Financial Markets in india Abstract
What does the India Financial market comprise of? It talks about the primary market, FDIs, alternative investment options, banking and insurance and the pension sectors, asset management segment as well. With all these elements in the India Financial market, it happens to be one of the oldest across the globe and is definitely the fastest growing and best among all the financial markets of the emerging economies. The history of Indian capital markets spans back 200 years, around the end of the 18th century. It was at this time that India was under the rule of the East India Company. The capital market of India initially developed around Mumbai; with around 200 to 250 securities brokers participating in active trade during the second half of the 19th century.
An Overview of India's Financial Market
Organized financial markets have existed in India for more than a century. Today, markets of varying maturity exist in equity, debt, commodities and foreign exchange. There are 25 stock markets all over the country, the most important of which, are the Bombay Stock Exchange and the National Stock Exchange. The rupee has been convertible on the current account since 1992. International Comparision India's total market capitalization touched Rs 644.67 billion, with an average daily turnover of Rs 2,384 million, in December 1995. India's market capitalization was the 6th highest among the emerging markets. The number of companies listed on the BSE at the end of December 1994 was 4,702. This was more than the aggregate total of companies listed in 9 emerging markets (Malaysia, S.Africa, Mexico, Taiwan, Korea, Philippines, Thailand, Brazil and Chile). The number of companies was also more than the that in developed markets of Japan, UK, Germany, France, Australia, Switzerland, Canada and Hong Kong. India's capital market features a wide variety of capital market instruments. Capital Markets : Previous Year Scenario
The Capital markets remained subdued through most of 1995-96 and the bear phase which began in October 1994, continued through most part of 1995-96. There was a slow down in Foreign Institutional Investors (FIIs) inflow and domestic liquidity conditions were relatively tight. Notably, between April to December 1995, the value of primary issues was marginally higher than the corresponding period last year, despite a downtrend in stock prices and low turnover in stock exchanges. The process of reforms in the capital markets, including the money markets, was further strengthened. Securities and Exchange Board of India (SEBI), was empowered to regulate all market intermediaries. An Ordinance to establish depositories was announced, thus addressing one of the major lacunae in the system. The National Stock Exchange expanded rapidly, providing an incentive to other stock exchanges to accelerate computerization
Scope of the India Financial Market
The financial market in India at present is more advanced than many other sectors as it became organized as early as the 19th century with the securities exchanges in Mumbai, Ahmedabad and Kolkata. In the early 1960s, the number of securities exchanges in India became eight – including Mumbai, Ahmedabad and Kolkata. Apart from these three exchanges, there was the Madras, Kanpur, Delhi, Bangalore and Pune exchanges as well. Today there are 23 regional securities exchanges in India. The Indian stock markets till date have remained stagnant due to the rigid economic controls. It was only in 1991, after the liberalization process that the India securities market witnessed a flurry of IPOs serially. The market saw many new companies spanning across different industry segments and business began to flourish. The launch of the NSE (National Stock Exchange) and the OTCEI (Over the Counter Exchange of India) in the mid 1990s helped in regulating a smooth and transparent form of securities trading. The regulatory body for the Indian capital markets was the SEBI (Securities and Exchange Board of India). The capital markets in India experienced turbulence after which the SEBI came into prominence. The market loopholes had to be bridged by taking drastic measures. Potential of the India Financial Market –
India Financial Market helps in promoting the savings of the economy – helping to adopt an effective channel to transmit various financial policies. The Indian financial sector is well-developed, competitive, efficient and integrated to face all shocks. In the India financial market there are various types of financial products whose prices are determined by the numerous buyers and sellers in the market. The other determinant factor of the prices of the financial products is the market forces of demand and supply. The various other types of Indian markets help in the functioning of the wide India financial sector.
Features of the Financial Market in India:
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India Financial Indices – BSE 30 Index, various sector indexes, stock quotes, Sensex charts, bond prices, foreign exchange, Rupee & Dollar Chart Indian Financial market news Stock News – Bombay Stock Exchange, BSE Sensex 30 index, S&P CNX-Nifty, company information, issues on market capitalization, corporate earning statements Fixed Income – Corporate Bond Prices, Corporate Debt details, Debt trading activities, Interest Rates, Money Market, Government Securities, Public Sector Debt, External Debt Service Foreign Investment – Foreign Debt Database composed by BIS, IMF, OECD,& World Bank, Investments in India & Abroad Global Equity Indexes – Dow Jones Global indexes, Morgan Stanley Equity Indexes Currency Indexes – FX & Gold Chart Plotter, J. P. Morgan Currency Indexes National and Global Market Relations Mutual Funds Insurance Loans Forex and Bullion
If an investor has a clear understanding of the India financial market, then formulating investing strategies and tips would be easier.
