Structural And Operational Changes In Indian Securities Market
With the sweeping economic changes that are being witnessed globally towards more market-oriented economies, the Government of India too has embarked upon radical economic policies to revitalize its economy. In 2002-03, trends in the Indian capital markets were adversely affected by factors like initial slowdown syndrome, lack of investment initiative, sharp decline in FII investment to $607 mn ($2.1 bn), cross-border tensions, drought, war uncertainties, poor corporate financial results, the impact of fluctuating global markets etc. Both primary and secondary markets have experienced declining trends.
For instance, the average Sensex for 2002-03 recorded a 3.8% fall over the previous year. The third quarter of 2003-04, has given some hope to the investors. The BSE benchmark Sensex shot up to an all time high for the last 2 years and crossed the 5000 mark by the December 2003. In the beginning of 2004, the Sensex is marching fast towards the 6000 mark, closing at 5915 on January 1, 2004 the index has gained 77 points, a high of 1.7% and more than 150 scrips reached a 52-week high. A similar story is seen in the other index also. The NSE S&P CNX Nifty 50 has also risen by 1.7% to close at 1912 mark.
Any market that has experienced such volatility has a substantial demand for structural as well as operational changes. So, Indian securities market, without any exception has also passed through some changes in its settlement procedure, trading system ‘and flexibility and response time of the Stock Exchanges. To have transparency, competitiveness and create equal opportunities to all market participants, some regulations have also been introduced by SEBI. The Central Listing Authority (CLA), in this regard has been formed to guide SEBI in protecting the interests of the investors in terms of listing agreement, listing conditions and disclosure norms of a stock.
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