Stock markets in India have considerable depth. The market capitalisation of the BSE alone was around Rs.5 trillion in December 1994. This makes it one of the largest emerging stock markets in the world.
Of the 22 stock exchanges in the country, Bombay is the largest, with over 6,000 stocks listed. The BSE accounts for over two thirds of the total trading volume in the country. Established in 1875, the exchange is also the oldest in Asia. Approximately 70,000 deals are executed on a daily basis, giving it one of the highest per hour rates of trading in the world.
Ahmedabad, Delhi, Calcutta, Madras and Bangalore are some of the other stock exchanges. These stock exchages are served by 3,000 brokers and 20,000 sub-brokers.
All companies having a minimum issued capital of Rs.30 million can apply for listing on a stock exchange. Previous track record is not a pre-requisite. In the case of new companies with foreign equity participation, the public offer should not be less than 20% of the issued capital, and the Indian promoter's share should not be more than 40% of the issued capital.
For new companies without any foreign equity participation, the public offer is required to be at least 60% of the issued capital.
Stock exchanges are required to ensure that the companies concerned, have a valid acknowledgement card issued by SEBI. SEBI vets the offer document, to ensure that all disclosures have been made by the company, in the offer document, at the time the company applies for listing of its securities to the stock exchange.
The Over The Counter Exchage of India (OTCEI) allows listing of small and medium sized companies. The first issue listed on the OTCEI was in July 1992. The minimum issued share capital of a company requiring listing on OTCEI is Rs.3 million and the maximum Rs.250 million.
Listing on OTCEI is advantageous to companies because of the high liquidity of these securites, which is a result of compulsory market making, improved access and speed of transactions resulting from the extensive network of electronically interlinked counters.
Companies engaged in investment, leasing, finance, hire purchase, amusement parks etc., and companies listed on any other recognised stock exchange in India are not elegible for listing on OTCEI. Also, listing is granted only if the issue is fully subscribed to by the public and sponsor.
The National Stock Exchange is a computerised market for debt and equity instruments.
Centre for Monitoring Indian Economy, Bombay
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Last updated: May 1995.