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Based on secondary research. Basic theory of markets, basically financial and capital market.

Based on secondary research. Basic theory of markets, basically financial and capital market.

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  • 1.  
  • 2. STOCK MARKETS Presented By: Shilpi Jain
  • 3.  
    • In economics, a financial market is a mechanism that allows people to easily buy and sell financial securities, commodities, and other fungible items of value at low transaction costs & at prices that reflect the efficient-market hypothesis.
  • 5. Financial Markets Contd.
    • Whereas in finance, financial markets facilitate–
    • The raising of capital
    • The transfer of risk
    • International trade
    • & are used to match those who want capital to those who have it.
    • Financial markets have evolved significantly over several hundred years & are undergoing constant innovation to improve liquidity.
  • 6. Financial Markets Contd.
    • In our country, there is a large informal financial sector coexisting with the organized one.
    • Several steps have been taken to expand the scope of organized markets.
    • Yet, significant segments of our economy are outside the organized sector.
    • There is an urgent need to analyze the participants, magnitudes, nature and characteristics of the unorganized and informal financial markets & to explore ways of either bringing them directly into the mainstream or establish suitable linkages with the organized financial markets.
  • 7. Financial Markets Contd.
    • The main segments of the organized financial markets or the types of Financial Markets are:
  • 8. FINANCIAL MARKETS Capital Markets Commodity Markets Money Markets Derivatives Markets Insurance Markets Foreign Exchange Markets Government Securities Market
  • 9. CAPITAL MARKETS Stock Markets Bond Markets DERIVATIVES MARKETS Futures Markets
  • 10. Financial Markets Contd.
    • The capital market is the market for securities, where companies & governments can raise long term funds.
    • It is a market in which money is lent for periods longer than a year.
    • Includes the stock market & the bond market.
    • Consists of Primary Markets & Secondary Markets.
    • Newly formed (issued) securities are bought or sold in primary markets.
    • Secondary markets allow investors to sell securities that they hold or buy existing securities.
  • 11. Financial Markets Contd. Capital Markets
    • A Stock Market is a public market for the trading of company stock & derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.
    • The Bond Market (also known as the D ebt , C redit , or F ixed Income Market ) is a financial market where participants buy and sell debt securities, usually in the form of bonds.
  • 12. Financial Markets Contd.
    • M arkets where raw or primary products are exchanged.
    • These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts.
  • 13. Financial Markets Contd.
    • ● Global financial market for short-term borrowing and lending.
    • ● Provides short-term liquidity funding for the global financial system.
    • ● Participants borrow and lend for short periods of time, typically up to thirteen months.
    • ● Money market trades in short-term financial instruments commonly called "paper."
    • ● This contrasts with the capital market for longer-term funding, which is supplied by bonds & equity.
  • 14. Financial Markets Contd.
    • Financial markets for derivatives.
    • Divided in two:
    • For Exchange Traded derivatives & that for Ov er- The-Counter (OTC) derivatives.
    • ● A futures exchange is a central financial exchange where people can trade standar dized futures contracts; that is, a contract to buy specific quantities of a commodity or finan cial instrument at a specified price with deliver y set at a specified time in the future.
  • 15. Financial Markets Contd.
    • Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought prevent a large, possibly devastating loss.
    • An insurer is a company selling the insurance.
    • An insured is the person or entity buying the insurance.
  • 16. Financial Markets Contd.
    • Also known as Currency, Forex or FX markets.
    • Currency trading takes place.
    • It is where banks and other official institutions facilitate the buying and selling of foreign currencies.
    • FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another .
  • 17. Financial Markets Contd.
    • One of the most important segments of the financial market.
    • Serves as an important transmission channel for monetary policy.
    • Without it, or with one that functions poorly, the regulatory power to intervene during times of crisis would be severely circumscribed.
  • 18. Financial Markets Contd.
    • Indian financial markets are governed by three regulators namely :
    • Securities & Exchange Board of India (SEBI) that governs the Equity markets and Depositories.
    • Forward Market Commission (FMC) that governs Commodities markets.
    • Reserve Bank of India (RBI) that governs Fixed Income Money Markets.
  • 19.  
  • 20. Financial Markets Contd.
    • The three regulatory bodies don’t interfere in one another’s area , though the regulatory frame work of SEBI and RBI overlap to some extent.
    • The two stock exchanges in India, governed SEBI, National Stock Exchange (NSE) & Bombay Stock Exchange (BSE), contribute almost 99.9% turnover in the market.
  • 21. Financial Markets Contd.
    • The Depositories takes care of the share certificates in Dematerialized (DEMAT) form thus enhancing the efficiency of markets.
    • There are two depositories in Indian market namely:
    • 1) National Securities Depositories Limited (NSDL)
    • 2) Central Depositories Services Limited (CDSL)
    • ● These depositories also hold Commodities in DEMAT form.
  • 22. Financial Markets Contd.
    • The Commodities Market is governed by Forward Market Commission (FMC) .
    • The two prominent Commodities exchanges in India are:
    • 1) Multi Commodity Exchange (MCX)
    • 2) National Commodities & Derivatives Exchange (NCDEX)
  • 23. Financial Markets Contd.
    • Reserve Bank of India (RBI) governs money markets in India .
    • The trading platform for money markets is Negotiated Dealing System (NDS).
    • Trading in money markets is dominated by Institutional players and thus retail investors can participate only through Liquid Mutual funds.