Bombay Stock Exchange
The Bombay Stock Exchange Limited (Marathi: मुंबई शेअर बाजार Mumbaī Śhear Bājār) (formerly, The Stock Exchange, Mumbai;
popularly called Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia and has the greatest number of listed companies in the world, with 4700 listed as of August 2007. It is located at Dalal Street, Mumbai, India. On 31 December 2007, the equity market capitalization of the companies listed on the BSE was US$ 1.79 trillion, making it the largest stock exchange in South Asia and the 12th largest in the world. With over 4700 Indian companies listed on the stock exchange, it has a significant trading volume. The BSE SENSEX (SENSitive indEX), also called the "BSE 30", is a widely used market index in India and Asia. Though many other exchanges exist, BSE and the National Stock Exchange of India account for most of the trading in shares in India
Hours of operation
Session Beginning of the Day Session
Timing 8:00 9:00 9:00 15:30 15:30 15:50 15:50 16:05 16:05 -
Position Transfer Session
16:35 16:35 16:50 16:50 17:35 17:35
End of Day Session
The hours of operation for the BSE quoted above are stated in terms of the local time (i.e. GMT +5:30) in Mumbai (Bombay), India. BSE's normal trading sessions are on all days of the week except Saturdays, Sundays and holidays declared by the Exchange in advance. History The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its history to the 1850s, when stockbrokers would gather under banyan trees in front of Mumbai's Town Hall. The location of these meetings changed many times, as the number of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as 'The Native Share & Stock Brokers Association'. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading Sensex futures contracts. The development of Sensex options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform. Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition. Services BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives. It has a nation-wide reach with a presence in more than 359 cities and towns of India. BSE has always
been at par with the international standards. The systems and processes are designed to safeguard market integrity and enhance transparency in operations. BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certification. BSE continues to innovate. In recent times, it has become the first national level stock exchange to launch its website in Gujarati and Hindi to reach out to a larger number of investors. It has successfully launched a reporting platform for corporate bonds in India christened the ICDM or Indian Corporate Debt Market and a unique ticker-cumscreen aptly named 'BSE Broadcast' which enables information dissemination to the common man on the street. In 2006, BSE launched the Directors Database and ICERS (Indian Corporate Electronic Reporting System) to facilitate information flow and increase transparency in the Indian capital market. While the Directors Database provides a single-point access to information on the boards of directors of listed companies, the ICERS facilitates the corporates in sharing with BSE their corporate announcements. BSE also has a wide range of services to empower investors and facilitate smooth transactions: Investor Services The Department of Investor Services redresses grievances of investors. BSE was the first exchange in the country to provide an amount of Rs.1 million towards the investor protection fund; it is an amount higher than that of any exchange in the country. BSE launched a nationwide investor awareness programme- 'Safe Investing in the Stock Market' under which 264 programmes were held in more than 200 cities. BSE On-line Trading (BOLT) BSE On-line Trading (BOLT) facilitates on-line screen based trading in securities. BOLT is currently operating in 25,000 Trader Workstations located across over 359 cities in India. BSEWEBX.com In February 2001, BSE introduced the world's first centralized exchange-based Internet trading system, BSEWEBX.com. This initiative enables investors anywhere in the world to trade on the BSE platform.
Surveillance BSE's On-Line Surveillance System (BOSS) monitors on a real-time basis the price movements, volume positions and members' positions and real-time measurement of default risk, market reconstruction and generation of cross market alerts. BSE Training Institute (BTI) BTI imparts capital market training and certification, in collaboration with reputed management institutes and universities. It offers over 40 courses on various aspects of the capital market and financial sector. More than 20,000 people have attended the BTI programmes
National Stock Exchange of India
The National Stock Exchange of India Limited (NSE), is a Mumbaibased stock exchange. It is the biggest stock exchange in India and the third biggest in the world in terms of amounts of transactions. NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate groups. As of 2006, the NSE VSAT terminals, 2799 in total, cover more than 1500 cities across India. In July 2007, the NSE had a total market capitalization of 42,74,509 crore INR making it the second-largest stock market in South Asia in terms of market-capitalization.
The National Stock Exchange of India was promoted by leading Financial institutions at the behest of the Government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956. National Stock Exchange of India commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000. Innovations
The NSE has remained in the lead of modernization of India's capital and financial markets, and its pioneering efforts include:
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Being the first national, anonymous, electronic limit order book (LOB) exchange to trade securities in India. Since the success of the NSE, existent market and new market structures have followed the "NSE" model. Setting up the first clearing corporation "National Securities Clearing Corporation Ltd." in India. National Securities Clearing Corporation Ltd. was a landmark in providing novation on all spot equity market (and later, derivatives market) trades in India. Co-promoting and setting up of National Securities Depository Limited, first depository in India. Setting up S&P CNX Nifty. NSE pioneered commencement of Internet Trading in February 2000, which led to the wide popularization of the NSE in the broker community. Being the first exchange that, in 1996, proposed exchange traded derivatives, particularly on an equity index, in India. After four years of policy and regulatory debate and formulation, the NSE was permitted to start trading equity derivatives three days after the BSE. Being the first exchange to trade ETFs (exchange traded funds) in India. NSE has also launched the NSE-CNBC-TV18 media centre in association with CNBC-TV18, a leading business news channel in India.
Certifications NSE also conducts online examination and awards certifications, under its programmes of NSE's Certification in Finanacial Markets (NCFM). Currently, certifications are available in 9 modules, covering different sectors of financial and capital markets. The branches of the NSE are located throughout India.
References and Readings 1. http://www. Rbi.in 2. http://www.sebiindia.com 3. http://bse.com
4. http.//nse.com 5. http://www.Indianfinancialmarkets.com