Akash Deep, Dr Vijay Srivastava
Abstract: During the Nineteen Eighties, the developing countries started liberalizing their economies. There has been larger stress on the event of equity markets as an area of economic reforms. India has also followed this path. globalization, financial markets are becoming more and more important every day. A developed stock market is considered crucial to national economic growth as it provides an additional channel along with banks and other financial institutions, for encouraging and thus mobilizing domestic savings. It additionally ensures enhancements within the productivity of investment through the market allocation of capital and will increase management discipline through the marketplace for company control. A study by the World Institute for Development Economic Research (WIDER, 1990) has argued that the developing countries should liberalize their financial markets in order to attract foreign portfolio equity flow. The huge amount of financial capital available in the developed countries through pension and investment funds could be attracted to the developing countries provided the latter liberalize their markets externally and developed their stock market internally. Capital markets have taken a distinguished place within the developing countries national economy throughout the last decade. The most necessary live taken during this regard by developing countries was the gap of their individual stock markets to international investors. This step, taken in the late 1980s or early 1990s, resulted in a historically high level of portfolio investment in the emerging markets by global and regional funds. In developing countries like India, there is a great need for foreign capital not only to increase the productivity of labor but also to build a foreign exchange reserve to meet trade deficits. After opening up the borders for capital movement in 1991, foreign investment in India has grown enormous.
Keywords: Equity Market, Capital Market, Economy, Productivity, Marketplace, Financial Institutions, Investors, Foreign Investment