A Stock Market, also known as a Secondary Market or a Stock Exchange is a market existing for the purchase and sale of investable assets known as stocks.
An efficiently functioning Stock Market critically contributes to the growth and development of a country for it gives companies the ability to access funds from the public, helps existing investors to disinvest and new investors to enter the market and also provides liquidity and marketability to existing securities. Advances in the field of information technology have made trading through Stock Exchanges much more accessible from all corners of the world through trading terminals. Today we simply need to glance at our phones to know about the current conditions of the Stock Market and whether or not it is a wise time to enter it.

A Stock Exchange has certain important functions of which the two main ones are: –
-To provide companies with capital to fund and expand their businesses
-To provide investors the opportunity to share in the profits of publicly traded companies.

Other than these, some functions of a Stock Market include the following:
1: Providing Liquidity and Marketability to existing securities: A Stock Exchange creates a continuous market where securities can be bought and sold. This allows the process of disinvestment and reinvestment thus providing liquidity and marketability to existing securities.

2: Safety of transactions: The membership of a Stock Exchange is regulated and its dealings well defined according to the legal framework, thus ensuring investors get a safe and fair deal.

3: Contribution to economic growth: As a market that allows the process of disinvestment and reinvestment, savings get channelized into their most productive avenues, thus leading to capital formation and economic growth.

The history of Stock Markets in India goes back to the end of the 18th century when long term negotiable securities were first established. In 1850, the Companies Act was first introduced and brought with it the feature of limited liability thus, generating investor interest in corporate securities. The first Stock Exchange in India was set up in Bombay in the year 1875 and called the Native Share and Stock Brokers Association. Today, it is simply called The Bombay Stock Exchange. Until the 1990’s, The Indian Stock Market only consisted of regional stock exchanges. It was only after the reforms of 1991 that the Indian secondary market acquired a three tier form comprising of the regional stock exchanges, The National Stock Exchange (NSE) and the Over The Counter Exchange of India (OTCEI)

THE NATIONAL STOCK EXCHANGE(NSE)
The National Stock Exchange was incorporated in 1992 and recognised as a Stock Exchange in April, 1993. It was set up by leading financial institutions and banks and serving some important objectives which include:
1: Establish a Nationwide trading facility for all types of securities.
2: Ensure equal access to investors all over the country through a well-established communication network.
3: Meet International benchmarks and standards.
Within just a few years, NSE has been able to achieve these objectives and change the face of the Indian capital market for the better.


OVER THE COUNTER EXCHANGE OF INDIA (OTCEI)
The OTCEI was incorporated under the Companies Act in the year 1956 and acts as a forum where small and medium companies can access finance in a cost effective manner to expand and grow their businesses.
Their main objective was to hence provide a trading platform for smaller, less liquid companies as they are not eligible for listing in a regular exchange.
In an OTC exchange, there is no particular market place in the geographical sense. Trading happens simply when a buyer or seller walks up to an OTCEI counter, taps on the computer screen at hand, finds quotations and then proceeds to effect a purchase or sale depending on whether the prices meet their targets.

stock exchange

In order to oversee the working of these Stock Exchanges and protect the interests of investors, the Indian Government further introduced the: SEBI- SECURITIES AND EXCHANGE BOARD OF INDIA.

SEBI, established in the year 1988 acts as an administrative body that promotes the orderly and healthy growth of our Stock Markets and prevents any kind of malpractices on the part of companies, brokers, merchant bankers and all others involved in the securities market.
– SEBI ensures that all brokers, sub brokers and other players in the market are registered.
-Ensures the regulation of stock brokers, portfolio exchanges, under writers etc. in the market.
-Ensures training of intermediaries in the market.
-Conducts research and publishes information useful to all market participants.
-Controls insider trading and imposes penalties for such practises.

In brief, SEBI is what ensures that our stock market runs as smoothly and fairly as it does today, and creates an environment inclusive of set rules and regulations that ensures the efficient mobilisation and allocation of resources through the securities markets.