A 

 PRESENTATION ON
 “EFFECT OF REFORMS ON STOCK MARKETS”


 PRESENTED BY


 PETHE SARANG S.
 RUPESH KUMAR S.
 HARSHA S.
 SANGAY D.
 PRAJWAL MAN SHRESHTHA
 SUBBA REDDY M.V.
 AGENDA…..

• CAPITAL MARKETS.
• HISTORY.
• NEEDS OF REFORMS.
• STOCK MARKET REFORMS.
• EFFECT OF REFORMS.
INTRODUCTION TO FINANCIAL
MARKETS
Capital markets: Raise of long term funds
for a period longer than a year

Primary market: Deals with new

issue of securities
Secondary market: Deals with
the existing securities
 HISTORY OF STOCK MARKET
AND PRE-REFORM SCENARIO

 During 18th century the trading of securities was done as loan trading.
 The Indian Stock Exchange came into scenario with the establishment of
Bombay Stock Exchange in 1887.
 In 1956 Government came with the new legislation called Securities
Contract Regulation Act (SCRA).
 Before 1991 the Indian market was dominated by scrip of new issue market.
 Unfair practices involved due to no prohibition on insider trading.
 Till 1990 the nature of Indian Stock Market was not too liberal and there
was restriction on foreign investment.
 During this period the Indian economic condition was worse due to
reduction on capital inflow.
 NEED FOR REFORMS
In 1991,
• Foreign exchange reserves was merely Rs. 2500
crores.
• Fiscal Deficit estimated more than 8 % of GDP which
was 6 % in 1980s and 4 % in 1970s
• Internal public debt accumulated to 55 % of GDP.
• Interest payments was 4 % of GDP.
• Price Index increased by 13.6 %.
• Govt. want to recover from this situation and thus
reforms came into pictures.
Source: finmin.nic.in


 STOCK MARKET REFORMS

• Screen Based Trading through NSE

• Securities and Exchange Board of India (SEBI)
• Introduction of derivatives products Index/Stocks
futures and options
• Dematerialization of shares.


Source: sebi.com



 CONTD….
 It was after 1991 economic reforms that the government
gave statutory recognition to SEBI in 1992
 It focuses on replacing the traditional brokers by the
automated electronic system.
 After 1991 govt. allowed foreign investors to invest in local
share mkt. where as the local people can invest in foreign
stock market too. It comes under SEBI Foreign Institutional
Investors Regulation 1995.
 Providing Credit rating agencies.
 EFFECTS OF STOCK MARKET
REFORMS
• Capital issue control act abolished.
• Trading system.
• Removal of badla system.
• FDI & FPI.
• Fund raising by Indian company in India and abroad.
• Checking volatility.
• Opening of mutual funds.
• Setting up of SEBI.
•
Source: sebi.com
 CHANGES IN NIFTY PRICES

Source: nseindia.com
THANK YOU…
 ANY
QUESTIONS???