(Sample Material) IAS PRE GS Online Coaching : Economic & Social Development – Stock Markets in India

Subject: Economic & Social Development
Topic: Stock Markets in India

Ques. 1 : Give an account of Stock Markets (Specially in Indian
context).

Ans. A stock exchange is an organization which
provides a platform for trading shares- either physical or virtual. The origin
of the stock, market dates back to the year 1494, when the Amsterdam Stock
Exchange was first set up. In a stock exchange, investors through stock brokers
buy and sell shares in a wide range of listed companies. A given company may
list in one or more exchanges by meeting and maintaining the listing
requirements of the stock exchange.

In financial terminology, stock is the capital raised by a
corporation, through the issuance and sale of shares. In common parlance,
however, stocks and shares are used interchangeably. A shareholder is any person
or organization which owns one or more shares issued by a corporation. The
aggregate value of a corporation’s issued shares, at current market prices, is
its market capitalization. Stock broker buys and sells for an investor and does
the work of arranging the transfer of stock from a seller to a buyer.

Importance of Stock Exchanges

• For efficient working of the economy and for the smooth
  functioning of the corporate form of organization, the stock exchange is an
  essential institution.

• an efficient medium for raising long term resources for
  business

• Help raise savings from the general public by the way of
  issue of equity debt capital

• attract foreign currency

• exercise discipline on companies and make them profitable

• investment in backward regions for job generation

• another vehicle for investors’ savings

Stock Exchanges in India

The first company that issued shares was the VOC or Dutch
East India Company in. the early 17th century (1602). Since then we have come a
long way. With over 25m shareholders today, 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.

Stock exchanges provide an organised market for transactions
in securities and other securities. There are 24 stock exchanges in the country,
21 of them being regional ones with allocated areas. Three other are set up in
the reforms era, viz. National Stock Exchange (NSE), the Over the Counter
Exchange India Limited (OTCEI) and Inter-connected Stock Exchange of India
Limited (1SE) Important Stock Exchanges in India are Bombay Stock Exchange,
popularly known as BSE and National Stock Exchange located in Bombay.

Stock Exchanges in India

1. Ludhiana

2. New Delhi

3. Jaipur

4. Meerut

5. Ahmedabad

6. Rajkot

7. Indore

8. Vadodara

9. Bombay

10. Pune

11. Hyderabad

12. Mangalore

13. Bangalore

14. Emakulam

15. Coimbatore

16. Madras

17. Patna

18. Karipur

19. Bhubaneshwar

20. Calcutta

21. Guwahati