Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
0Activity
0 of .
Results for:
No results containing your search query
P. 1
Indian Capital Market...Take a Look

Indian Capital Market...Take a Look

Ratings: (0)|Views: 3|Likes:
Published by gowthamsri

More info:

Categories:Types, Business/Law
Published by: gowthamsri on Mar 12, 2012
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as DOCX, PDF, TXT or read online from Scribd
See more
See less

03/12/2012

pdf

text

original

 
Evolution
Indian Stock Markets are one of the oldest in Asia. Its history dates back tonearly 200years ago. The earliest records of security dealings in India are meagreand obscure. TheEast India Company was the dominant institution in those days andbusiness in its loansecurities used to be transacted towards the close ofthe eighteenth century.By 1830's business on corporate stocks and shares in Bankand Cotton presses took place inBombay. Though the trading list was broader in1839, there were only half a dozen brokersrecognized by banks and merchantsduring 1840 and 1850.The 1850's witnessed a rapid development of commercialenterprise and brokerage businessattracted many men into the field and by 1860the number of brokers increased into 60.In 1860-61 the American Civil War brokeout and cotton supply from United States ofEurope was stopped; thus, the'Share Mania' in India begun. The number of brokersincreased to about 200 to250. However, at the end of the American Civil War, in 1865, adisastrous slumpbegan (for example, Bank of Bombay Share which had touched Rs 2850could onlybe sold at Rs. 87).At the end of the American Civil War, the brokers who thrivedout of Civil War in 1874,found a place in a street (now appropriately called asDalal Street) where they wouldconveniently assemble and transact business. In1887, they formally established in Bombay,the "Native Share and Stock Brokers'Association" (which is alternatively known as " TheStock Exchange "). In 1895, theStock Exchange acquired a premise in the same street andit was inaugurated in1899. Thus, the Stock Exchange at Bombay was consolidated.
Other leading cities in stock market operations
Ahmedabad gained importance next to Bombay with respect to cotton textileindustry.After 1880, many mills originated from Ahmedabad and rapidly forgedahead. As new millswere floated, the need for a Stock Exchange at Ahmedabad wasrealised and in 1894 thebrokers formed "The Ahmedabad Share and StockBrokers' Association".What the cotton textile industry was to Bombay andAhmedabad, the jute industry was toCalcutta. Also tea and coal industries werethe other major industrial groups in Calcutta.After the Share Mania in 1861-65, inthe 1870's there was a sharp boom in jute shares,which was followed by a boomin tea shares in the 1880's and 1890's; and a coal boombetween 1904 and 1908. OnJune 1908, some leading brokers formed "The Calcutta StockExchangeAssociation".In the beginning of the twentieth century, the industrial revolutionwas on the way in Indiawith the Swadeshi Movement; and with the inauguration ofthe Tata Iron and Steel Company Limited in 1907, an important stage in industrial
 
