A capital market is a financial market where long-term securities such as stocks and bonds are bought and sold. It facilitates the raising of capital for businesses, governments, and individuals by connecting investors with entities that need funding. The capital market is divided into the primary market, where new securities are issued, and the secondary market, where existing securities are traded. Key institutions include stock exchanges, investment banks, and regulatory bodies. Efficient capital markets promote economic growth by enabling capital formation, liquidity, and investment opportunities. Examples include the New York Stock Exchange (NYSE) and Bombay Stock Exchange (BSE).
Features of Indian Capital Market:
(a) Dealing in Securities: It deals in long-term marketable securities and non-marketable securities.
(b) Segments: It included both primary and secondary market. Primary market is meant for issue of fresh shares and secondary market facilitates buying and selling of second hand securities.
(c) Investors: It includes both individual investors and institutional investors such as Mutual funds, banks, Insurance companies etc. It also includes foreign institutional investors.
(d) Link between savers and investment opportunities: Capital market is a crucial link between saving and investment process. It facilitates flow of long term capital from those who have surplus capital to those who need capital.
(e) Intermediaries: It acts through intermediaries which includes bankers, brokers, underwriters etc.
(f) Government rules and regulations: The capital market operates freely but under the guidance of government policies. These market functions within the framework of government rules and regulations.
