The document discusses various types of financial markets and capital markets in India. It provides details about the money market and capital market. The capital market can be divided into the primary market, where new stock issues are sold, and the secondary market, where existing securities are traded. The primary role of the capital market is to raise long-term funds for governments, banks, and corporations by providing a platform for trading stocks and bonds.

1. MONEY MARKET AND
CAPITAL MARKET IN INDIA

2. TYPES OF FINANCIAL
MARKETS
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• Any marketplace where buyers and sellers
participate in the trade of assets such as
equities, bonds, currencies and derivatives.
• Financial markets are typically defined by having
transparent pricing, basic regulations on trading,
costs and fees, and market forces determining
the prices of securities that trade.
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3. TYPES OF FINANCIAL
MARKETS
Financial
Markets
Capital Market
Money Market
Cash or Spot Market
Derivative Market
Forex & The Interbank Market

4. CAPIT
ALMARKETS
➤ A capital market is one in which individuals and institutions trade
financial securities.
Organisations and institutions in the public and private sectors also
often sell securities on the capital markets in order to raise funds(Long-
Term).
Thus, this type of market is composed of both the primary and
secondary markets.
Stock markets allow investors to buy and sell shares in publicly traded
companies.
A bond is a debt investment in which an investor loans money to an
entity (corporate or governmental), which borrows the funds for a
defined period of time at a fixed interest rate.
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5. CASHORSPOTMARKETS
➤ Investing in the cash or "spot" market is highly sophisticated,
with opportunities for both big losses and big gains.
In the cash market, goods are sold for cash and are delivered
immediately.
Prices are settled in cash "on the spot" at current market
prices. This is notably different from other markets, in which
trades are determined at forward prices.
Dominated by institutional market players such as hedge
funds, limited partnerships and corporate investors.
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6. DERIVA
TIVEMARKETS
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• The derivative is named so for a reason: its value is
derived from its underlying asset or assets.
• A derivative is a contract, but in this case the contract
price is determined by the market price of the core asset.
• It can be used quite effectively as part of a risk
management program.
• Examples of common derivatives are forwards,
futures, options, swaps and contracts-for-difference
(CFDs).
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7. FOREX&THEINTERBANKMARKETS
➤
• The interbank market is the financial system and
trading of currencies among banks and financial
institutions, excluding retail investors and smaller
trading parties.
• The forex market is where currencies are traded. The
forex market is the largest, most liquid market in the
world with an average traded value that exceeds $1.9
trillion per day.
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8. WHA
TAREMONEYMARKETS?
➤
“ A market for short terms financial assets that are close substitute for
money, facilitates the exchange of money in primary and secondary
market”.
Money market transactions are generally used for funding the
transactions in other markets including Government securities market
and meeting short term liquidity mismatches.
Within the one year, depending upon the tenors, money market is
classified into:
Overnight market : The tenor of transactions is one working day.
Notice money market : The tenor of the transactions is from 2 days to 14
days.
Term money market : The tenor of the transactions is from 15 days to
one year (364 days).

9. STRUCTUREOFMONEYMARKETSININDIA
Indian Money Market
Sub Markets
Organised
Reserve bank of India
Schedule Commercial Banks
Lenders
Development Banks
Investment Institutions
Regional Rural Banks
Foreign Banks
State Financial Corp.
Discounted & Finance House of India
Unorganised
Indigenous Bankers
Domestic Money
Nidhis & Chit Funds
Traders & Friends
Brokers & Dealers
Call Money Market Bill Market 364 day Bill Market Certificate of Deposit Commercial Paper’s
Commercial Bills T
reasuryBills

10. OBJECTIVESOFMONEYMARKETS
➤ To provide a parking place to employ short term
surplus funds.
To provide room for overcoming short term deficits.
To enable the central bank to influence and regulate
liquidity in the economy through its intervention in this
market.
To provide a reasonable access to users of short-term
funds to meet their requirement quickly, adequately at
reasonable cost.
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11. MONEYMARKETININDIA
• The definition of money for money market purposes is not confined to bank
notes but includes a range of assets that can be turned into cash at short
notice.
• The average turnover of the money market in India is over Rs. 40,000
crores daily.
• This is more than 3 percents of the total money supply in the Indian
economy and 6 percent of the total funds that commercial banks have let out
to the system. This implies that 2 percent of the annual GDP of India gets
traded in the money market in just one day.
• The major player in the money market are Reserve Bank of India (RBI),
Discount and Finance House of India (DFHI), banks, financial institutions,
mutual funds, government,big corporate houses.

