India's capital market is a crucial component of the country's financial system, playing a significant role in mobilizing savings and channeling them toward productive investments. The capital market provides a platform for corporations to raise funds from investors and the public, facilitating economic growth and development. Everything has evolved throughout time, including the way the market operates, the asset classes, the structure of the exchanges, and more. In accordance with the convenience of the investors and market participants, the adjustments have been implemented progressively. The Securities Regulatory authorities throughout the world have monitoring mechanisms for mitigating such acts in order to prevent market participants to take undue advantage of the information.


In India, the capital market comprises two major segments, namely the primary market and the secondary market. The primary market is where corporations issue new securities, such as stocks, bonds, and other financial instruments, to raise capital. The secondary market, on the other hand, is where existing securities are traded between investors.


The Securities and Exchange Board of India (SEBI) is the regulatory authority that oversees the functioning of the capital market. SEBI was established in 1992 with the objective of protecting investors' interests and promoting the development of the capital market.

The following are the duties and objectives of SEBI:

  1. Regulation of stock market activity
  2. Defending the interests of investors
  3. Ensuring the investments' security.
  4. To stop fraud and malpractice.
  5. To create a code of behavior for intermediaries, such as brokers and sellers of mutual funds.

The Indian capital market has witnessed significant growth over the past few decades, driven by various factors, including economic liberalization, privatization, and globalization. The market has also been buoyed by a growing middle class with a greater propensity to invest in financial assets, increasing investor awareness and education, and the development of technology-enabled platforms for trading and investing.

The equity market is the largest segment of the Indian capital market, with the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) being the major exchanges. The Indian equity market has seen a surge in activity, with the number of listed companies increasing from around 5,000 in the early 2000s to over 7,000 in recent years. The market capitalization of Indian companies listed on the stock exchanges has also grown significantly, from around $200 billion in 2000 to over $3 trillion as of 2021.

The debt market in India has also grown significantly over the years, with the introduction of new financial instruments such as corporate bonds, commercial paper, and securitized debt instruments. The introduction of credit rating agencies has helped improve transparency and investor confidence in the debt market.

Foreign institutional investors (FIIs) have played a significant role in the growth of the Indian capital market. The liberalization of the Indian economy and the opening up of the capital account in the 1990s has led to a surge in foreign investments, with FIIs investing in both equity and debt securities.

However, the Indian capital market also faces several challenges. One of the significant issues is the lack of depth and liquidity in certain segments of the market, particularly the debt market. The Indian corporate bond market is relatively underdeveloped compared to other major economies, with a limited number of issuers and investors. There is also a need to improve the regulatory framework to protect investors' interests and prevent fraud and malpractices.


In conclusion, the Indian capital market has come a long way in terms of growth and development, driven by a range of factors, including economic liberalization, technological advancements, and investor awareness. The market has also faced several challenges, which need to be addressed to ensure the continued growth and development of the Indian capital market. The future of the Indian capital market looks promising, with a range of initiatives and reforms underway to improve its functioning and make it more robust and efficient.



What is the capital market of India? ›

A capital market is a financial market where long-term debt or equity-backed securities are bought and sold. Suppliers are people/organisations with the capital to lend or invest. Banks and investors are common examples. Securities Exchange Board of India (SEBI) governs the capital market in India.

What are the major problems of India's capital market? ›

The capital market also poses major challenges as of taming derivatives, regulatory overhang, the demise of proprietary trading, sustained volatility and increased concentration etc.

What does the capital market in India consist of? ›

Definition: A market is defined as the sum total of all the buyers and sellers in the area or region under consideration. The area may be the earth, or countries, regions, states, or cities.

What is the backbone of the Indian capital market? ›

NSE India: The Backbone of Indian Capital Markets.

What is the total market capital in India? ›

India market capitalization accounted for US$4,574.606 billion in January 2024, compared to US$4,378.993 billion in the previous month. As of December 2023, India's overall market capitalization had gained 8.82 percent, the highest growth among the top 10 markets.

What is the difference between money market and capital market in India? ›

In the money market, only short-term liquid financial instruments are exchanged. Whereas, in the capital market, only long term securities are dealt with. Capital Market plays a significant role in the growth of a country's economy as it provides a platform for mobilising the funds.

What is the main problem of Indian market? ›

The problems faced by the Indian capital market are as follows: Inadequate disclosure of information. Price manipulation. Insider trading.

What are the deficiencies of Indian capital market? ›

Poor growth in the secondary market. Prevalence of insider trading and front running. Manipulation of security prices. Existence of unofficial trade in the primary market, prior to the issue coming into the market.

What is the rank of Indian capital market? ›

At $4 trillion, India's m-cap is now 5th biggest in the world.

How control the capital market in India? ›

10 The Securities and Exchange Board of India (SEBI) is the regulatory authority for the capital market, but private placements are currently not regulated by SEBI.

What are the capital market reforms in India? ›

The capital market reforms were initiated in the year 1991. It includes Liberalization, deregulation, Privatization, Globalization. These economic reforms were initiated with the implementation of liberalization policy under domestic financial laws and foreign exchange regulations.

What is the India capital exchange? ›

India Capital Exchange (ICX) is revolutionizing the fundraising landscape for India's unlisted companies by bridging the gap between these enterprises and a diverse pool of investors.

What is the concept of capital market in India? ›

Capital markets function according to the circular flow of money theory. Typically, capital markets are used for selling financial products such as stocks and bonds. Stocks, or ownership shares of a company, are equities. A bond is an interest-bearing IOU, as are other debt securities.

What are the recent developments in capital markets in India? ›

India's stock market is now the world's fourth largest with a market capitalisation of US$4.33trn. In September 2023, the JP Morgan Global Bond Index (GBI) team announced that India will be included in the GBI-Emerging Markets (EM) Global Series from June.

Who needs funds from the capital market? ›

Capital markets are a very important part of the financial industry. They bring together suppliers of capital and those who seek it for their own purposes. This may include governments that want to fund infrastructure projects, businesses that want to expand, and even individuals who want to buy a home.

What is the capital of Indian stock market? ›

National Stock Exchange of India
CurrencyIndian rupee (₹)
No. of listings2,190 (December 2023)
Market cap₹334.7 trillion (US$4.2 trillion) (December 2023)
IndicesNIFTY 50 NIFTY Next 50 NIFTY 500 NIFTY Midcap 100 NIFTY Smallcap 100
7 more rows

What is capital structure market in India? ›

Capital markets structure is made of primary and secondary markets. Primary markets consist of companies that issue securities and investors who purchase those securities directly from the issuing company. These securities are called Initial Public Offerings (IPO).

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