Indian Economy / Capital Markets
Stock Market is the financial market, where already issued shares and their derivatives like futures and options of different
companies are traded. The place, where these securities are traded is called Stock Exchange, e.g. Bombay Stock Exchange (BSE), National Stock
Exchange (NSE), etc.
Types of Financial Markets
The financial market meant for the short term funds is called Money market and the financial market meant for the long term funds is called
the Capital market.
Since 1991, Indian capital market has been getting broadened significantly and the volume of savings and investment has
shown significant improvement.
Capital market comprises of primary and secondary markets. Primary market handles the trading of new issues or Initial Public Offering (IPO)
of stocks and other securities, while secondary market handles the trading of already issued securities.
One more significant classification in the capital market is done on the basis of the type of security that is traded. They are classified
as stock market and bond market.
- It is the index of Bombay Stock Exchange. 1978-79 is taken as the Base year for Sensex and the base value started with 100 index
- Sensex comprises of 30 most actively traded scrips on BSE.
- BSE is situated in Mumbai.
- It is the primary index of National Stock Exchange. The base year for NIFTY-50 is 1995 and the base value started with 100 index
- It is also situated in Mumbai.
- It comprises of 50 most actively traded scrips on National stock Exchange.
- The present index values are different for NIFTY-50 and SENSEX because of difference in base years.
- Bull Market - A stock market which is being characterized by rising prices of the stocks over a long period of time because
of investor optimism and sound economic growth is called Bull Market.
- Bear Market - A Stock Market which is being characterized by falling stock prices because of investor permission is called
- Credit Rating Agencies - There are 3 credit rating agencies operating in the country and providing required guidance to the
investors. They are
- CRISIL (Credit Rating Information Services of India Limited), which is established in 1987.
- ICRA Limited (Investment Information and Credit Rating Agency), which is established in 1991.
- CARE (Credit Analysis and Research Limited), which is established in 1993.