12. FEA
TURESOFINDIANMONEYMARKETS
➤ Existence of Unorganised Money Market.
Absence of Integration
Diversity in Money Rates of Interest Seasonal
Market
Highly volatile call money market
Absence of a well organised Banking System
Availability of credit instruments
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13. ROLEOFRESERVEBANKOFINDIA
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The Reserve Bank of India is the most important constituent of the
money market.
The aims of the Reserve Bank’s operations in the money market are:
To ensure that liquidity and short term interest rates are maintained at
levels consistent with the monetary policy objectives of maintaining
price stability.
To ensure an adequate flow of credit to the productive sector of the
economy and
To bring about order in the foreign exchange market.
The Reserve Bank of India influence liquidity and interest rates through a
number of operating instruments - cash reserve requirement (CRR) of
banks, conduct of open market operations (OMOs), repos, change in
bank rates and at times, foreign exchange swap operations.
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14. HISTOR
YOFINDIANMONEYMARKETS
➤ Till 1935, when the RBI was set up the Indian money market
remained highly disintegrated, unorganised, narrow, and
therefore, very backward.
The planned economic development that commenced in the year
1951 market an important beginning.
The nationalisation of banks in 1969, setting up of various
committees such as the Chakraborty Committee (1982), the
Vaghul working group (1986), the setting up of discount and
finance house of India ltd. (1988), the securities trading
corporation of India (1994) and the commencement of
liberalization and globalization process in 1991 gave a further fillip
for the integrated and efficient development of India money market.
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15. DEVELOPMENTSININDIANMONEYMARKETS
➤ Deregulation of the Interest Rate : In recent period the
government has adopted an interest rate policy of liberal
nature. It lifted the ceiling rates of the call money market,
short-term deposits, bills re-discounting, etc. Commercial
banks are advised to see the interest rate change that takes
place within the limit. There was a further deregulation of
interest rates during the economic reforms. Currently interest
rates are determined by the working of market forces except
for a few regulations.

16. DEVELOPMENTSININDIANMONEYMARKETS
➤ Money Market Mutual Fund (MMMFs) : In order to provide
additional short-term investment revenue, the RBI
encouraged and established the Money Market Mutual Funds
(MMMFs) in April 1992. MMMFs are allowed to sell units to
corporate and individuals. The upper limit of 50 crore
investments has also been lifted. Financial institutions such
as the IDBI and the UTI have set up such funds.
Establishment of the DFI : The Discount and Finance House
of India (DFHI) was set up in April 1988 to impart liquidity
in the money market. It was set up jointly by the RBI, Public
sector Banks and Financial Institutions. DFHI has played an
important role in stabilising the Indian money market.
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17. DEVELOPMENTSININDIANMONEYMARKETS
➤ Establishment of the CCIL : The Clearing Corporation of India
limited (CCIL) was set up in April 2001. The CCIL clears all
transactions in government securities, and repose reported on the
Negotiated Dealing System.
Development of New Market Instruments : The government has
consistently tried to introduce new short-term investment
instruments. Examples: Treasury Bills of various duration, Commercial
papers, Certificates of Deposits, MMMFs, etc. have been introduced in
the Indian Money Market.
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18. CAPITAL MARKET

19. CAPITAL MARKET INSTRUMENTS
INTRODUCTION
Capital market is the segment of financial market that dealing with
effective channeling of medium to long term funds from surplus to deficit
units.
Normally the process of transfer this channeling is through documents or
certificates; thus is showing evidence of investments.

20. CAPITAL MARKET INSTRUMENTS
PRIMARY ROLE
The primary roles of capital market is to raise long term funds for government,
banks, and corporation while providing platform for the trading of securities.
This fund raising is regulated by the performance of stocks and bonds market
within the capital market
The member or organizations of the capital market may issue stocks and bonds
in order to raise funds. Investors can then invest in the capital market by
purchasing those stocks and bonds

21. CAPITAL MARKET INSTRUMENTS
REGULATION OF CAPITAL MARKET.
Every capital market in the world is monitored by financial regulators and
their respective governance organization.
The purpose of such regulation is to protect investors from fraud and
deception.
Financial regulatory bodies are also charged with minimizing financial
losses, issuing licenses to financial service providers, and enforcing
applicable laws.

22. CAPITAL MARKET INSTRUMENTS
• The Capital Market’s Influence on International Trade.
Capital market investment is no longer limited to the boundaries of a
single nation.
Today’s corporations and individuals are able, under some regulation, to
invest in the capital market of any country in the world. Investment in
foreign capital markets has caused substantial development to the business
of international trade.

23. CAPITAL MARKET INSTRUMENTS
• NATURE OF CAPITALMARKET
 It has two segments: This means that the capital market is divided in two types which is
primary market and secondary market.
 It deals with long term securities.
 It help capital formation.
 It help in creating liquidity.by dealing with capital market you can create liquidity of your
asset easily
 It perform trade off functions
 It create dispersion in business ownership

24. TYPES OF CAPITAL
MARKET
• There are two types of capital market.
• Primary market : The primary markets deal with the trading of newly
issued securities
The primary market is perform the following roles.
Origination
Underwriting
Distribution

25. FEATURES OF PRIMARY MARKET
• It related only with new issues
• It has no particular place
• It has various methods of float capital, such as Public issues, Offer for
sales, Private placement Right issue and Electronic –initial public offer.
• It come before secondary market

26. SECONDARY MARKET
• Secondary market is also called after market is the financial market in
which previously issued financial instruments such as stock, bonds, option
and future are bought and sold.
• The main function of secondary market :securities are sold by and
transferred from one investor or speculator to another. It is therefore
important that the secondary market be highly liquid (originally, the only
way to create this liquidity was for investors and speculators to meet at a
fixed place.

27. FEATURES OF SECONDARY
MARKET
• It create liquidity.
• It come after primary market.
• It has particular place.
• It encourage new investments.

28. CAPITAL MARKET INSTRUMENTS
• Equity instruments
• Debt instruments
• Derivatives (Future contract, forward contract, options, swaps)