ppt

1. MONETARY ECONOMICS:
Capital Market
Dr.Sunitha.S
Assistant Professor
School of Management Studies,
National Institute of Technology (NIT) Calicut

2. Capital Market

3. Capital market
 A market where medium term and long term
funds are borrowed and lent.
 Divided into:
 Primary Market (New Issues Market)
 Secondary market (Stock Exchanges)
 Also
 Industries Securities Market
 Gilt Edged Securities Market

4. Players & Instruments in the capital markets
Players Instruments
 Investors
 Brokers/traders
 Securities and Exchange
Bard of India (SEBI)
 National Stock Exchange
(NSE)
 Bombay stock Exchange
(BSE)
 Credit rating agencies
(CRISIL,CARE etc)
 Preference Shares
 Equity Shares
 Debentures
 Bonds

5. What is meant by stock?
 A “stock” is a share in the ownership of a
company.
A stock represents a claim on the company's
assets and earnings. As you acquire more
stocks, your ownership stake in the company
becomes greater.

6. So what does ownership of a company
give you?
 Holding a company's stock means that you are one of the
many owners (shareholders) of a company and, as such,
you have a claim to everything the company owns.
 This means that technically you own a tiny little piece of all
the furniture, every trademark, and every contract of the
company. As an owner, you are entitled to your share of the
company's earnings as well.
 These earnings will be given to you. These earnings are
called “dividends” and are given to the shareholders from
time to time.

7.  A stock is represented by a "stock certificate".
This is a piece of paper that is proof of your
ownership.
 However, now-a-days you could also have a
“demat” account. This means that there will be
no “stock certificates”. Everything will be done
though the computer electronically. Selling and
buying stocks can be done just by a few
clicks.

8. What makes stock prices go "up" and
"down"?
Stock prices change every day because of market forces. By
this we mean that stock prices change because of “supply and
demand”. If more people want to buy a stock (demand) than
sell it (supply), then the price moves up!
Conversely, if more people wanted to sell a stock than buy it,
there would be greater supply than demand, and the price
would fall. (Basics of economics!)

9. CAPITAL MARKET
 Primary market also
known as New Issues
Market (NIM) is a
market for raising fresh
capital in the form of
shares & debentures
 Secondary Market, also
known as stock market
deals in securities that
have already been
issued by companies.

10. Modes of raising capital
 Public Issue (IPO): is where the securities
are issued to the members of the general
public. Most popular method of raising long
term funds.
 Rights Issue: is a method of issuing
additional shares to the existing
shareholders.
 Private Placement: Where the shares of a
company are sold to a group of small
investors.

12. Stock Market
 Bombay Stock
Exchange (BSE)
 National Stock
Exchange (NSE)

13. Gilt Edged Market
 Gilt edged market is also known as Govt
securities market, is the market for Govt &
semi Govt securities.
 Features
 Guaranteed returns on investments
 No speculation in securities
 Predominated by LIC,GIC,Provident funds &
commercial banks

14. Stock Market Indices
Stock market indices are the barometer of the
stock market.
BSE SENSEX,NSE-NIFTY etc are some of
the market indices.

15. SENSEX –BSE Index
 What is SENSEX?
 The Sensex is an "index". An index is
basically an indicator. It gives you a general
idea about whether most of the stocks have
gone up or most of the stocks have gone
down.
 The Sensex is an indicator of all the major
companies of the Bombay Stock Exchange
( BSE).

16. Companies represented by Sensex as of 2012
 Reliance Industries
 Infosys Tech
 ICICI Bank
 L&T
 HDFC
 ITC
 HDFC Bank
 SBI
 ONGC
 Bharti Airtel
 BHEL
 Tata Consultancy
 Hindustan unilever
 Sterlite Industries
 Coal India
 Tata Steel
 Tata Power
 Maruti Suzuki
 NTPC
 Wipro
 M&M
 Jaiprakash Associates
 Reliance Infrastructure
 Grasim Industries
 Tata Motors DLF
 Hero Motorcorp
 Hindalco
 Reliance communications
 Sun Pharma
 ACC

17. Companies represented by Sensex as of 11 Nov 2013
 Reliance Industries
 Infosys Tech
 ICICI Bank
 L&T
 HDFC
 ITC
 HDFC Bank
 SBI
 ONGC
 Bharti Airtel
 BHEL
 Tata Consultancy
 Hindustan unilever
 M&M
 Gail India
 Tata Steel
 Tata Power
 Maruti Suzuki
 NTPC
 Wipro
 Cipla
 Sesagoa
 Dr.Reddys
 Jindal Steel
 Tata Motors DLF
 Hero Motorcorp
 Hindalco
 Sun Pharma
 Bajaj Auto
 Coal India

18.  If the Sensex goes up, it means that the
prices of the stocks of most of the major
companies on the BSE have gone up. If
the Sensex goes down, this tells you that
the stock price of most of the major
stocks on the BSE have gone down.

19. NIFTY
 The Nifty is an indicator of all the major
companies of the NSE.
 Just like the Sensex represents the top
stocks of the BSE, the Nifty represents the
top stocks of the National Stock Exchange
(NSE) Delhi.

20. Equity Shares
 Equity shares are known as ordinary shares
held by the owners of a corporate entity.
 Equity shareholders face greater risks
 They are given larger share of profits through
higher dividends than those given to
preference share holders.

21. Preference Shares
 Shares that carry preferential rights in
comparison with ordinary shares are called
Preference shares. The preferential rights are
regarding payment of dividend and the
distribution of the assets of the company in
the event of its winding up, in preference to
equity shares.

22. Debentures
 A form of long term debt capital
 A document that either creates a debt or
acknowledges it is known as a debenture.
 A document that shows on the face of it that
a company has borrowed a sum of money
from the holder thereof upon certain terms
and conditions is called a debenture.
 More secured & carries fixed interest rate

23. Shares Vs Debentures
 Shareholder has a
proprietary interest in
the company
 Entitled to dividends
depending on varying
profits
 Enjoys voting rights
 Debenture holder is
only a creditor of the
company
 Entitled to fixed interest
 Do not enjoy voting
rights
 Gets priority over
shareholders when
assets are distributed
upon winding up

24. Market capitalization
 Market capitalization represents the public
consensus on the value of a company's
equity.
 Its market capitalization is the share price
multiplied by the number of shares in issue,
providing a total value for the company's
shares.

25. Categorization of companies by
capitalization
 Large-cap: $10 billion–$200 billion
 Mid-cap: $2 billion–$10 billion
 Small-cap: $300 million–$2 billion
 Micro-cap: $50 million-$300 million
 Nano-cap: Below $50 million

26.  Large cap :ONGC,Coal India,SBI
 Midcap: Ashok Leyland,colgate Palmolive
 Smallcap:BNP Paribas

27. Speculation
 Speculation consists of buying and selling
commodities or securities or other property,
in the hope of profit from anticipated changes
of value.
 Involves risk
 Type of speculators: Bulls & Bears

28. Bulls & Bears
 Bull is a speculator on the
stock exchange who
expects a rise in the price of
a certain security is known
as ‘bull’.
 Hence a bull tends to buy
the security in order to sell it
in future at the expected
higher price.
 He is a potential seller of
security to reap profit.
 A bear is a speculator who
expects a fall in price of the
security of a company.
 Market becomes bearish
when there is a strong
expectation of fall in prices
and is said to be bullish
when it is dominated by an
expectation of a rise in
price.

29. HOW TO MAKE MONEY IN
STOCK MARKET?
Patience, profound knowledge.
Best guess.
Diversification .
Portfolio management.

30. Thank You