Structure, Growth, and Regulatory Reform in the Indian Capital Market

Abstract

Three decades ago, India’s capital market was largely confined to paper. Physical share certificates, a manual settlement system, and an exclusive trading environment limited the market to a few. Today, however, this perception has changed dramatically, as India’s market capitalization has grown exponentially. The purpose of this paper is to describe and analyze the current state of India’s capital market and the factors contributing to the significant rise in its primary and secondary markets in recent years. The discussion will focus on the data collected from various reliable sources, including SEBI, AMFI, the two national depositories, and other market participants. Such information as the market capitalization, IPOs, mutual funds, demat accounts, and the derivatives segment will be presented and assessed. In addition, SEBI’s role in the development of the market will also be considered. Ultimately, it will be concluded that India’s market has grown considerably in value and now ranks among the five largest worldwide. Nevertheless, there are still issues for regulators to address, including the market’s speculative nature and the need for more equal participation in different formats and regions.