Comparative Analysis of Capital Market

Topics: Stock exchange, Stock market, Stock Pages: 59 (19090 words) Published: March 12, 2013
A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year. Capital markets may be classified as primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the-counter, or elsewhere. The capital market is important to a country’s economic and social system. It plays the crucial roles of capital raising for public and private sectors, promoting balance and stability in the financial system, decreasing dependency on the banking sector, driving the economy forward and creating jobs, as well as being an alternative method for savings. A strong capital market will lessen the impact of economic fluctuations which can be compounded by the fast-flowing nature of capital. Indian securities markets have undergone many changes during the last decade. Exponential growth in trading volumes is pushing existing trading systems and processes to capacity and increasing settlement risk. With Indian market moving to a T+3 rolling settlement cycles in line with global markets, SEBI is continuing its efforts to increase the efficiency and transparency in Indian markets. This would result in lowering of trade costs and make Indian markets a more attractive destination for global investors. Indeed it has been SEBI endeavor to make the Indian markets, one of the most competitive and efficient markets of the world. The move from a 5 day settlement period to a three day period requires firms to streamline trading processes by way of a foolproof, faster, cost effective and universally acceptable mode of communication among market participants. With changes happening in rapid succession, derivatives markets looking to expand, the settlement risk are increasing and this is pushing the need for Straight Through Processing (STP) and making it a pre-requisite for success of smooth functioning of securities market with a settlement period of T + 3 or less. The study of Indian capital market begins with the introduction of capital markets. What is capital market and what is the problem in capital market in past times is revealed in problem statement


• To understand the relationship between stock market development and economic growth in pre and post liberalization of Indian economy.

• To study about the impacts of stock market on Indian economy. • To study about the significant growth of stock market and Indian economy. • To study about the status of capital market and Indian economy in pre and post liberalized economy of India.

There are following scope of the study:-
• Relationship between stock market and Indian economy. • Impact of stock market on the growth of industrial sector of India and vice-versa. • Relationship between stock market and different sectors of Indian economy. • Impact of stock market on gross domestic product (G.D.P.).Stock market and Indian economy affects each other in significant way. So in this study I identified those areas of Indian economy which are related with the fluctuation and variation of stock market.

There are various significant impacts on the Indian economy and industrial sector. Its contribution to the economy reflects the importance of the Indian stock market. So there are following importance of the topic of research paper: 1. Study of the impact of stock market on Indian economy. 2. It helps to understand the reflection of the stock market fluctuation on industrial sectors and their growth. 3....
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