutional investment (
F
II) and tradeintegration since 1995. This is a very attractive field for making profit for 
 
medium and long term investors, short-term swing and position traders andvery intraday traders.The Indian market has 22 stock exchanges. The larger companies areenlisted with BSE and NSE. The smaller and medium companies are listedwith OTCEI (Over The counter Exchange of India). The functions of theEquity Market in India are supervised by SEBI (Securities Exchange Boardof India).
HISTORY
The history of the Indian equity market goes back to the 18th century whensecurities of the East India Company were traded. Till the end of the 19thcentury, the trading of securities was unorganized and the main tradingcenters were Calcutta (now Kolkata) and Bombay (now Mumbai
 )
.
The Indian Equity Market was not well organized or developed beforeindependence. After independence, new issues were supervised. The timing,floatation costs, pricing, interest rates were strictly controlled by theController of Capital Issue (CII).
F
or four and half decades, companies weredemoralized and not motivated from going public due to the rigid rules of the Government. In the 1950s, there was uncontrollable speculation and themarket was known as 'Satta Bazaar'. Speculators aimed at companies likeTata Steel, Kohinoor Mills, Century Textiles, Bombay Dyeing and NationalRayon. The Securities Contracts (Regulation) Act, 1956 was enacted by theGovernment of India.
F
inancial institutions and state financial corporationwere developed through an established network.In the 60s, the market was bearish due to massive wars and drought.
F
orward trading transactions and 'Contracts for Clearing' or 'badla' were

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