advancement under Indian enterprise wasreached.Indian cotton and jute textiles,steel, sugar, paper and flour mills and all companiesgenerally enjoyed phenomenalprosperity, due to the First World War.In 1920, the then demure city of Madrashad the maiden thrill of a stock exchangefunctioning in its midst, under the nameand style of "The Madras Stock Exchange" with 100members. However, when boomfaded, the number of members stood reduced from 100 to3, by 1923, and so itwent out of existence.In 1935, the stock market activity improved, especially inSouth India where there was arapid increase in the number of textile mills andmany plantation companies were floated. In1937, a stock exchange was once againorganized in Madras - Madras Stock ExchangeAssociation (Pvt) Limited. (In 1957the name was changed to Madras Stock ExchangeLimited).Lahore Stock Exchangewas formed in 1934 and it had a brief life. It was merged with thePunjab StockExchange Limited, which was incorporated in 1936.
Indian Stock Exchanges - An Umbrella Growth
The Second World War broke out in 1939. It gave a sharp boom which wasfollowed by aslump. But, in 1943, the situation changed radically, when India wasfully mobilized as asupply base.On account of the restrictive controls on cotton,bullion, seeds and other commodities,those dealing in them found in the stockmarket as the only outlet for their activities. Theywere anxious to join the tradeand their number was swelled by numerous others. Many newassociations wereconstituted for the purpose and Stock Exchanges in all parts of thecountry werefloated.The Uttar Pradesh Stock Exchange Limited (1940), Nagpur StockExchange Limited (1940)and Hyderabad Stock Exchange Limited (1944) wereincorporated.In Delhi two stock exchanges - Delhi Stock and Share Brokers'Association Limited and theDelhi Stocks and Shares Exchange Limited - werefloated and later in June 1947,amalgamated into the Delhi Stock ExchnageAssociation Limited.
Post-independence Scenario
Most of the exchanges suffered almost a total eclipse during depression. LahoreExchangewas closed during partition of the country and later migrated to Delhi andmerged withDelhi Stock Exchange.Bangalore Stock Exchange Limited wasregistered in 1957 and recognized in 1963.Most of the other exchanges languished till 1957 when they applied to theCentralGovernment for recognition under the Securities Contracts (Regulation)Act, 1956. OnlyBombay, Calcutta, Madras, Ahmedabad, Delhi, Hyderabad andIndore, the well establishedexchanges, were recognized under the Act. Some
 
of the members of the other Associationswere required to be admitted bythe recognized stock exchanges on a concessional basis,but acting on the principleof unitary control, all these pseudo stock exchanges wererefused recognition bythe Government of India and they thereupon ceased to function.Thus, during earlysixties there were eight recognized stock exchanges in India (mentionedabove).The number virtually remained unchanged, for nearly two decades. Duringeighties,however, many stock exchanges were established: Cochin Stock Exchange(1980), UttarPradesh Stock Exchange Association Limited (at Kanpur, 1982), andPune Stock ExchangeLimited (1982), Ludhiana Stock Exchange Association Limited(1983), Gauhati StockExchange Limited (1984), Kanara Stock Exchange Limited (atMangalore, 1985), MagadhStock Exchange Association (at Patna, 1986), JaipurStock Exchange Limited (1989),Bhubaneswar Stock Exchange Association Limited(1989), Saurashtra Kutch Stock ExchangeLimited (at Rajkot, 1989),Vadodara Stock Exchange Limited (at Baroda, 1990) and recentlyestablishedexchanges - Coimbatore and Meerut. Thus, at present, there are totally twentyonerecognized stock exchanges in India excluding the Over The Counter Exchangeof IndiaLimited (OTCEI) and the National Stock Exchange of India Limited(NSEIL).The Table given below portrays the overall growth pattern of Indian stockmarkets sinceindependence. It is quite evident from the Table that Indian stockmarkets have not onlygrown just in number of exchanges, but also in number oflisted companies and in capital oflisted companies. The remarkable growth after1985 can be clearly seen from the Table,and this was due to the favouringgovernment policies towards security market industry.
Trading Pattern of the Indian Stock Market
Trading in Indian stock exchanges are limited to listed securities of publiclimitedcompanies. They are broadly divided into two categories, namely, specifiedsecurities(forward list) and non-specified securities (cash list). Equity shares ofdividend paying,growth-oriented companies with a paid-up capital of atleastRs.50 million and a marketcapitalization of atleast Rs.100 million and having morethan 20,000 shareholders are,normally, put in the specified group and the balancein non-specified group.Two types of transactions can be carried out on the Indianstock exchanges: (a) spotdelivery transactions "for delivery and payment withinthe time or on the date stipulatedwhen entering into the contract which shall notbe more than 14 days following the date ofthe contract" : and (b) forwardtransactions "delivery and payment can be extended byfurther period of 14 dayseach so that the overall period does not exceed 90 days from thedate of thecontract". The latter is permitted only in the case of specified shares. Thebrokers

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->