A  PRESENTATION ON “EFFECT OF REFORMS ON STOCK MARKETS”
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PRESENTED BY

PETHE SARANG S.  RUPESH KUMAR S.  HARSHA S.  SANGAY D. PRAJWAL MAN SHRESHTHA  SUBBA REDDY M.V.

AGENDA…..
• • • • • CAPITAL MARKETS. HISTORY. NEEDS OF REFORMS. STOCK MARKET REFORMS. EFFECT OF REFORMS.

INTRODUCTION TO FINANCIAL MARKETS
Capital markets: Raise of long term funds for a period longer than a year Primary market: Deals with new issue of securities Secondary market: Deals with the existing securities

HISTORY OF STOCK MARKET AND PRE-REFORM SCENARIO

 During 18th century the trading of securities was done as loan trading.  The Indian Stock Exchange came into scenario with the establishment of Bombay Stock Exchange in 1887.  In 1956 Government came with the new legislation called Securities Contract Regulation Act (SCRA).  Before 1991 the Indian market was dominated by scrip of new issue market.  Unfair practices involved due to no prohibition on insider trading.  Till 1990 the nature of Indian Stock Market was not too liberal and there was restriction on foreign investment.  During this period the Indian economic condition was worse due to reduction on capital inflow.

NEED FOR REFORMS
In 1991, • Foreign exchange reserves was merely Rs. 2500 crores. • Fiscal Deficit estimated more than 8 % of GDP which was 6 % in 1980s and 4 % in 1970s • Internal public debt accumulated to 55 % of GDP. • Interest payments was 4 % of GDP. • Price Index increased by 13.6 %. • Govt. want to recover from this situation and thus reforms came into pictures. Source: finmin.nic.in

STOCK MARKET REFORMS

• Screen Based Trading through NSE • Securities and Exchange Board of India (SEBI) • Introduction of derivatives products Index/Stocks futures and options • Dematerialization of shares.
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Source: sebi.com

CONTD….
 It was after 1991 economic reforms that the government gave statutory recognition to SEBI in 1992  It focuses on replacing the traditional brokers by the automated electronic system.  After 1991 govt. allowed foreign investors to invest in local share mkt. where as the local people can invest in foreign stock market too. It comes under SEBI Foreign Institutional Investors Regulation 1995.  Providing Credit rating agencies.

EFFECTS OF STOCK MARKET REFORMS
• Capital issue control act abolished. • Trading system. • Removal of badla system. • FDI & FPI. • Fund raising by Indian company in India and abroad. • Checking volatility. • Opening of mutual funds. • Setting up of SEBI. • Source: sebi.com

CHANGES IN NIFTY PRICES

Source: nseindia.com

THANK YOU…

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