Indian Capital Market Essay

History of Indian crown Markets S. Sowdeesram The history of the Indian chapiter markets and the stock market, in particular can be traced back to 1861 when the American Civil War began. The opening of the Suez Canal during the 1860s conduct to a nasty increase in exports to the United Kingdom and United States. Several companies were organise during this period and many an(prenominal) banks came to the fore to handle the finances relating to these trades. With many of these registered chthonic the British Companies Act, the Stock Exchange, Mumbai, came into existence in 1875.It was an unincorporated body of stockbrokers, which started doing business line in the city under a banyan tree. Business was essentially confined to troupe owners and brokers, with very little interest evinced by the ecumenical universe. There had been much fluctuation in the stock market on account of the American war and the battles in Europe. Sir Premchand Roychand remained a kingpin for many ye ars. Sir Phiroze Jeejeebhoy was another who dominated the stock market scene from 1946 to 1980. His word was constabulary and he had a great deal of influence over some(prenominal) brokers and the government.He was a good regulator and many crises were averted due to his cognition and practicality. The BSE building, icon of the Indian capital markets, is called P. J. Tower in his memory. The plan process started in India in 1951, with importance being given to the arrangement of institutions and markets The Securities Contract Regulation Act 1956 became the parent regulation after the Indian Contract Act 1872, a basic law to be followed by security markets in India. To regulate the dilute of share prices, the Controller of Capital Issues Act (CCI) was passed in 1947.The stock markets have had many turbulent multiplication in the last 140 years of their existence. The imposition of wealth and wasting disease tax in 1957 by Mr. T. T. Krishnamachari, the then finance minister, l ed to a huge fall in the markets. The dividend freeze and tax on incentive issues in 1958-59 also had a negative impact. War with China in 1962 was another memorably bad year, with the resultant shortages increasing prices all round. This led to a ban on forward trading in trade good markets in 1966, which was again a very bad period, together with the instauration of the Gold Control Act in 1963.The markets have witnessed several flamboyant times too. Retail investors began participating in the stock markets in a small way with the dilution of the FERA in 1978. Multinational companies, with operations in India, were obligate to reduce foreign share holding to below a plastered percentage, which led to a compulsory sale of shares or issuance of saucily stock. Indian investors, who applied for these shares, encountered a real lottery because those were the days when the CCI firm the price at which the shares could be issued.There was no free price and their formula was very co nservative. The next big boom and mass companionship by retail investors happened in 1980, with the entry of Mr. Dhirubhai Ambani. Dhirubhai can be tell to be the father of modern capital markets. The Reliance public issue and subsequent issues on various Reliance companies generated huge interest. The general public was so unfamiliar with share certificates that Dhirubhai is rumoured to have distributed them to educate people. Mr. V. P. Singhs pecuniary budget in 1984 was pathbreaking for it started the era of liberalization.The removal of estate duty and reducing of taxes led to a swell in the new issue market and there was a deluge of companies in 1985. Mr. Manmohan Singh as Finance rector came with a reform agenda in 1991 and this led to a resurgence of interest in the capital markets, only to be punctured by the Harshad Mehta scam in 1992. The mid-1990s saw a rise in leasing company shares, and hundreds of companies, mainly listed in Gujarat, and got listed in the BSE. The end1990s saw the emergence of Ketan