Need for Strong Financial Market in India

Need for Strong Financial Market in India

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By allocating resources and generating liquidity for businesses and entrepreneurs, financial markets are essential to the efficient operation of capitalist economies. Sellers and Buyers are able to conveniently trade within their financial holdings because of the financial markets. The securities produced by the financial markets offer a return to investors and lenders who have excess funds and make these funds accessible to borrowers who require additional funds. The Indian Financial Market has created and is greater now subsequent to changing approaches in 1991 and is not quite the same as what it used to be, harking back to the 1980s. The following are some of the advantages of a functioning financial market:

• Using financial products to help investors manage their capital over a variety of time horizons.

• It gives businesses a way to raise money based on whether they need short-term or long-term financing from the private sector or the government.

• Reducing risks through various methods like diversification or hedging

• Serve as a mirror for the economic circumstances of the nation or states.

• Stimulator of confidence for attracting capital through investments or inflows from abroad.

• Gives market participants access to information, allowing them to take precautions.

In the current scenario, the financial market has evolved into a determining factor for how well the global or national economies are doing. On the stock and bond exchange markets, it is simple to observe the impact of fiscal and monetary economic policies implemented by the government. The performance of both the sovereign and the businesses is reflected in the volume of trades in bonds and stocks. For instance, the bond and equity markets are clearly affected whenever the RBI decides to raise or lower interest rates.

Monetary Business sectors are utilized by created economies to keep up with their financial and social strength and increment their monetary level. In order to finance their BOP (balance of payments), dormant or developing economies turn to financial markets, accelerating their development plan for social and economic stability. The growth of the financial market in new or developing economies is dependent on the government's reforms, which should also be designed to match the frequency of investor requirements on a local or international level. To achieve their goal of creating jobs and reducing poverty, they place a high value on the financial sector's expansion and development.