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  1. 1. Business Club BIZ 101 Lecture II Indian Financial Markets
  2. 2. Contents <ul><li>Financial Markets </li></ul><ul><li>Shares and Stocks </li></ul><ul><li>Regulatory Environment in India </li></ul><ul><ul><li>SEBI </li></ul></ul><ul><ul><li>RBI </li></ul></ul>
  3. 3. Financial Markets <ul><li>A Market is a place where buyers and sellers come together to exchange something </li></ul><ul><li>Financial Markets are where financial Instruments/products are exchanged. </li></ul><ul><li>A Financial Market is known by type of product traded in it </li></ul>
  4. 4. Different Financial Markets FINANCIAL MARKET Money Market Debt Market Forex Market Capital Market
  5. 5. Money Market <ul><li>Markets for short term </li></ul><ul><ul><li>Borrowing </li></ul></ul><ul><ul><li>Lending </li></ul></ul><ul><li>Primarily used by Banks </li></ul><ul><li>Typical Financial Instruments </li></ul><ul><ul><li>Bankers Acceptance </li></ul></ul><ul><ul><li>Certificate of Deposit (CD) </li></ul></ul><ul><ul><li>Treasury Bills </li></ul></ul><ul><ul><li>Repo’s </li></ul></ul>
  6. 6. Debt Market <ul><li>Debt </li></ul><ul><ul><li>Contract </li></ul></ul><ul><ul><li>One Party lends to another Party </li></ul></ul><ul><ul><li>Predetermined </li></ul></ul><ul><ul><ul><li>Interest Rates and Term </li></ul></ul></ul><ul><li>Participants </li></ul><ul><ul><li>Banks </li></ul></ul><ul><ul><li>Financial Institutions </li></ul></ul><ul><ul><li>Mutual Funds </li></ul></ul><ul><ul><li>Insurance Companies etc. </li></ul></ul><ul><li>Instruments </li></ul><ul><ul><li>Government Securities (G-Secs) </li></ul></ul><ul><ul><li>Public Sector Units Bonds </li></ul></ul><ul><ul><li>Corporate Securities </li></ul></ul>
  7. 7. Foreign Exchange Market <ul><li>Foreign Goods </li></ul><ul><ul><li>Payments in Foreign Currency </li></ul></ul><ul><ul><li>Forex Market </li></ul></ul><ul><li>Participants </li></ul><ul><ul><li>Government </li></ul></ul><ul><ul><ul><li>Payments for Imports </li></ul></ul></ul><ul><ul><ul><li>Repayment of Loans </li></ul></ul></ul><ul><ul><li>Importers </li></ul></ul><ul><li>Exchange Rates – One Currency in terms of other (Eg. 1 US Dollar = 45 Rupees) </li></ul><ul><ul><li>Bid Rate </li></ul></ul><ul><ul><li>Offer Rate </li></ul></ul>
  8. 8. Capital Market <ul><li>Long Term Funds </li></ul><ul><li>Raised by </li></ul><ul><ul><li>Government </li></ul></ul><ul><ul><li>Corporates </li></ul></ul><ul><li>Trading Instruments used </li></ul><ul><ul><li>Shares </li></ul></ul><ul><ul><li>Derivatives </li></ul></ul><ul><ul><li>Units of Mutual Funds </li></ul></ul>
  9. 9. Financial Markets <ul><li>Primary Market </li></ul><ul><ul><li>Instruments issued for first time </li></ul></ul><ul><ul><li>Used by </li></ul></ul><ul><ul><ul><li>Government/Corporates/PSU’s </li></ul></ul></ul><ul><ul><li>IPO </li></ul></ul><ul><ul><ul><li>Initial Public Offering </li></ul></ul></ul><ul><li>Secondary Market </li></ul><ul><ul><li>Trading of already issued </li></ul></ul><ul><ul><ul><li>Stocks </li></ul></ul></ul><ul><ul><ul><li>Bonds </li></ul></ul></ul><ul><ul><li>Stock Exchange </li></ul></ul>
  10. 10. Investment Basics <ul><li>Using savings to get returns in future is known as Investment </li></ul><ul><li>Why should I invest?? </li></ul><ul><ul><li>I want to earn return on my idle money </li></ul></ul><ul><ul><li>A good bank balance before I retire </li></ul></ul><ul><ul><li>I intend to own a Mansion and Ferrari </li></ul></ul><ul><li>When should I invest </li></ul><ul><ul><li>As soon as possible </li></ul></ul>
