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Capital market

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Capital market

  1. 1. Need of Finance…!
  2. 2. Economic System Household Sector Business Sector Economic system System
  3. 3. Financial Market Types of Financial Market A financial market is a market in which people and entities can trade financial securities, commodities and fungible items of value at low transaction cost and at prices that reflect supply and demand.  Money Market  Capital Market
  4. 4. Capital Market  A market deals in medium and long-term funds, both debt and equity, is termed as Capital Market.  The market is an institutional arrangement for borrowing medium and long-term funds and which provides facilities for marketing and trading of securities
  5. 5. Factors Responsible for Growth of Indian Capital Market • Growth of Stock Exchange • Growth of Financial Institution • Growth of Mutual Fund • Growth of Merchant Bank Service • Development of Venture Capital Funds • Development of Credit Rating Agency • Setting up SEBI • National securities Clearing Corporations • Corporate Governance
  6. 6. Capital Market Types Primary Market Secondary Market  A market where the issuers access the prospective investors directly for funds required by them either for expansion or for meeting the working capital needs.  A market where securities are traded after being initially offered to the public in the primary market and/or listed in the stock exchange.
  7. 7. Pricing Of the Share  Fixed Pricing  book Building
  8. 8. Methods of raising capital in the Primary Market:  Initial Public Offer  Follow-on Public Offer  Private Placement  Offer for Sale  Rights Issue  E-Ipo  Qualified Institutional Placement 11
  9. 9. Secondary Market Secondary/Stock market!!!!
  10. 10. Functions of Stock Markets  Liquidity for Securities  Evaluation  Promotion of Savings Habits  Ready & Continuous Markets  Public Finance  Growth of Joint Stock Company
  11. 11.  Hyderabad Stock Exchange  Uttar Pradesh Stock Exchange  Coimbatore Stock Exchange  Cochin Stock Exchange  Bangalore Stock Exchange  Saurashtra Kutch Stock Exchange  Pune Stock Exchange  OTC Exchange of India  Calcutta Stock Exchange  Madras Stock Exchange  Madhya Pradesh Stock Exchange  Vadodara Stock Exchange  The Ahmedabad Stock Exchange  Magadh Stock Exchange  Gauhati Stock Exchange  Bhubaneswar Stock Exchange  Jaipur Stock Exchange  Delhi Stock Exchange Assoc  Ludhiana Stock Exchange
  12. 12. Bombay Stock Exchange  Bombay Stock Exchange, commonly referred to as the BSE, (Bombay Share Bazaar) is a stock exchange located on Dalal Street, Mumbai, Maharashtra, India. It is the oldest stock exchange in Asia. The equity market capitalisation of the companies listed on the BSE was US$1 trillion as of December 2011, making it the 6th largest stock exchange in Asia and the 14th largest in the world. The BSE has the largest number of listed companies in the world.
  13. 13. National Stock Exchange  The National Stock Exchange (NSE) is stock exchange located at Mumbai, Maharashtra, India. It is in the top 20 largest stock exchanges in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading.  NSE has a market capitalization of around US$1 trillion and over 1,652 listings  Fully Automated System  Universal Membership  Listing  Demat  Settlement Cycle
  14. 14. Stock Exchanges names and their Indices Name: Country Stock exchange name Indices name India National Stock Exchange S & P Nifty India Bombay Stock Exchange Sensex Hong Kong Hong Kong Stock Exchange Hang Seng USA New York Stock Exchange NYSE Korea Korean Stock Exchange KRX 100 Russia Russian Stock Exchange RTS Index
  15. 15. Some Important Terms Relating To ‘Stock Market’ Speculators  Market Capitalization  Capital Structure  Cornering  Speculation  Bull  Bear  Lame Duck  Arbitrageur
  16. 16. Source-Securities and Exchange Board of India Getting started  To start trading the following are required –  Bank account  Trading account  Demat account  Permanent Account Number (PAN)  Unique Client Code
  17. 17. Source -Securities and Exchange Board of India Where to trade  The secondary market is divided into two segments  Cash/ Equity segment  Derivative segment –  Equity Futures and Option (F & O)  Currency Futures/ Option  Interest Rate Futures
  18. 18. Trading Procedure in Stock Market  Selection Of Broker  Opening Demat Account with Depository  Placing the Order  Executing the Order  Settlement
  19. 19. Source-Securities and Exchange Board of India 22 Settlement  The settlement in the securities market is done on a T+2 Rolling Settlement Cycle (where T = Trading Day). Trading (T) Option of Early Pay-in (T1) Auction (T3) Close out (T4) Pay-in and Pay out (T2) TRADE SETTLEMENT T + 2 FAILURE TO PAY-IN
  20. 20. SEBI Guidelines in Capital Market Primary Market Secondary Market  Initial Public offer  Follow-on Public Offer  Underwriting  Public Issue and Right Issue  Innovative Instruments  Bonus Shares a) source of fund b) residual reserves c) past profit d) other conditions  Issue of Debenture  Compulsory Registration of Intermediaries  Demutualization  Transparency in Trading  Compulsory Audit  Investor protection  Capital Adequacy Norms
  21. 21. Major crash and Rallies in Indian Capital Market 28 April 1992 18 May 2006 21 January 2008 18 may 2009
  22. 22. Money Market Vs. Capital Market
  23. 23. Concluded