India has entered the 21st century as one of the Asia’s most dynamic economies. This is the part of the assessment made by International Financial and Capital Market Institutions based on India’s economic and financial reforms initiated in 1991 and brought to fruition in various budget. Infact, the achievement is the cumulative effect of yester years coupled with economic reforms in the Indian economy. The economic and financial liberalization, based on the firm pillars of fiscal discipline, structural reform and Securities Market reforms has yielded strong dividends to the economy.
The progress of any economy mainly depends on the efficient financial system of the country. Indian economy is no exception financial system of the country. The importance of the financial sector reforms affirms an effective means for solving the problems of economic, financial and social in India and elsewhere in the developing nations of the world. The progress of the Securities Industry of any country depends mainly on the flow of funds. In fact, capital generation is the lifeblood of the capital market without which the health and soundness of the financial system cannot be geared and for which well-developed capital market as well as money market is essential.
The Indian financial system, as it has evolved, is comparable in many respects with the financial system of the most advanced developing countries as well as some of the developed countries. It has a well-diversified structure of financial institutions and instrument and, in fact financial development has out-placed economic development. India’s capital market is among the largest in the developing world. The market is comprised of 24 stock exchanges transacting long-term debt; debentures and equity shares both electronic and physical forms. Derivatives financial instruments are also be added to the market shortly. The number of firms listed on the Indian Stock Exchange is more than the USA. Market Capitalisation of listed firms is 1980s was similar to Brazil, Malaysia, Singapore and Denmark.
The capital market of the country, however, underwent dramatic changes since the beginning of 1980s basically because of a progressive realization that the command economy on which the emphasis was placed could not lead to higher levels of economic development and that a slant towards a market-oriented economy is necessary. Government did this gradually by opening up progressively new cistas of economic activity for the private sector.
It is in the context of fast expanding economy and a liberalized and deregulated atmosphere that the growth of the Indian Stock Market activities has to be viewed. No wonder that the markets have registered a quantum jump judge by any standards. India is now a major player in the emerging markets of the world, next only to Mexico, Korea and Taiwan both in respect of market capitalistion and turnover