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Indian capital market


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Indian capital market

  2. 2. Problems in Indian Capital Markets before 1992 Multiplicity of administration Poor disclosure in prospectus Investors faced problems of delays (Refund, Transfers etc.) No concept of capital adequacy No inspections of stock exchanges undertaken
  3. 3. Problems in Indian Capital Markets before 1992 Stock Exchanges management dominated by brokers Poor disclosures by Mutual Funds (NAV not published, No valuation Norms) No prohibition of insider trading, or fraudulent and unfair trade practices. Primary markets not in the main stream of the financial systems
  5. 5. Reforms in Indian Capital Market Companies free to raise funds from securities markets after filing prospectus with SEBI SEBI introduces regulation for primary & other secondary market intermediaries Listed Co’s to furnish annual statement to the exchanges Book Building introduced for institutional investors SEBI introduces regulations governing substantial acquisition of shares and takeovers.
  6. 6. Reforms in Indian Capital Market NSE establishment as a stock exchange with national wide electronic trading BSE introduces screen based trading Capital adequacy requirement for brokers System of mark to market margins introduced Stock Lending schemes introduced NSCCL setup by NSE
  7. 7. Reforms in Indian Capital Market SEBI strengthen surveillance mechanisms and have a separate surveillance departments with all stock exchanges Depositories act introduces for Electronic transfer of shares. Permission to access in international capital markets by Indian companies through Euro issues FDI allowed in stock broking ,AMC’s, Merchant Bankers , NBFC’s. FII’s allowed to access Indian capital markets on registration with SEBI
  8. 8. Regulatory Framework of Indian Capital Markets Regulatory Framework SEBI Stock RBI DCA Exchange
  9. 9. SEBI Setup in 1992 , as a statutory body Registering & regulating intermediaries Investor protection through regulating Indian capital markets Boost up the development of Indian Capital Markets Registering & regulating service providers, Mutual funds, collective investment schemes, venture capital funds, takeovers etc. Power to inspect book, records, suspend registered entities and cancel registration
  10. 10. RBI Regulatory involvement in Indian Capital Markets Limited to the Debt Management Foreign Exchange Control Liquidity support to market participants Regulate primary dealers in the Government securities markets Securities transactions that involve foreign exchange transaction need prior permission of RBI Important role in NSE debt Markets
  11. 11. DCA(Dept of Company Affairs) Administered by Controller of capital issue(CCI) Part of Ministry of Finance In 1992 ,Liberalize capital issuance and pricing Public & Private Companies were governed by companies act 1956, which continued to be administered by DCA. Specify certain aspects concerning capital issuance and securities trading.
  12. 12. Stock Exchanges Two major exchanges (NSE,BSE) in India. Automated Trading System developed for fast & transparent execution of trades Listing of securities in exchanges Introduced risk management systems Committees of stock exchange set up to handle matters of discipline , default and investor-broker disputes
  13. 13. Major crash in Indian Capital Markets 28 April 1992 • Sensex fall by 570 points (12.77%) • Harshad Mehta securities scam 18 May 2006 • Nifty crash by 496.50 points(8.70%) • Heavy selling by FII’s due to weakness in global markets 21 JAN 2008 • Sensex crash by 1408 points • Due to recession in US
  14. 14. Major Rallies in Indian Capital Markets 18 May 2009 • Sensex Rise by 2111 points (20.00%) • Victory of UPA in election