about capital market of india

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2.  Various types of financial markets
 What is a Capital Market?
 Nature of Capital Market
 Capital Market Efficiency
 Types of Capital Markets
 Primary Market
 Methods of Raising Capital in Primary Market
 Features of Primary Market
 Secondary Market
 Features of Secondary Market
 Participants in the Secondary Market
 Products dealt in Secondary Market
 Difference between primary and secondary market
 SEBI and its Features
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The Financial Markets can
broadly be divided into:
 MONEY MARKET
 CAPITAL MARKET

4.  The market where investment instruments like
bonds, equities and mortgages are traded is
known as the Capital Market.
 The primal role of this market is to make
investment from investors who have surplus funds
to the ones who are running a deficit.
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5.  Link between savers and investors
 Stability in security prices
 Speed up economic growth and development
 Helps in capital formation
 Helps in creating liquidity
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6. The degree to which the present asset price
accurately reflects current information in the
market place.
Forms:
 Weak
 Semi strong
 Strong
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8.  PRIMARY 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. This process is called
disintermediation where the funds
flow directly from investors to
issuers.
The primary market is also called new
issue market.
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9.  This is the market for new long term capital. The primary
market is the market where the securities are sold for the first
time. Therefore it is also called New Issue Market (NIM).
 In a primary issue, the securities are issued by the
company directly to investors.
 The company receives the money and issue new security
certificates to the investors.
 Primary issues are used by companies for the purpose of
setting up new business or for expanding or modernizing the
existing business.
 The primary market performs the crucial function of facilitating
capital formation in the economy.
 The new issue market does not include certain other sources
of new long term external finance, such as loans from financial
institutions. Borrowers in the new issue market may be raising
capital for converting private capital into public capital; this is
known as ‘going public’.
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10.  Public issue
 Private placement
 Euro issues
 Government securities
 Offer for sale
 Right issue
 Electronic initial public offering
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11.  A market where securities are
traded after being initially offered
to the public in the primary market
and/or listed in the stock
exchange. Majority of the trading
is done in the secondary market.
This market comprises of Equity
market and Debt Market.
 Secondary market provides
liquidity to the securities on the
exchange(s) and this activity
commences subsequent to the
original issue.
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SECONDARY MARKET :

12.  Help in determining fair prices based on demand
and supply forces and all available information
 Provides easy marketability and liquidity for
investors
 Facilitation in capital allocations in primary market
through price signalling
 Enabling investors to adjust portfolios of securities
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13.  Stock Exchange
 Clearing Corporation
 Depositories/ DP
 Trading Member (Stock Broker)/ Clearing
Member
 Registrar to an Issue and Share Transfer Agent
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14.  Equity shares
 Debentures
 Government securities
 Bonds
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15. In the primary market, securities are offered to
public for subscription for the purpose of
raising capital or fund. Secondary market is
an equity trading avenue in which already
existing/pre-issued securities are traded
among investors.
Secondary market could be either auction or
dealer market. While stock exchange is a
part of an auction market.
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16. SEBI is the regulator of securities market in India. It
was established on 12 April 1988.
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17. SEBI is required to regulate and promote the securities
market by:
 Providing fair dealings in the issues of securities and
ensuring a market place where funds can be raised at a
relatively low cost.
 Providing a degree of protection to the investors and
safeguard their rights and interests so that there is a
steady flow of savings into the market.
 Regulating and developing a code of conduct and fair
prices by intermediaries in the capital market like brokers
and merchant banks with a view to make them competitive
and professional.
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18.  Power to make rules for controlling stock exchange :
SEBI has power to make new rules for controlling stock exchange in India.
For example, SEBI fixed the time of trading 9 AM and 5 PM in stock
market.
 To provide license to dealers and brokers :
SEBI has power to provide license to dealers and brokers of capital market.
If SEBI sees that any financial product is of capital nature, then SEBI can
also control to that product and its dealers.
 To Stop fraud in Capital Market :
SEBI has many powers for stopping fraud in capital market.
> It can ban on the trading of those brokers who are involved in fraudulent
and unfair trade practices relating to stock market.
> It can impose the penalties on capital market intermediaries if they involve
in insider trading.
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19.  To Control the Merge, Acquisition and
Takeover the companies :
SEBI sees whether this merge or acquisition
is for development of business or to harm
capital market.
 To audit the performance of stock market :
SEBI uses his powers to audit the
performance of different Indian stock
exchange for bringing transparency in the
working of stock exchanges.
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20.  To make new rules on carry - forward transactions :
> Share trading transactions carry forward can not exceed
25% of broker's total transactions.
> 90 day limit for carry forward.
 To create relationship with ICAI :
SEBI creates good relationship with ICAI for bringing more
transparency in the auditing work.
 Introduction of derivative contracts on Volatility Index :
For reducing the risk of investors, SEBI has now been
decided to permit Stock Exchanges to introduce derivative
contracts on Volatility Index
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21.  To Require report of Portfolio Management
Activities :
SEBI has also power to require report of
portfolio management to check the capital
market performance.
 To educate the investors :
Time to time, SEBI arranges scheduled
workshops to educate the investors.
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22. Presented By:
Upendra Mahla
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