Organized financial markets have existed in India for more than a century. Today, markets of varying maturity exist in equity, debt, commodities and foreign exchange.
There are 25 stock markets all over the country, the most important of which, are the Bombay Stock Exchange and the National Stock Exchange. The rupee has been convertible on the current account since 1992.
India's total market capitalization touched Rs 644.67 billion, with an average daily turnover of Rs 2,384 million, in December 1995. India's market capitalization was the 6th highest among the emerging markets. The number of companies listed on the BSE at the end of December 1994 was 4,702. This was more than the aggregate total of companies listed in 9 emerging markets (Malaysia, S.Africa, Mexico, Taiwan, Korea, Philippines, Thailand, Brazil and Chile). The number of companies was also more than the that in developed markets of Japan, UK, Germany, France, Australia, Switzerland, Canada and Hong Kong. India's capital market features a wide variety of capital market instruments.
Capital Markets : Previous Year Scenario
The Capital markets remained subdued through most of 1995-96 and the bear phase which began in October 1994, continued through most part of 1995-96. There was a slow down in Foreign Institutional Investors (FIIs) inflow and domestic liquidity conditions were relatively tight. Notably, between April to December 1995, the value of primary issues was marginally higher than the corresponding period last year, despite a downtrend in stock prices and low turnover in stock exchanges.
The process of reforms in the capital markets, including the money markets, was further strengthened. Securities and Exchange Board of India (SEBI), was empowered to regulate all market intermediaries. An Ordinance to establish depositories was announced, thus addressing one of the major lacunae in the system. The National Stock Exchange expanded rapidly, providing an incentive to other stock exchanges to accelerate computerization.