In recent years, globalization of capital flows has lead to the growing relevance of "Emerging Capital Markets". In particular, India is one of the countries with an expanding stock market that has started attracting foreign funds. The Indian capital market has grown henomenally due to the recently initiated liberalization process. For instance, between 1985 and 1992 the number of listed companies on the Bombay Stock Exchange (B.S.E.) increased from 4,344 to 6,480. Over the corresponding period, the market value of capital of the listed companies went up from Rs.253 billion to Rs.3,541 billion (approximately $ 110 billion). As a percentage of the G.N.P., the market capitalization of the listed companies increased from 9.7% in 1985-86 to 57% in 1991-92. However, the stock markets in India are plagued by severe illiquidity with the trading being very infrequent and concentrated in only a few stocks.