THE ROLE OF STOCK MARKET ON INNOVATION AND GROWTH OF INDIAN

ECONOMY

By,

Nilanjan Paul

A stock market is a place where the stocks and securities of various companies are traded.

A stock market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (shares); these are securities listed on a stock exchange as well as those only traded privately.

What is Stock Market?

i) Indian stock market is one of the oldest stock market in Asia.ii) Establishment of Bombay Stock Exchange.iii) Establishment of NSE.iv) Establishment of SEBI.

INDIAN STOCK

MARKET

Stock Exchange

National Exchanges

BSE NSE

Regional Exchanges

21 Other Regional Exchanges

STRUCTURE OF INDIAN STOCK EXCHANGE

BSE

To protect the interests of investors through proper education and guidance.

To prohibit fraudulent and unfair practices.

To regulate and control the business on stock exchanges and other securities.

To provide suitable training to intermediaries.

To register and regulate the working of mutual funds including UTI.

To promote self-regulatory organization of intermediaries.

To conduct inspection, inquiries & audits of stock exchanges.

ROLE OF SEBI

Promotes the savings.

Provide liquidity to investors.

Profitable activities for companies.

Permits for the investor to have a political power in the companies .

Possibility of diversifying  your portfolio .

FUNCTIONS OF STOCK MARKET

ROLE OF STOCK MARKET

Financial resources for public and private sectors

Mobilizing savings for investment.

Liquidity and safety of investment.

Redistribution of wealth and funds for development purpose.

Raising capital for businesses & Facilitating companies growth.

Creating investment opportunities for small investors.

Government capital-raising for development projects.

Barometer of the economy.

Of a population of over a billion , only 18 million invest in stock markets which is only 1.8% of the total population of INDIA.

Certainly , there is a lack of broad participation

INVESTMENTS IN INDIAN STOCK MARKETS

STOCK

EXCHANGE

CENTERS

Market Condition. Companies History & Performance. Risk Factor. Adequate knowledge about share market. ROI. Govt laws and regulations.

FACTORS TO BE CONSIDERED BEFORE

INVESTING

Why Share Prices Fluctuate

1. Demand and Supply2. Bank Rate3. Speculative Pressure4. Actions of underwriters and other financial institutions5. Change in company’s board of directors

Possibility of high returns

Easy liquidity

Unbeatable tax benefits

Income from dividends

Benefits Of Investing In Shares

The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to open the DEMAT account if you want to buy and sell stocks.

A person want to buy/sell stocks in the stock market has to first place his/her order with a broker or can do themselves using online trading systems.

The stocks purchased will be sent to the your DEMAT account. This process is called Rolling Settlement Cycle.

TRADING PROCESS IN STOCK MARKET

INSURANCE SCAM(1947) –Non Nationalised insurance sector were concerned with providing benefits to selected industrialist and ignored the interest of common man.The govt responded by nationalizing the insurance sector.

HARSHAD MEHTA(1992) -Harshad Mehta siphoned off funds amounting to Rs 4,000 crore (Rs 40 billion) from various banks to manipulate stocks in the early 1990s.

MAJOR INDIAN STOCK MARKET

SCAMS

UTI SCAM(2001) –It involved the US-64 scheme of UTI, which was mainly meant to channel the funds of small investors into instruments bearing higher returns. In order to prevent default in payment the Govt announces a huge bailout of about 3,500-4,000 crore.

SECURITIES SCAM KETAN PAREKH(2001) -Ketan Parekh, a stock broker, used Unit Trust of India and Calcutta Stock Exchange. After the government bailed out UTI with Rs 4,800 crore, it bought manipulated shares from Ketan Parekh.

SATYAM(2009) –They manipulated their accounts and revealed a completely different picture of their profits that attracted a larger group of new investors. The company admitted irregularities worth around 12,000 crores.

Þ Firstly, it provides an equilibrating mechanism for demand and supply of short-term funds.

=> Secondly, it enables borrowers and lenders of short-term funds to fulfill their borrowing and investment requirements at an efficient market clearing price.

=> Three, it provides an avenue for central bank intervention in influencing both quantum and cost of liquidity in the financial system, thereby transmitting monetary policy impulses to the real economy.

CONCLUSION

*www.google.com*www.moneycontrol.com*www.bseindia.com*www.nseindia.com*economictimes.indiatimes.com*en.wikipedia.org/wiki/Stock_market

REFERENCES