B Economic Barometer : Any stock exchange in the world is a reliable barometer to measure the economic condition of any country like India. Every major change in country and economic is reflected in the boom or recession cycle of the economy. Stock market is also known as a pulse of economic mirror reflects the economic conditions of a country. C Contributes to Economic Growth : In stock market Securities of various companies are bought and sold and this process of disinvestment and reinvestment helps to invest in most productive investment proposal and this leads to capital formation and economic growth.
D Safety in Stock Exchange : In stock exchange only the listed securities are traded and stock market authorities include the companies names in the trade list only after verifying the soundness of company.
The companies which are listed they also have to operate within the strict rules and regulations. This ensures safety of dealing through stock market. To ensure liquidity and demand of supply of securities the stock market permits healthy speculation of securities.
F Better Allocation of Capital : The share of profit making companies are quoted at higher prices and are actively traded so much companies can easily raise fresh capital from Stock exchange.
The general public hesitates to invest in securities of loss making companies. So, Stock market facilitates allocation of investor's fund to profitable channels. G Liquidity and Stock Market : The main function of stock market is to provide ready market for sale and purchase of securities. The presence of stock market gives assurance to investors that their investment can be converted into cash whenever they want.
The investors can invest in long term investment projects without any hesitation, as because of Stock market they can convert long term investment into short term and medium term.
H Saving and Investment : The Stock market promotes or offers attractive opportunities of saving and investment in various securities. These opportunities encourage people to save more and invest in Securities of corporate sector rather than investing in unproductive assets such as gold, silver, etc.
Stock Market and Modern Financial System : The financial system under stock market in most of the countries has undergone a remarkable transformation generally in western countries. One features of this development is disintermediation. A portion of the funds involved in saving and financing, flows directly to the financial markets instead of being routed via the traditional bank lending and deposit operations.
The general public interest in investing in the Stock market, either directly or through mutual funds, has been an important component of this process. Statistics show that in recent decades, shares have made up an increasingly large proportion of households' financial assets in many countries as well as India.
The trend towards forms of saving with higher risk has been accentuited by new rules for most funds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to be found in India as well as developing countries. Saving has moved away from traditional government insured "bank deposits to more risky securities of one sort or another".
Therefore, a second transformation is the move to electronic trading to replace human trading of listed securities. The major part of this adjustment is that financial portfolios have gone directly to shares but a good deal now takes the form of various kinds of institutional investment for groups of individuals such as pension funds, mutual funds, hedge funds, insurance investment of premiums through this modern electronic system in the country. In conclusion, it may be say that National Stock Exchange is a first exchange in India to introduce electronic trading facility thus connecting together the investor base of the entire country.
Hence, Stock markets are the financial barometer and development indicators of national economy of the country, industrial growth and stability is reflected in the index of stock exchange.
There is also need to attract investor to investment more fund in stock market. The exchanges provide real-time trading information on the listed securities, facilitating price discovery. In fact, the stock market is often considered the primary indicator of a country's economic strength and development. References: 1. Naved, M. Advances in Economics and Business Management, p.
Naved, Mohd. Related Papers. An Overview of India Capital Markets. By Bonfring International Journal. Download pdf. Log in with Facebook Log in with Google. Remember me on this computer. Enter the email address you signed up with and we'll email you a reset link. The GaryVee Content Model. Mammalian Brain Chemistry Explains Everything. Related Books Free with a 30 day trial from Scribd. Related Audiobooks Free with a 30 day trial from Scribd. Who Owns the Future? Jaron Lanier.
Blog, Inc. Debt market in india 1. The Debt market is any market situation where trading debt instrument take place. The Indian debt market while composed of bonds, both government and corporate, is dominated by the government bonds. The central and state government need money to manage their short term and long terms finance and fund budgetary deficits.
Being the largest issuers in the Indian Debt Market, they raise money by issuing bonds and T-bills of different maturities. Debt market refers to the financial market where investors buy and sell debt securities, mostly in the form of bonds5. These markets are important source of funds, especially in a developing country like India. The Debt market in India is also considered a useful substitute to banking channels for finance6.
Since the Government securities are issued to meet the short term and long terms financial needs of the government, they are not only used as instruments for raising debt, but have emerged as key instruments for internal debt management, monetary management and short term liquidity management7.
Primary Market: Primary market is that market where the debt instruments are issued for the first time which can be issued as follows - a. Public prospectus: invites public to buy. Private placement: Invites few selected individuals, as the cost of public issuing is quite a large. Rights issue: to the already exciting members, but they can refer to their beneficiaries in case of unwillingness to buy.
However, the issuer has to inform the exchanges in case of issuing debts, to notify the investors, about associated risk changes. Secondary Market: Secondary market is where the debt instruments can be traded, it can take place by the following two ways based on the characteristics of the investors and the structure of the market are: a.
Retail debt Market: involves participation by individual investors, small trusts and other legal entities in addition to the wholesale investors classes. Since the Government securities are used to meet the short term and long term financial needs of the Government, they are not only used as instruments for raising debt, but have emerged as key instruments for internal debt management, monetary management and short terms liquidity management. The debt market also provides greater funding avenues to public- sector and private sector projects and reduce the pressure on institutional financing.
It also enhances mobilisation of resources by unlocking illiquid retail investment like gold. The key role of the debt markets in the Indian Economy stems from the following reasons: a Efficient mobilization and allocation of resources in the economy. The returns that the market offer is almost risk-free though there is always certain amount of risks, however the trend says that return is almost assured. However, investors can take help from the credit rating agencies which rate those debt instruments.
Another advantage of investing in India debt market is its high liquidity. Banks offer easy loans to the investors against government securities As the returns here are risk free, those are not as high as the equities market at the same time. So, at one hand you are getting assured returns, but on the other hand, you are getting less return at the same time. Retail participation is also very less here, though increased recently.
There are also some issues of liquidity and price discovery as the retail debt market is not yet quite well developed Government Securities B. Corporate Bonds C. Certificate of Deposits D. Government Securities It consists of central and state government securities. It means that, loans are being taken by the central and state government.
The Indian experience of developing the government securities market followed a developmental rather than a regulatory and supervisory model and attempted to facilitate overall improvement in the strength of financial and economic system of the country These securities have a maturity period of 1 to 30 years.
G-secs offers fixed interest rate, where interests payable semi-annually. These bonds are issued to meet financial requirements at a fixed cost and hence remove uncertainty in financial costs. Bonds are the most common form of debt investment. Certificate of Deposits Certificate of Deposits which usually offer higher returns than bank term deposits, are issued in demat form Bank can offer CDs which have maturity between 7 days and 1 years. CDs from financial institutions have maturity between 1 to 3 years.
Commercial Paper There are short term securities with maturity of 7 to day. Commercial Papers are issued by corporate entities at a discount to face value. Zero Coupon bonds 2. Coupon bearing bonds 3. Treasury bills 4. Floating rate bonds 5. STRIPs 1. Coupon bearing bond Public sectors bonds Government agencies, statutory bodies, public sector undertakings 1.
Debentures 2. Government guaranteed bonds 3. Commercial papers 4. Commercial papers 3. Fixed floating rate 4.
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