Scope of Financial Market in India

April 2, 2021 By TechWorldMe 0
Financial Market In India

The Indian Financial market is a rapid expansion in terms of the growth of existing entities and new firms in the market. Financial Market provides credit to those sectors and places where it requires. It includes primary market, Foreign Direct Investment (FDI), Stocks and bonds, commodities market like agriculture, mining, goods, and services.

This is the market where buyers and sellers easily sell and purchase shares, bonds, debentures, and derivatives. It helps in providing employment in the economy.

History of Indian Financial Market

The Indian capital market began after British rule about 200 years ago. Prior to 1991, there was no regulatory system to govern the Indian financial market. The market, therefore, had many flaws, and no proper regulatory system.

Mumbai as the Bombay Stock Exchange (BSE) with 200 to 250 securities was first India’s financial market. There were three securities exchanges in India Mumbai, Delhi, and Kolkata.

After the New economic policy in 1991 liberalization played a major role in the spurt of the Indian securities market. New foreign companies came into India, many IPOs issued in different sectors of the economy, and business began to flourish. The launch of the National Stock Exchange (NSE) and India’s counter exchange (OTCEI) helped in smooth functioning.

Types of Financial Market.

There are four types of the market where investors and those who are in need of investments meet each other.

Capital Markets 

It is a place where savers and investors meet each other. investors find savings in one place. It provides the flow of money through some instruments which are given below :

Stock market: It is a very popular market where billions of transactions take place every day.

It is a market where firms can take loans by issuing their company’s shares. Primary market issues first-hand shares. Secondary market investors sell and purchase shares and bargain.

Bonds Market: Market where bonds are issued at a fixed rate of interest and other amenities by the firms. Government issues treasury bills to raise capital.

Money Markets

In this market, money received in the short term. The time of trading securities is less than one year. It would include certificates of deposits, banker’s acceptance, commercial papers, and municipal stamps. It is very riskier as more risk, more profit, and vice-versa.

Spot markets

In this market, trade happens through cash only. It is a very volatile market, advisable to stay away from first-time investors as it is very complex in nature. Trade is done at the current market price.

Derivatives Market

Forces of demand and supply is an instrument where the price is determined in the market. It is a very risky market as it is known as a speculation market. Price is predictable in the market as one can become a billionaire in a short period of time or poor.

Functions of the financial market.

The financial market plays a very important role in providing credit facilities to investors. It provides a strong economy for the country.

Use of savings in productive source

Institutions like banks, LIC use savings to grant loans to individuals or company’s need in this investors financial requirement is fulfilled.

Fixes the price of Securities

All investor’s main motive is to earn profit. Forces of demand and supply determine the market price. 

Liquidity of asset 

Buyer and seller can sell and purchase assets at any time of financial market time as they desire.

Indian Economy

As a developing country, there is huge potential for growth and development of the primary, secondary, and tertiary sectors. India is continuously giving outsourcing services to developed countries.

There is a big scope in various fields like information technology (IT), business process outsourcing (BPO), and many other foreign industries to establish their roots in India. That the region why India’s financial market will go up in the sky at a fast pace.

Foreign investment in technology and the Indian government’s policy are good for investors in India’s financial market. India’s economy is going towards the export-oriented and manufacturing hub.

The government has announced the desi goods as made in India goods and services which help to boost Indian industries and their price of shares will rocket high.

Financial Market at the time of Recession 

The Indian financial market changed during the recession but did not change like the market of other countries. The major institutions like RBI realize the loopholes of these problems like fall in export, restriction of domestic companies, to trade in foreign stocks and shares. People’s are spending and saving decline as a result of unemployment arise.

News and Articles

News and articles are the best sources of providing information about the capital market and stock market. It gives information about the various prices of shares and their valuation.

Beginner investors can take information about the financial market from a reliable source of data from a particular news agency about the market.

Growth of Indian Financial market in 10 years

There is no doubt that India’s financial market has shown a spurt in the financial sector.NEP (New Economic Policy 1991) and the Establishment of the Stock Exchange Board of India (SEBI). there has been an increase in the value of India’s GDP and stocks and shares of the financial market. There is numerous participation of New firms and issuing of IPOs in the market. 


From the above content, India’s financial market is one of the world’s leading markets and becoming larger and larger day by day. We can say that the Indian financial market is lucrative for investors. Who is willing to invest.