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  2. 2.  Capital market is defined as a market which provides long term capital to the industrial sector for various items of fixed capital expenditure under various heads such as land, building, plant & machinery, which are permanent in nature and are used for production.
  3. 3.  In a primary market, securities are offered to public for subscription for the purpose of raising capital or fund.  New issues market  New issues of common stock ( share) , bonds, preference share are sold by the companies, government and local authorities, corporation, to acquire new capital
  4. 4.  Secondary market is an equity trading avenue in which already existing / pre-issued securities are traded among investors  Securities already outstanding and owned by investors are usually bought and sold through secondary market  Proceeds from the sale in a secondary market do not go to the issuing organization but to the current owner of the security
  5. 5.  Information Motivated Reasons  Liquidity Motivated Reasons
  6. 6.  Investment Companies  Corporation which uses the capital subscribed by its shareholders to build up a portfolio of securities for long term capital growth  Sources of Funds: for such investment company is share capital, borrowed money, undistributed profits, investment income and capital gains on the sale of shares in their portfolio
  7. 7.  Portfolio Management Companies  It is a company which has arrangement with a client, advises or directs or undertakes on behalf of the client, the management of administration of a portfolio of securities or funds of the client, as the case may be
  8. 8.  Mutual fund companies  It is an investment company or a trust that pools the resources of thousands of its unit holders and invests on behalf of them in diversified securities to achieve returns in terms of income and growth to the investors
  9. 9.  Insurance companies  Collecting premium from the people in return providing insurance  Protection to life and property  Premium deposited monthly/ quarterly / yearly  Investment avenue
  10. 10.  Institutional investors  Financial institutions and banks bring the savings of individuals to companies  Two ways:  Financing projects  Purchasing existing securities from the secondary market
  11. 11.  Share broker  Depository Participant ( DP)  Registrar and Share Transfer Agent  Records of shares through various folios  Capture the sign of investor in the IPO form  Big role to play in sending dividends, right forms, bonus shares
  12. 12. Share  A holder of stock (a shareholder) has a claim to a part of the corporation's assets and earnings. A shareholder is an owner of a company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own and have claim to 10% of the company's assets.
  13. 13. 1)Ordinary shares: No special right or restriction  High risk-High return  Last to be paid if the company is wound up 
  14. 14. 2)Preference shares It gives preferential treatment to the holders in following ways  Annual dividend  Repaid the value if the company is to be liquidated However, the preferential share holder is not benefited if there is an increase in the profits of the company
  15. 15. 3) Cumulative preference share  These shares give the holders , if a dividend cannot be paid in one year.  Dividends are paid even if the earning levels of the company are not stable. Bonus Share: Bonus shares are issued when a company capitalizes its reserves and surplus to give bonus shares to existing shareholder.  Bonus issue is offered in a particular ratio. 
  16. 16. Redeemable shares:  can be bought back by the company at a future date, date is not mentioned at the time of issue. Rights Shares:  Rights Issue is offered to the existing shareholders when the company has to borrow capital from the market  Rights Issue is offered in a particular ratio
  17. 17. Investors Traders Bull Bear
  18. 18.  Growth rate exceeding 8 % in the last 4 years  Mergers and acquisitions  Foreign Exchange markets  Commodity market attained scale  Banking industry  Microfinance sector emerged to outreach and provide much needed financial services to poor Indian households
  19. 19.  Indian economy  Culture of liscensing, protection and wide spread red tape breeding corruption  Balance of payments  GDP- 3.5% to 8.5 % in 2008  End of License Raj- new investment and capacity creation
  20. 20.  Biggest structural change- fall in the interest rates , reducing the cost of capital for companies  Rise in imports and exports  Share of foreign trade in India’s GDP has increased over 50%  Due to increase in exports, increase in foreign exchange reserves  Portfolio Investments and FDI  Bureaucracy, poor infrastructure, rigid labour laws and unfavourable tax structure discourage FDI
  21. 21.  Number of stock exchanges in India-23  At the time of independence-4  Price appreciation in the stock prices from mid 2003 to mid 2007  Role of FIIs money  At the end of 2005, BSE was 16th largest stock market in the world and NSE was 18th in terms of market capitalisation
  22. 22.  In 2004-05, private companies raised $ 2.7 bn from the market  $ 378 mn by bonds/ debenture  In 2005, about 5000 cos. were listed and traded on NSE / BSE  The dollar value of trades is much lower than on NYSE but number of trades is 10 times more that on Euronext or London  Its of the same magnitude that on NYSE
  23. 23.        Bombay Stock Exchange- oldest stock exchange in Asia, established in 1875 Until 1992 was a monopoly in the market, marked with inefficiency, high costs of intermediation and manipulative practice The economic reforms created 4 new institutions The Securities and Exchange Board of India(SEBI) The National Stock Exchange ( NSE) The National Securities Clearing Corporation (NSCC) The National Securities Depository( NSDL)
  24. 24.    NSE accounts for 2/3rd of the stock exchange trading in India NSCC is legal counterparty to net obligations of each brokerage and thus eliminates counter party risk It follows rigorous risk management framework involving collateral and intra day monitoring
  25. 25. Regulatory framework to ensure fairness, transparency and good practice  Transparency eg: when total no. of shares is more than 0.5 % of the equity of the company  From 1996, transparency and fairness in the working of BSE; Limit order book  Brokers disclosure  Playing a role of watch dog  Addressing consumer grievances 
  26. 26.        Retail investors Mutual fund companies Banks Insurance companies Venture capital funds FIIs Introduction of Derivatives- Futures and options- Biggest development in the Indian Capital markets with turnover increasing 50 to 70 times in the past 5 years
  27. 27.   The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the largest electronic screen-based equity securities trading market in the United States and secondlargest by market capitalization in the world. As of January 13, 2011, there are 2,872 listings. The NASDAQ has more trading volume than any other electronic stock exchange in the world.