Origin of Capital Markets Transactions in the second half of the 18th century were limited to debt securities transactions by the East Indian Company. In the 1830s, with the boom of the economy and the creation of textile factories, certain actions of companies appeared. Stock exchanges are any organization of natural persons, incorporated for the purpose of facilitating, regulating, or controlling the activity of buying, selling, or trading in securities.
The Bombay Stock Exchange was founded in 1875 by the Native Share and Share Brokers Association. The Calcutta and Chennai Stock Exchange was founded in 1908 and the Delhi Stock Exchange in 1947. There are 23 stock exchanges in India and their structure varies. Some are limited companies (15), others are limited by guarantees (5) or voluntary non-profit organizations.
During the 1994-1995 period, the number of exchanges increased from 7 to 22. In March 2000, the number of exchanges rose to 23 with the creation of Inter Connect Stock Exchanges of India Limited (ICSEL). The number of listed companies varies from 1125 to 9477, and the market value was from ₹1,971 crore to ₹6,39,575 crore.
Definition of the stock market:
Under the SCR law, stock exchanges are created with the aim of facilitating, regulating, or controlling the activities of buying, selling or trading in securities, incorporated, or not by any of the persons. SCR has said that the government should recognize a stock market.
Under the Act, the titles are:
1. Shares, Scripts, Shares, Bonds, Debentures, Shares or Securities may be marketed in any consolidated company or physical company or other securities of a similar nature;
2. Government instruments or other instruments that may be declared as securities by the central government, and
3. Interest on securities.
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The stock market is considered to be “the essential respect for the capitalist system of the economy. It is essential for the proper functioning of society. It brings together the important capital necessary for the economic development of a country.
It provides the necessary movement for capital and drives the flow of capital to a profitable and successful business. It is the barometer of general economic progress in a country and exerts a powerful and significant influence on depression or the stimulation of commercial activities. It can be defined as “the place or the market where the securities of public limited companies and governmental or semi-governmental institutions are handled”.
Main stock exchange in India:
Bombay Stock Exchange: The Bombay Stock Exchange is one of the oldest stock exchanges in India and Asia and one of the largest stock exchanges in the world. It is said that it is the nerve of the Indian economy, which reveals the health of the economy. The Bombay Stock Exchange achieved a turnover of ₹6,8,028 crore and a market capitalization of ₹9,12,842 crore in 1999-2000. Its activity is not limited to Mumbai. In March 2000, she covered 275 cities with the BOLT network and increased the number of outlets to 3803. It’s daily income increased from ₹11 crores in 1979-80 to ₹84,587 crores in 2000-01.
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It was founded in 1857 and its membership fee at the time was only ₹1. It increased to ₹5 in 1877, ₹1000 in 1896, ₹2,500 in 1916, ₹6,600 in 1929, and ₹62,000 during post World War II period. It was more than ₹3 crore in 1992 and was about 2 crore in 1997.
The BSE introduced the Bombay On-Line Trading (Bolt) system on January 19, 1995. It provides an automated trading function based on quotes. The process of transferring share certificates listed on the ESB from trading in the ring to the bolt system ended on July 3, 1995. The ESB also started trading on the bolt system from 26 June 1995.
National Stock Exchange: The National Stock Exchange(NSE) was incorporated in November 1992 with a share capital of 25 crores. It is funded by IDBI and other term lenders, LIC, GIC, other insurance companies, banks, and financial institutions, namely SBI Capital Markets Limited, Infrastructure Leasing and Financial Services Limited (ILFS), Stock Holding Corp. Ltd. (SHCL), and International Securities Consulting (ISC) of Hong Kong, which has helped in setting up of the NSE. The NSE has a fully automated electronic trading system on the screen, through which it has overcome the geographical barrier. On March 1, 2000, the market capitalization of the NSE was ₹10,20,426 crore.
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- Provide national, efficient, transparent, and fair trading facilities for equities, credit instruments, and hybrids.
- Provide access to investors across the country via an appropriate communication network.
- Execute short settlement cycles and book-entry solution settings.
- Bring the Indian stock market to international markets.
- Improvement of the secondary market for debt securities such as government and corporate securities.
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