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Composition of the Indian Capital Market, Indian Economy Video Lecture | Business Economics for CA Foundation

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FAQs on Composition of the Indian Capital Market, Indian Economy Video Lecture - Business Economics for CA Foundation

1. What is the composition of the Indian capital market?
Ans. The Indian capital market is composed of two major segments: the primary market and the secondary market. The primary market is where companies issue new securities to raise capital, while the secondary market is where these securities are traded among investors.
2. How does the Indian capital market contribute to the Indian economy?
Ans. The Indian capital market plays a crucial role in the growth and development of the Indian economy. It provides a platform for companies to raise funds for expansion and investment through the issuance of stocks and bonds. Additionally, it enables investors to trade securities, which promotes liquidity and efficient allocation of capital.
3. What are the key participants in the Indian capital market?
Ans. The Indian capital market involves various participants, including investors, issuers, intermediaries, and regulators. Investors include individuals, institutional investors, and foreign investors who buy and sell securities. Issuers are companies or governments that issue securities to raise capital. Intermediaries, such as stockbrokers, merchant bankers, and depository participants, facilitate the trading and settlement of securities. Regulators, such as the Securities and Exchange Board of India (SEBI), oversee and regulate the functioning of the capital market.
4. How does the primary market function in the Indian capital market?
Ans. In the primary market, companies issue new securities to raise capital. This can be done through initial public offerings (IPOs), where companies offer shares to the public for the first time, or through rights issues, where existing shareholders are given the opportunity to purchase additional shares. The primary market facilitates the direct transfer of funds from investors to companies, enabling them to finance their operations and expansion plans.
5. What role does the secondary market play in the Indian capital market?
Ans. The secondary market is where previously issued securities are traded among investors. It provides a platform for investors to buy and sell securities after their initial issuance in the primary market. The secondary market promotes liquidity, as investors can easily convert their investments into cash. It also facilitates price discovery and ensures fair value for securities by allowing market forces of supply and demand to determine their prices.
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