Weaknesses of Stock Exchanges In India

· Lack of Professionalism:- Stock Broker in India lacks proper education, business skills etc which inhibit them to provide proper service to clients. They are not able to guide & council their clients in a proper manner.

· Domination of financial institutions:- UTI, LIC, GIC are major players in Indian stock markets. Buying & selling by institutions sets the position in market like market goes bullish if Financial Institutions starts buying shares & vice versa.

· Poor Liquidity:- A Small no. of scrip’s are regularly traded in stock exchange. Out of over 3000 scrip’s less then 500 scrip’s are traded and even out of these 90 % volume of trade confines to between 200-250 scrip’s.

· Dominated by Big Operators:- In BSE, 3-4 operators used to call the shots like Harshad Mehta, he created bullish condition in stock exchange in Ist Quarter of 1992 and Sensex nearly doubled in a very short period. Artificial Increase in price of shares affected the investing public and people suffered huge losses.

· Less Floating Stocks:- Shares and debentures offered for sale are a small portion of total stocks. FI’s and JSC’s having a control over 75% do not offer them for sale.

· Speculative Trading:- Operators try to derive benefit out of short term price fluctuations. At BSE, up to 5% and at other stock exchange up to 10 % are genuine. Investment deals broker try to create a sentiment in the market which will be beneficial to them.