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1. INDIAN CAPITAL MARKET

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. 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

4. REFORMS IN INDIAN CAPITAL MARKET

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. 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. 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. Regulatory Framework of Indian
Capital Markets
Regulatory
Framework
SEBI
Stock
RBI DCA
Exchange

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. 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. 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. 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. 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. Major Rallies in Indian Capital
Markets
18 May 2009
• Sensex Rise by 2111 points
(20.00%)
• Victory of UPA in election