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In India, the history of capital markets dates back to the 18th century when East India Company securities traded the country. The present study is largely based on the available secondary data. The statistical data regarding growth of the capital markets was available from various websites. Capital markets help to channelize surplus funds into productive use. Generally, this market trades mostly in long-term securities. The important divisions of the capital market are stock market, bond market and primary, secondary markets. Primary markets deal with the trade of new issues of stocks and other securities, whereas secondary market deals with the exchange of existing or previously-issued securities. Our finding is that during the first and second five year plans, the Government emphasized on the development of agriculture and public undertakings. The Public sector undertaking was healthier than Private undertakings, but shares were not listed in the stock exchange. More over controller of Capital Issue (CCI) closely supervised everything. A number of investors were interested to invest their savings in debentures instead of company deposits. We conclude that Capital markets were not well organized and developed during the British rule. But in the present scenario, we find that Capital markets are well developed after the introduction of SEBI. Through provision of long term loans, the capital market brings about effective functioning of various sectors of the economy. A sound and efficient capital market is one of the most instrumental factors in the economic development of a nation.
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