History of capital market:

For the first time in 1171, Republic of Venice a forced loan from the citizens of the country. Such
debts paid 5% rate of interest per year and had an indefinite maturity date . These debts were
known as prestigious bonds . The Bonds were regarded as waivable instruments that could be
bought and sold and hence in this way the bond market had begun.

History of share market in world economy:

The Dutch East India company in Amsterdam was formed with the shares readily tradable. The
company paid an average dividend of 16 % per year from 1600 to 1650

Timeline of Indian stock market:

18th century: East India company was a dominant Institution and the business in loan securities
gained full momentum.

1830 1840 and 1850 : Business on corporate stocks and shares started in Bombay and brokers
started getting the recognition from banks and merchants and the brokerage business was
widened.

1860: The shear Mania concept begin as due to tremendous increase in Indian exports to UK.
Many banks and companies were formed to handle the finance related to this trade.

1874: Share trading business started to grow rapidly and the brokers used tog gather at a street
in Bombay for the purpose of transacting business.
Hence an association was formed by this brokers named as a native share and stock brokers
Association.

1894: The Ahmedabad share and stock brokers Association was established.

1908 Calcutta stock exchange Association was formed

1920 Madras stock exchange was formed

1934 Lahore stock exchange was formed

1936 merger of Lahore and Punjab Stock Exchange

1940 up and Nagpur stock exchange were formed

1944 the Hyderabad stock exchange was found.

1947 The Delhi stock exchange Association Limited was formed

- in 1928 the plot of the land on which the BSE building now stands was acquired and a building
was constructed and occupied in 1930.

- in 1956 the Government of India recognised the Bombay Stock Exchange as the first stock
exchange in the country under security contract Regulation Act.

Meaning of capital market:

Capital market is a place where people buy and sell securities which includes shares
debentures and bonds

Definition of capital market:

The capital market is a complex network of Institutions investment and practices with establish
links between the demand and supply of different types of capital gains.

Role of capital market:

1 promotes capital formation

2) Promotes economic growth
3 generates employment
4 generate foreign capital
5 provides excellent investment opportunity
6 provides a bridge between investors and companies
7 promotes industrial growth

Bank of England helped in bringing gilt edge Bank bonds to the market

There are 26 stock exchanges in India

Gilt edged market: It is the market for government securities are the securities guaranteed by
the government.

This market deals in bonds which are the most reliable debt instruments as the government can
not default on its payment obligations and hence bonds are regarded as a risk free instruments.

RBI manages and tireless public debt operations of the centre and the state government

Meaning of Bond: Indian securities market, the term Bond denotes the debt investment issued
by the central and the state government and public sector organisations

Ab bond is a negotiable instrument or certificate which entitles the holder for repayment of the
principal sum plus interest
Bond holder are the creditors who have power claim over common and preferred stockholders
regarding the income and asset of the company or organisation

Industrial securities market: The market deals with securities of Corporate firms. The securities
are shares and debentures which are traded in primary issue market and secondary issue
market of Stock Exchange.

Meaning of shares: Share is Defined by section 2(46) of Companies Act 1956 2 means- share
capital of a company includes the stock except where distinction between stock and share is
expressed or implied.

Debentures: The definition of debentures is contained in section 2(30) of Companies Act 2013.

The definition of debenture as contained in section 2(30) of the Companies Act 2013 does not
explain the term debentures. It reads ' debentures include stocks bonds or any other securities
of a company where the issue of the dependent promises to the debenture holder to repay the
loan amount on a specified maturity rate'

Primary issue market: Market for new and fresh issue . It is the door way for corporate
interprises to enter the capital market where the demand and supply of New Capital funds are
brought together.

Secondary issue market: It is the share market that trades in securities that have been already
issued in its initial public offering and have been already sold to public in primary market.

Stock Exchange: Stock exchange constitutes such institutional arrangement where securities
issued by public bodies, joint stock companies and other corporate firms are traded.

Bombay Stock Exchange: It is a voluntary in non-profit making Association of broker members .

On March 1995 she had introduced open trading system and online trading.

National Stock Exchange: Set up in 1992 .

It is an electronic screen based system where the members have equal access and equal
opportunity of trade irrespective of their location in different parts of the country.
NSE was the first stock exchange to grant permission to brokers for internet trading.

Otcei: Over the counter exchange in India

It was incorporated in 1990 under section 25 of Companies Act 1956 .
It was set up to provide small and medium enterprises access to capital market for raising
Finance.
It allows companies with paid up capital less than 30 lacs to get enlisted.
Merchant bankers: As per s e b i( merchant banker Regulation Act 1992) any person who is
engaged in business of issue management either by making arrangements regarding selling
buying or subscribing to securities As a manager consultant advisor or underwriter or rendering
corporate advisory services in relation to such issue management that person will be known as
merchant banker for the company.
Example: Kotak Mahindra Bank - Cafe Coffee Day, Indian Oil, Axis Bank
JP Morgan- Quick Heal

Venture capitalist: Ab venture capitalist is an investor( person or investment firm) who provides
capital to a Startup and also provides simultaneous inputs of skill design marketing strategy
management to those projects of Technology which poses strong potential for growth.
Example- helion venture partners- Yepme Flipkart Myntra BookMyShow MakeMyTrip
Jeremy Lewis- best investor in Facebook and the largest investor in Pinterest

Leasing companies: Meaning of leasing companies for lease finance given by the
cholamandalam investment and Finance co Limited Madras -
' the asset required by the user company( borrower) is purchased by the financing
companies( leasing company) and is let on lease over a period on terms and rentals mutually
agreed between them.
Example: First leasing company of India- chidambaram group ( Madras)
HDFC limited

Mutual funds: A mutual fund is a collective investment which was formed with the specific object
of raising money from the large number of individuals and investing it according to the
prescribed objective with the benefits accured to be shared among the investors in proportion of
their investment.
A mutual fund is a trust registered with SEBI where the funds are invested in equity shares and
Government Bonds. The trustees are responsible for ensuring the safety of the investor. Mutual
fund of India was the unit Trust of India ( UTI) which came into existence in 1964.