WORLD'S 4th LARGEST STOCK MARKET: INDIA

Context:

1. As of January, 2024, India overtakes Hong Kong to become 4^th-largest stock market, as reported by Bloomberg.
2. The top 3 global stock markets are the United States, China, and Japan.

What is the Stock market?

The stock market serves as a platform where a wide range of securities, including stocks, bonds, Exchange Traded Funds (ETFs), derivatives, and more, are traded by both individual and institutional investors.

There are 2 types of stock market:

1. Primary Market: New shares, bonds, etc., are offered for the first time.
2.  Secondary Market: Existing securities (equities, bonds, etc.) are traded. e.g., Stock exchanges like Bombay Stock Exchange, National Stock Exchange etc.

The regulatory framework overseeing the market in India is governed by 4 main laws:

1. Companies Act, 2013
2. Securities and Exchange Board of India Act, 1992 (SEBI Act)
3. Securities Contracts (Regulation) Act, 1956 (SCRA)
4. Depositories Act, 1996

The Securities and Exchange Board of India (SEBI) holds the overarching responsibility for the development, regulation, and supervision of the stock market.

About Securities and Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) is a regulatory body established by the Indian Government in 1992 and endowed with statutory powers under the SEBI Act, 1992.

Objective: SEBI's primary goal is to regulate the securities market in India and safeguard the interests of investors involved in securities.

Significance of Stock market:-

1. Capital Formation and Economic Growth: The stock market serves as a vital platform for companies to raise capital through Initial Public Offerings (IPOs), enabling business expansion, innovation, and contributing to overall economic growth.
2. Economic Indicators and Confidence: Movements in the stock market are closely monitored as indicators of economic health. Bull and bear markets can reflect optimism or pessimism, influencing investor and consumer confidence and shaping economic policies.
3. Corporate Governance and Transparency: Publicly traded companies in the stock market adhere to stringent regulatory standards, fostering transparency and accountability. This contributes to improved corporate governance practices, benefiting investors and the overall financial ecosystem.
4. Wealth Distribution and Economic Inclusivity: Participation in the stock market allows a broader segment of the population to share in the ownership and success of companies, promoting economic inclusivity and contributing to the distribution of wealth.
5. Global Integration and Investment Diversification: The stock market facilitates global investment, enabling diversification for investors and offering companies access to an international capital pool. This global integration enhances economic resilience and fosters cross-border economic relationships.

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