  11. 11. Where to invest??? <ul><li>Physical Assets </li></ul><ul><ul><li>Real Estate ,Gold/jewellery </li></ul></ul><ul><ul><li>Requires huge capital </li></ul></ul><ul><li>Financial Assets </li></ul><ul><ul><li>Savings Bank Account </li></ul></ul><ul><ul><li>Fixed Deposits </li></ul></ul><ul><ul><li>Post office </li></ul></ul><ul><ul><li>Government Bonds </li></ul></ul><ul><ul><li>Provident Funds </li></ul></ul>
  12. 12. <ul><li>But .. </li></ul><ul><li>All these are fixed return instruments </li></ul><ul><li>Lets learn to take some risks and earn more </li></ul><ul><li>Welcome to the Exciting world of Stocks !! </li></ul>
  13. 13. Stock and Shares <ul><li>Stock </li></ul><ul><ul><li>Capital raised by corporations </li></ul></ul><ul><ul><li>Through issue and distribution of shares </li></ul></ul><ul><li>Share </li></ul><ul><ul><li>Signifies ownership in the company </li></ul></ul><ul><ul><li>A company might have thousands of Shareholders </li></ul></ul><ul><li>Which company issued shares for the first time in the world??? </li></ul><ul><ul><li>The Dutch East India Company in 1602 </li></ul></ul>
  14. 14. Stock Exchange <ul><li>Place where the shares are traded </li></ul><ul><ul><li>BSE </li></ul></ul><ul><ul><li>NSE </li></ul></ul><ul><li>BSE – Bombay Stock Exchange </li></ul><ul><ul><li>Oldest Stock Exchange in Asia </li></ul></ul><ul><ul><li>Sensex – Sensitive Index </li></ul></ul><ul><ul><ul><li>Index of 30 Actively traded Companies </li></ul></ul></ul><ul><li>NSE – National Stock Exchange </li></ul><ul><ul><li>Incorporated in 1992 </li></ul></ul><ul><ul><li>Nifty </li></ul></ul><ul><ul><ul><li>Index of 50 Actively traded Companies </li></ul></ul></ul>
  15. 15. A Few Jargons!!! <ul><li>Types of Shares </li></ul><ul><ul><li>Common/Equity </li></ul></ul><ul><ul><li>Preferred </li></ul></ul><ul><li>Face Value </li></ul><ul><li>Market Value </li></ul><ul><li>Market Capitalization </li></ul><ul><li>Dividend </li></ul>
  16. 16. A few more Jargons!!! <ul><li>Stock Broker </li></ul><ul><li>Mutual Funds </li></ul><ul><li>Annual Report </li></ul><ul><li>Prospectus </li></ul><ul><li>Liquidity </li></ul>
  17. 17. Regulatory Environment in India <ul><li>Pre 1991 </li></ul><ul><ul><li>Tight Control of Government </li></ul></ul><ul><li>Post 1991 </li></ul><ul><ul><li>Liberalization </li></ul></ul><ul><ul><li>Opening of the Economy </li></ul></ul><ul><ul><li>Need for Supervision </li></ul></ul><ul><ul><ul><li>Regulation </li></ul></ul></ul><ul><ul><li>Regulatory Bodies </li></ul></ul>
  18. 18. Regulatory Environment in India <ul><li>RBI – Reserve Bank of India </li></ul><ul><ul><li>Established in 1935 </li></ul></ul><ul><ul><li>Bankers Bank </li></ul></ul><ul><ul><li>Regulates Indian Financial Markets </li></ul></ul><ul><li>SEBI –Securities and Exchange Board of India </li></ul><ul><ul><li>Incorporated in 1992 </li></ul></ul><ul><ul><li>Regulation of Securities Market </li></ul></ul><ul><ul><li>Protecting the interests of Investors </li></ul></ul>
  19. 19. So want something more??? <ul><li>Hmm…. </li></ul><ul><li>Stay tuned to BIZ 101 Lecture Series </li></ul><ul><li>What’s more in Store?? </li></ul><ul><ul><li>Mutual Funds </li></ul></ul><ul><ul><li>Stock Valuation </li></ul></ul><ul><ul><li>Derivatives </li></ul></ul><ul><ul><li>Supply Chain Management </li></ul></ul>
  20. 20. Sources <ul><li>www.wikipedia.org </li></ul><ul><li>www.rbi.org.in </li></ul><ul><li>www.sebi.gov.in </li></ul><ul><li>www.nseindia.com </li></ul><ul><li>www.bseindia.com </li></ul><ul><li>www.moneycontrol.com </li></ul><ul><li>And, !!! </li></ul>
  21. 21. Contact Us <ul><li>Atul Bansal – MBA Second Year </li></ul><ul><ul><li>[email_address] </li></ul></ul><ul><li>Gaurav Sharma – MBA Second Year </li></ul><ul><ul><li>[email_address] </li></ul></ul><ul><li>Pratyush – B Tech Final Year </li></ul><ul><ul><li>[email_address] </li></ul></ul>
  22. 22. <ul><li>Thank you !! </li></ul>

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