Page 322 - DMGT207_MANAGEMENT_OF_FINANCES

Unit 14: Capital Market and Financial Institutions

trading malpractices and aims at achieving a balance between self-regulation by securities Notes
industry and its statutory regulation.

14.8.3 IRDA Act, 1999

The Insurance Regulatory and Development Authority (IRDA) is a national agency of the
Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known
as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements.
Mission of IRDA as stated in the act is “to protect the interests of the policyholders, to regulate,
promote and ensure orderly growth of the insurance industry and for matters connected therewith
or incidental thereto.”

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Case Study Emerging Trends in Capital Markets

he Indian capital market is more than a century old. Its history goes back to 1875,
when 22 brokers formed the Bombay Stock Exchange (BSE). Over the period, the
TIndian securities market has evolved continuously to become one of the most
dynamic, modern, and efficient securities markets in Asia. Today, Indian market confirms
to best international practices and standards both in terms of structure and in terms of
operating efficiency.
Indian financial market is also witnessing significant changes for some time. In recent
past, it has experienced paradigm shift in terms of global M&A activity, big ticket IPOs,
renewed interest of FIIs, private equity deals, hedge funds, international listing of Indian
securities and the effect of global recession and recovery. Indian financial market is no
more immune to global events and getting increasingly integrated with global market.
But with all these, volatility in Indian stock market has also become the hallmark of the
day. With multiple TV channels airing expert comments on buy and sell recommendations,
equity pricing projections, and effect of events happening all over the world; equity
valuation has taken different meaning now. Sometimes, the bond or debt market start
looking much more lucrative as an investment option with rising yields.
Questions
1. What are the emerging trends in the Indian capital market in this decade – how to act
accordingly?
2. What are the main factors behind the volatility in Indian stock market?

14.9 Summary

 In capital market two types of market exists i.e. Primary and Secondary.
 Primary market is also known as new issue market and Secondary market is also known
as Stock exchange market. Role of supplying the capital is direct in the primary market
and indirect in Secondary market.
 In the secondary market, there are basically three parties to a transaction. These are buyers,
sellers and intermediaries between them.
 The stock exchange provided a ready, continuous and permanent market for the purchase
and sale of exiting securities. Securities traded on the exchange are easily marketable and
highly liquid, less risky than other types of investment.

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