INTRODUCTION
India's capital market is a crucial component of the country's financial system, playing a significant role in mobilizing savings and channeling them toward productive investments. The capital market provides a platform for corporations to raise funds from investors and the public, facilitating economic growth and development. Everything has evolved throughout time, including the way the market operates, the asset classes, the structure of the exchanges, and more. In accordance with the convenience of the investors and market participants, the adjustments have been implemented progressively. The Securities Regulatory authorities throughout the world have monitoring mechanisms for mitigating such acts in order to prevent market participants to take undue advantage of the information.
TYPES OF CAPITAL MARKET
In India, the capital market comprises two major segments, namely the primary market and the secondary market. The primary market is where corporations issue new securities, such as stocks, bonds, and other financial instruments, to raise capital. The secondary market, on the other hand, is where existing securities are traded between investors.
ROLE OF SEBI IN CAPITAL MARKET
The Securities and Exchange Board of India (SEBI) is the regulatory authority that oversees the functioning of the capital market. SEBI was established in 1992 with the objective of protecting investors' interests and promoting the development of the capital market.
The following are the duties and objectives of SEBI:
The Indian capital market has witnessed significant growth over the past few decades, driven by various factors, including economic liberalization, privatization, and globalization. The market has also been buoyed by a growing middle class with a greater propensity to invest in financial assets, increasing investor awareness and education, and the development of technology-enabled platforms for trading and investing.
The equity market is the largest segment of the Indian capital market, with the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) being the major exchanges. The Indian equity market has seen a surge in activity, with the number of listed companies increasing from around 5,000 in the early 2000s to over 7,000 in recent years. The market capitalization of Indian companies listed on the stock exchanges has also grown significantly, from around $200 billion in 2000 to over $3 trillion as of 2021.
The debt market in India has also grown significantly over the years, with the introduction of new financial instruments such as corporate bonds, commercial paper, and securitized debt instruments. The introduction of credit rating agencies has helped improve transparency and investor confidence in the debt market.
Foreign institutional investors (FIIs) have played a significant role in the growth of the Indian capital market. The liberalization of the Indian economy and the opening up of the capital account in the 1990s has led to a surge in foreign investments, with FIIs investing in both equity and debt securities.
However, the Indian capital market also faces several challenges. One of the significant issues is the lack of depth and liquidity in certain segments of the market, particularly the debt market. The Indian corporate bond market is relatively underdeveloped compared to other major economies, with a limited number of issuers and investors. There is also a need to improve the regulatory framework to protect investors' interests and prevent fraud and malpractices.
CONCLUSION
In conclusion, the Indian capital market has come a long way in terms of growth and development, driven by a range of factors, including economic liberalization, technological advancements, and investor awareness. The market has also faced several challenges, which need to be addressed to ensure the continued growth and development of the Indian capital market. The future of the Indian capital market looks promising, with a range of initiatives and reforms underway to improve its functioning and make it more robust and efficient.
