Wondering how the Indian capital market works? This is basically the market for funds which are long-term and can be loaned. This is separate from the money market which covers transactions in short-term funds. The Indian capital market is basically the institutional facilities and provisions for lending and borrowing of term funds or those funds with medium or long tenors. Loans in the capital market are used by companies and businesses for fixed investments. Capital goods are not covered in this market although there is sustained focus on raising capital.