Page 62 - DMGT401Business Environment

Unit 2: Industrial Policy and Regulatory Structure

According to this Act, securities include: (i) Shares, scrips, stocks, bonds, debentures, stock or Notes
other marketable securities of a like nature in or of any incorporated company or body corporate;
(ii) Government securities or such other instruments as may be declared by the Central
Government to be securities, and (iii) Right of interest in securities.
Stock exchange is regarded as "an essential concomitant of the capitalistic system of economy. It
is indispensable for the proper functioning of corporate enterprise. It brings together large
amounts of capital necessary for the economic progress of a country. It is the citadel of the capital
and the pivot of money market".
It provides necessary mobility to capital and directs the flow of capital into profitable and
successful enterprise. It is the barometer of general economic progress in a country and exerts a
powerful and significant influence as a depressant or stimulant of business activity. It may be
defined as "the place or market where securities of joint stock companies and of government or
semi government bodies are dealt in".

2.3.2 Major Stock Exchanges in India

Bombay Stock Exchange

The Bombay Stock Exchange is one of the oldest stock exchanges of India and Asia and it is also
one of the biggest stock exchanges of the world. It is said to be the nerve of the Indian economy
which reveals the health of economy. The Bombay Stock Exchange had a turnover of 6,8,028
crore and a market capitalisation of 9,12,842 crores in 1999-2000. Its business is no more
confined to Mumbai alone. In March 2000 it had 275 cities covered by the BOLT network and an
increase in the number of Trader Work Stations to 3803. Its daily turnover had increased from
11 crore in 1979-80 to 4587 crore in 2000-01.
It was established in 1857 and at that time its membership fee was just Re. 1. It increased to 5 in
1877, 1000 in 1896, 2,500 in 1916, 6,600 in 1929, and 62,000 during post World War II period.
It was more than 3 crore in 1992, and was about 2 crore in 1997.

The BSE introduced Bombay On-Line Trading (BOLT) System on January 19, 1995. It provides a
quote-driven automated trading facility with an order book functioning as an auxiliary jobber.
The process of transferring the equity scrips listed on the BSE from trading in the ring to the
BOLT system was completed on July 3, 1995. The BSE also began debt trading also on the BOLT
system from June 26, 1995 in respect of 60 actively traded debentures.
National Stock Exchange

The NSE was incorporated in November 1992 with an equity capital of 25 crores. It is sponsored
by IDBI and co-sponsored by other term-lending institutions, LIC, GIC, other insurance companies,
banks and financial institutions, viz., SBI Capital Market Ltd., Infrastructure Leasing and Financial
Services Ltd. (ILFS), Stock Holding Corporations Ltd. (SHCL), and the International Securities
Consultancy (ISC) of Hong Kong which have helped in setting up of the NSE. NSE has a fully
automated, electronic, screen-based trading system through which it has overcome geographical
barrier.

The market capitalisation of NSE was 10,20,426 crores on March 1, 2000. Its objectives of
NSE are:
1. To provide fair, efficient and transparent nationwide trading facility for equities, debt
instrument and hybrids.

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