Stock Market

Indian Stock Markets

With over 20 million shareholders, India has the third largest investor base in the world after the USA and Japan. Over 9,000 companies are listed on the stock exchanges, which are serviced by approximately 7,500 stockbrokers. The Indian capital market is significant in terms of the degree of development, volume of trading and its tremendous growth potential.

Bombay Stock Exchange (BSE), one of the oldest in the world, accounts for the largest number of listed companies and has also started a screen-based trading system with the introduction of the Bombay On-Line Trading system.

There are 23 recognized stock exchanges in India, including the Over the Counter Exchange of India (OTCEI) for small and new companies and the National Stock Exchange (NSE) which was set up as a model exchange to provide nation-wide services to investors. NSE, which in the recent past has accounted for the largest trading volumes, has a fully automated screen based system that operates in the wholesale debt market segment as well as the capital market segment.

India's market capitalization was amongst the highest among the emerging markets. Total market capitalization of the BSE as on July 31, 1997 was Rs 5,573.07 billion growing by 18 percent over a period of twelve months and as of August 2007 was over $1090 billion (over Rs 43 lakh crores).

India has emerged as the world’s 10th largest equity market after it added several companies to the billion dollar club in terms of capitalization, taking the total to 81 companies. India has become the third largest Asian market (excluding Japan and Australia) after having toppled Korea, China and Singapore that have 80, 50 and 47 firms with billion-dollar market capitalization respectively. India is also inching closer to outpacing Taiwan that has 84 such companies but lags far behind Hong Kong which has 107, the highest in Asia.

As of May 2008, the assets under management (AUM) by the Indian MF industry stood at Rs 6,00,000 crore (Rs 1,13,005 crore at end-March 2000). In India, there are 33 registered Mutual Fund houses. While income funds accounted for 49% of the total assets and equity or growth funds had 26% of the total assets. Balanced funds, gilt funds, ELSS and Liquid funds/ money market funds accounted for the rest.

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.

There is a large presence of FIIs in the Indian capital market with over 451 FIIs and 38 foreign brokers registered with SEBI. The cumulative investment of FIIs in the Indian stock market stood at US$ 6.59 billion in July 1996 and US $12 billion in April 2000. Since January 2005, FII's have pumped in $8 billion into Indian markets, compared to $8.5 billion in entire 2004 and $6.6 billion in entire 2003. Foreign investors invested $4.02 billion in June-August 2005, which is much higher than the $3.41 billion flows India received between January and May.

The capital markets in India are regulated by the Securities and Exchange Board of India (SEBI) under the provisions of the Securities Contracts (Regulations) Act, 1956 and Securities and Exchange Board of India Act, 1922. SEBI has issued detailed guidelines for capital issues, disclosure by public companies and investor protection.