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INTRODUCTION
growth of our economy. Hence the area of the growth of the Indian
Capital Market, in my opinion, is a most important topic, which requires
further in-depth study. I think, there is enough research scope in the area.
From the review of literatures also it appears that though a number of
write ups are there in the area of capital market focusing different aspects
of capital market, none of them finds the analysis of Growth of Capital
Market in India. The present research study attempts to fill this gap. This
is the reason behind the choice of this topic for the purpose of research
work.
1.1 OBJECTIVES OF THE STUDY
The objectives of ,the study are varied. The present study is mainly
aimed at evaluating and analyzing the growth achieved in Indian Capital
Market during the study period. The other objectives of the study are:
(l)to study and analyze the major reforms in the area of capital market
leading to the achieved growth ;
(2) to make statistical analysis of growth of Indian capital market
during the study period by using some selected parameters of
Indian economy and some other parameters ;
(3) to compare the growth of Indian capital market with the same in
some selected countries ( both developed as well as developing ) ;
and finally
(4) to make some concluding remarks on the growth of Indian capital
market, and on the basis of observations of the study to give some
suggestions for further improvement and growth of Indian capital
market.
1.2 PERIOD OF THE STUDY
For the purpose of the research work a study period of ten years i.e.
from 1995-96 to 2004-05 has been taken.
1.3 SOURCES OF DATA
The data used in the study are all secondary data. The data have been
collected from Annual Reports for different years of SEBI, BSE and
NCFM -Capital Market (Dealers) Module Work Book, National Stock Exchange of
India limited pp. 207-208
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the study were more appropriate at that time for the policy makers and
mutual funds to design the financial products for the future.
Madhusudhan V. Jambodekar (1996) conducted a study, Marketing
Strategies of mutual Funds - Current Practices and Future Directions,
Working Paper, UTI-liMB Center for Capital Markets Education and
Research, Bangalore, to assess the awareness of MFs among investors
and reported the need for investor education.
Sujit Sikidar and Amrit Pal Singh (1996), in "Financial Services:
Investment in Equity And Mutual Funds - A Behavioural Study, in
Bhatia B. S., and Batra G. S., ed., Management and Financial Services,
Deep and Deep Publications, New Delhi, Chapter 10: 136-145 carried out
a survey with an objective to understand the behavioural aspects of the
investors of the North Eastern region towards equity and mutual funds
investment portfolio. The survey revealed that the salaried and self
employeds constituted the major investor group in mutual funds primarily
due to tax concessions. UTI and SBI schemes were popular in that part of
the country and other funds had not proved to be a big hit during the time
when the survey was done.
Raja Raj an ( 1997), in his article "Investment Size Based Segmentation of
Individual Investors", Management researcher, 3 (3&4): 21-28, while
dealing with the basic concept of mutual funds and their importance in
the Indian capital market environment, highlighted segmentation of
investors on the basis of their characteristics. Further the same author in
1998, in his article "Stages in Life Cycle and Investment Pattern", The
Indian Journal of Commerce, 51 (2&3): 27-36 studied investors'
characteristics on the basis of their investment size, and the relationship
between stage in life cycle of the investors and their investment pattern
(in respect of mutual fund investments).
Malodia, G. L. of J. N. Vyas University, Jodhpur, Rajasthan (2001), in his
article, Rules and Regulations To Curb Insider Trading in Indian Stock
Market, The Indian Journal of Commerce, 54 (4): October-December, 4853 evaluated critically the legal provisions to curb the insider trading in
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India and some other countries. The. study has made some suggestions for
effective control of insider trading.
Gupta, Arindam and Joydeep Biswas (2006), in their article "Financial
Linearization and Indian Capital Market", The Indian Journal of Capital
market, April-June, pp.53-64, examined the development and efficiency
of the Indian Capital market in the post-liberalization period. As per the
study, both market capitalization and turnover are lower in Indian market.
The reason for India's low turnover and market capitalization ratio may
be because of the presence of huge number of illiquid stocks, excessive
volatility and speculative noise trading in the Indian market. The low
market capitalization and turnover ratios indicate a narrow market size
and low liquidity in the Indian stock market. The study commented that
to arrest the volatility of the stock market there is a need to develop
appropriate regulatory and legislative fran1ework to curb the speculative
activities of both domestic and foreign investors. The study further
commented that there is a need to foster the investor confidence by
making the market more "news" oriented rather than "noise" driven. The
study concluded with the remark that if the Indian stock market behaves
irrationally on the basis of noise, the basic objectives of stock market
liberalization i.e. efficient mobilization and allocation of the scarce
resources would face a big jolt.
Biswas, Joydeep (2006), in his artide, Indian Stock Market in
Comparison, Economic And Political Weekly, May 6-12, pp.1747-1752
evaluates the impact of financial liberalization on the growth,
development and efficiency of the Indian stock market vis-a-vis other
select Asian Markets. Though the expansion of the Indian stock market in
the post liberalization period is truly impressive, in terms of quality there
has been a regress. Trading has become increasingly concentrated in
some sectors and companies, and the higher volatility in the market,
without a corresponding higher return, portends greater risk and more
instability of investors.
Chattopadhyay Arup, Ex-Reader, Department of Commerce, the
University of Burdwan, West Bengal and Banerjee Pradipta (2002), a
Research Scholar, department of Commerce, the University of Burdwan,
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been stabilizing for Indian capital market. In the study the author used
data in respect of GDRs/ADRs, Investment by the Fils, Investment by
Offshore funds (in terms of US $ million) for the period from 1992-93 to
2002-03 and Average Portfolio Flows and their volatility (1995-2002) in
the countries namely India, Malaysia, Philippines, Korea, Mexico and
Indonesia. As per the study, the volatility of cross-border portfolio
investment flows into India has been less than that in respect of other
emerging market economies. Empirical estimates indicate that FII flows
are positively related to returns on BSE Sensex. FII inflows to India
display seasonality, with inflows being significantly higher in the first
few months of the calendar year, particularly in the month of February.
Machiraju, H. R. (2002), in his book "INDIAN FINANCIAL SYSTEM"
(Second Edition), Vikash publishing House Pvt. Ltd, New Delhi, in
different chapters, studied theoretically almost all areas of Indian Capital
Market. In this book, the author opined that the financial system consists
of the Money Market and Capital Market as found elsewhere in the
world. The capital market consists of Primary Market and Secondary
Market. The book also covers various Regulations and Guidelines of the
market regulator, SEBI on Primary and Secondary Market.
Khan, Y. M. (2005), in his book "INDIAN FINANCIAL SYSTEM", has
discussed in details about various issues of Capital Market. According to
the author, the main function of capital market is the collection of savings
and their distribution to productive units, thereby stimulating the capital
formation and to that extent, accelerating the process of economic
growth. Indian financial system comprises of three interdependent
components: (i) financial markets, (ii) financial institutions/
intermediaries, and (iii) financial assets/instruments/securities. The
financial markets are classified into (i) Money Market and (ii)
Capital/Securities Market. The Capital/Securities Market has two
segments - Primary Market and Secondary Market. According to the
author, Capital Market is not a source of long-term finance, it is only a
media where savors and investors meet each other and securities are only
documents containing their terms and conditions for fund transfer.
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C~pital
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