The Indian Equity Market is also popularly known as the share market. The forces moving the market depend mainly on monsoons, global funds flowing into equities and the performance of various companies.
The Indian Equity Market is almost wholly dominated by two major stock exchanges – National Stock Exchange of India Ltd. (NSE) and The Bombay Stock Exchange (BSE). The benchmark indices of the two exchanges – Nifty of NSE and Sensex of BSE are closely followed. The two exchanges also have an F&O (Futures and options) segment for trading in equity derivatives including the indices. The major players in the Indian Equity Market are Mutual Funds, Financial Institutions and FIIs representing mainly Venture Capital Funds and Private Equity Funds.
All trading on the Indian bourses is carried out in dematerialized form. Shares held in physical form remain illiquid and cannot be sold in the market by any investor since there is no liquidity for physical stocks. Furthermore, SEBI has mandated that securities be sold only in dematerialized form in the T+2 rolling settlement systems. SEBI has also mandated that all IPO’s be traded compulsorily in the dematerialized form
Indian Equity Market at present is a lucrative field for investors. Indian stocks are profitable not only for long and medium-term investors but also the position traders, short-term swing traders and also very short term intra-day traders. In India as on December 30, 2007, market capitalization (BSE 500) at US$ 1638 billion was 150 per cent of GDP, matching well with other emerging economies and selected matured markets.
SBI DFHI Limited is also trading in equities and equity derivatives after RBI allowed stand-alone PDs to diversify their activities in 2006.