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<\/a>includes companies and\u00a0governments\u00a0can raise long-term funds. In other words it is defined as a market in which money is provided for a period of more than a year.<\/p>\nThe capital market includes the\u00a0stock market<\/strong>\u00a0where the equity securities are traded and the\u00a0bond market<\/strong>\u00a0where the debt securities are traded. Financial regulators, such as the India\u2019s Securities and Exchange Board of India (SEBI) or the\u00a0U.S. Securities and Exchange Commission\u00a0(SEC), oversee the capital markets in their designated jurisdictions to ensure that investors are protected against fraud<\/em>, among other duties. Certain rules and regulations are formulated by them which must be adhered to so as to safeguard the interest of the investors.<\/p>\n Based on the type of securities traded capital market is divided into two parts: stock market<\/strong> and bond market.<\/strong><\/p>\n Read On GWI <\/em>How to invest in the India Stock Market<\/em> where Management Quality is a choice between Bad and Ugly<\/em><\/a>.<\/p>\n Also the Capital markets may be classified as\u00a0primary markets<\/strong>\u00a0and\u00a0secondary markets<\/strong> based on the nature of trading facilitated by it.<\/p>\n Indian Economy<\/strong>\u00a0is the\u00a0tenth largest economy\u00a0in the world by\u00a0nominal GDP\u00a0and the\u00a0fourth largest\u00a0by\u00a0purchasing Following are the main challenges which act as a hurdle in the growth of capital market:<\/p>\n 1) Inflation<\/strong> – Inflation is the rate at which the prices for goods and services are rising and subsequently, purchasing power is falling. The inflation situation in the economy continues to be a cause of concern. Despite tightening of the monetary policy by the apex of India, RBI and other steps taken by the government, inflation continues to remain close to the double digit mark. High international oil prices, high global food prices are some of the causes of high inflation.<\/p>\n 2) GDP <\/strong>– The growth figures for Indian economy are highly disappointing and highlight an unmistakable downward trend. GDP is expected to grow by ~5-6% 2012-13<\/em>. Sectors like manufacturing and mining have seen a considerable erosion of growth momentum.<\/p>\n 3) Index of Industrial Production<\/strong> – Weakness in industrial production trend continues to be a point of concern for the economy. The recent IIP numbers was registered below expectation. Weakness was seen with growth in the capital goods segment, intermediate goods segment and consumer goods segment which slowed down drastically during these months.<\/p>\n 4) Population<\/strong> – The current population of India is over 1.23 billion,<\/em> making it the second most populous country in the world after China, with over 1.35 billion people. India represents almost 17.31% of the world’s population which is a serious concern. If the trend of growth continues, the crown of the world’s most populous country will move on India from China by 2030. The population growth rate is at 1.58% with which it is predicted India would reach 1.5 billion mark by 2030.<\/p>\nClassification of Capital Market<\/h3>\n
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Challenges of the Indian Capital Market<\/h3>\n
<\/a>power parity\u00a0(PPP).\u00a0Following a strong economic reform post-independence socialist economy, the country’s\u00a0economic growth\u00a0progressed at a rapid pace, as\u00a0the LPG policy was implemented in 1991 for international competition and foreign investment. Despite fast economic growth, India still faces massive\u00a0income inequalities, high\u00a0unemployment\u00a0and\u00a0malnutrition.<\/p>\n