Money and capital market in india
The twin features of reasonable return and liquidity in stock exchange are definite incentives to the people to invest in securities. Mutual Funds also declare whether this will be an open ended scheme i.
Easy marketability makes an investment in securities more liquid as compared to other assets. The secondary market has further two components. By Shilpi Pandey New Delhi: Foreign investors ' portfolio investments have long been known as ' hot money ' that comes in fast but can go out even faster and it is the outward journey that seems to be the underlying theme for the Indian capital markets as draws to a close, with net outflows nearing the Rs 1 lakh crore mark.
In this market, various types of securities help to mobilize savings from various sectors of the population. A stock may be bought or sold only if it is listed on an exchange.
Overview of capital market
Secondary Markets or Stock Exchanges : The functions of a stock exchanges are to provide ready and continuous market for securities, information about prices and sales, safety to dealings and investment, helps mobilisation of savings and capital formation. A DVR share is like an ordinary equity share, but it provides fewer voting rights to the shareholder. Alos, Corporations can sell new stock through an initial public offering IPO and raise money through that. It helps the business and industries with working capital requirements. But they also suffer from limitations like exclusive speculation and fluctuation in prices due to rumours and unpredictable events. Money markets are considered safe but they sometimes give negative returns. Activities in the Secondary Market: Trading of securities Clearing and settlement of trades Delivery of securities and funds Significance of capital market: The capital market has significant role in mobilising saving and contribute into productive investments for the development of commerce and industry. Indian firms are able to generate capital funds from overseas markets by way of bonds and other securities. The capital market helps in capital formation and economic development of the country. Before , FPIs were net buyers of Indian equities for six consecutive years. Investors try to look for arbitrage opportunities due to such anomalies to get higher returns. The capital market in India is a market for securities, where companies and governments can increase long term funds. In an underdeveloped country where capital is limited, the absence of a developed capital market is a greater interference to capital formation and economic development. Ready And Continuous Market The stock exchange provides a central convenient place where buyers and sellers can easily purchase and sell securities.
It is ideal for long term investors, typically small investors who seek higher dividend and are not necessarily interested in taking a voting position.
Reliable Guide To Performance The capital market serves as a reliable guide to the performance and financial position of corporate, and thereby promotes efficiency.
It attaches various rights and liabilities. The Narasimhan Committee has made the following recommendations regarding mutual funds: i creation of an appropriate regulatory framework to promote sound, orderly and competitive growth of mutual fund business: ii creation of proper legal framework to govern the establishments and operation of mutual funds the UTI is governed by a special statuteand iii equality of treatment between various mutual funds including the UTI in the area of tax concessions.
They are of a great importance to technocrat entrepreneurs who have technical competence and expertise but lack venture capital. Individual investors were very few in numbers and that too were limited to the affluent classes in the urban and rural areas.
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