The document provides information about capital markets in India. It discusses the Bombay Stock Exchange (BSE) as the oldest stock exchange in Asia, established in 1875. It lists various market offerings at BSE like cash market, derivatives, debt market segment, and ETFs/mutual funds. It also describes how the capital market operates with T+2 settlement system and details demat and e-trading facilities. It notes the role of regulator SEBI and various asset class offerings like equity, debt, gold. The document emphasizes the importance of investing to beat inflation and highlights equity investing can provide higher long-term returns than fixed deposits.

1. Capital Market Awareness

2. What is a Stock Market ?
 Bombay Stock Exchange (BSE)
 First and Oldest Stock Exchange in Asia –
 Founded as The Native Stocks & Share Brokers Association in 1875
 Largest number of listed companies - 5,249
 7th
largest exchange in Asia in terms of Market Capitalization
 8th
Largest Exchange in World – number of trades in Equity
Shares
 New Platform for trading in equities of SMEs
2

3. BSE Market Offerings
 Cash Market
 Derivatives
 Currency Derivatives
 Interest Rate Derivatives
 Debt Market segment
 ETFs/Mutual Funds
 BSE SME Platform

4. How the Capital Market Operates
Settlement System: T+2 Settlement System
Day Time Description of activity
T 9:15 a.m. – 3:30 p.m. Trade Day
T+1
By 11:00 a.m.
Confirmation of all trades (including custodial trades) Facility
of an exceptional window for late confirmations would be
made available by the exchanges
By 1:30 p.m.
Processing and downloading of obligation files to brokers /
custodians
T+2
By 11:00 a.m. Pay-in of securities and funds
By 1:30 p.m. Pay-out of securities and funds

5. www.lkwindia.com www.gurukshetra.com
How the Capital Market Operates
e-trading
 BOLT on-line Trading
System at BSE
 Benefits :
 Lower Transaction Costs
 Increased Liquidity &
Transparency
 Greater Competition
 Time Efficient & Automated
De-materialization (Demat)
 Shares held in electronic
format (Non-Physical)
 Facilitates electronic
settlement of trades
 Maintained & monitored
by Depository Participant
(DP)

6. e-trading Screen
1 6

7. Capital Market Regulator - SEBI
 Capital Market Watchdog
 Established under SEBI Act, 1992
 Promotes Investor Education
 Monitors Insider Trading
 Regulates
 Stock Exchanges
 Working of all Intermediaries, Stock Brokers
 Prohibits Fraudulent and Unfair Trade Practices

8. Asset Class Offerings
 Equity
 Direct Equity
 Equity Mutual Funds
 Debt
 Bank FDs
 Corporate FDs
 Debt Mutual Funds
 Government Instruments (PPF, NSC, Post Office Savings)
 Gold
 ETFs
 Fund of Funds

9. 100 = 20 .…. How ?
Now that Rs. 100 has become 20, how will one make Rs. 20 work
optimally ???
Illustration Amount
Base Income 100
Less : Direct Tax 30
Post Direct Tax Income 70
Non - Discretionary Expenses 35
Indirect Taxes 5
Net Income 30
Net Investible Income 20

10. Demon of Inflation
1200.00
300.00
50.00
40.00
22.20
48.35
2008
830.85LPG Cylinder
2620.27Zodiac Men’s shirt
259.12Petrol (per litre)
224.00Masala Dosa
52.00Hamam Soap
104.0018.90Colgate toothpaste
(100 gm tube)
2017?Item 1987
8.05
3.05
3.50
7.99
56.15
225.00
7.85
14.00
25.48
137.85
510.00
1997

11. You Have to Invest to Beat Inflation
FD Returns = 9%
Interest is taxable
Clearly, ONLY Low Risk FDsClearly, ONLY Low Risk FDs
will erode your capitalwill erode your capital
More than ~70% of Investors Funds find their wayMore than ~70% of Investors Funds find their way
to FD’sto FD’s

12. Equity v/s Debt – Performance RecoEquity v/s Debt – Performance Recordrd
 Equity
Rs. 813 in August 2014 at a CAGR
Return of 20.1% After Tax
 Debt
Rs. 236 in August 2014 at a CAGR
Return of 6.2% After Tax**
Investment of Rs. 100 invested in March 2003 would have been
** assumed investor is in Highest Tax Bracket

13. BEATING INFLATION – Equity InvestingBEATING INFLATION – Equity Investing
 High Risk
 Two year Bull Run in a 7-8 years7-8 years
 Pulls up overall average returns
* Minimum period of remaining invested is 7-10 years
Returns Difference – Over the Longer TermReturns Difference – Over the Longer Term
HUGE
Scheme Category /
Benchmark Indices
CAGR % Returns (10th
October, 2014)
1 year 2 years 3 years 5 years 7 years 10 years
Large Cap Funds 53% 24% 22% 16% 13% 22%
Mid Cap Funds 94% 37% 33% 23% 20% 24%
Balanced Funds 64% 25% 23% 18% 15% 22%

14. Ways of Participating in the Equity
Market
 Direct Equity
 Through Mutual Funds

15. Selecting a Stock
 Management
 Business Model
 Numbers
 Story behind the Numbers
 Industry Outlook
 Annual Report

16. Investing v/s Trading
 Time Frame v/s Immediate
 Level of Market Expertise
 Long Term v/s Speculative
 Delivery v/s Square Off
 Returns v/s Zero Sum Game

17. Capital Markets – Road Ahead
 Current Participation – 2%; Year 2025 – 10-15%
participation
 Indian Equity Market - Strong Potential for Growth
 Investment Cycle has to re-start
 Sheer Size of Indian Economy
 Changing Demographics in India

18. InvestingInvesting in Mutual Fundsin Mutual Funds

19. What are Mutual Funds
 Pool of Money
 Professionally Managed
 Governed by AMFI and SEBI
 Sponsor / Trustee, AMC

20. Mutual Fund Terms
 AMC
 Corpus
 AUM
 NAV & Units
 Fund Factsheet
 Expense Ratio
 NFO

21. Types of Mutual Fund Schemes
 Equity Mutual Fund Schemes
 Large Cap / Multi Cap / Mid & Small cap / Sectoral Funds
 Debt Mutual Fund Schemes
 Liquid / Ultra Short Term / Dynamic Bond / Income / Gilt
 Balanced Funds
 Gold Fund of Funds
 Tax Saving Schemes

22. Advantages of Investing through MFs
 Wide choice of products
 Relatively easier to invest – in terms of operations
 Less Volatile
 Possible to invest small sums
 Facilitates disciplined investing

23. Mutual Fund Taxation
LTCG = Long Term Capital Gains, STCG = Short Term Capital Gains; ** With effect from 11th
July, 2014

24. Ways of Investing in Mutual Funds
 Systematic Investment Plan
 Systematic Transfer Plan
 Systematic Withdrawal Plan
 Lumpsum
 KYC & Procedures

25. No need to time the market
Buy more for less when the markets are down and less for more when
the markets are up
Rupee Cost Averaging
The above investment simulation, is purely for illustrative purpose only and shall not be deemed as guarantee/promise of minimum returns and safeguard of capital or to depict performance
of any mutual fund scheme. SIP does not assure a profit or guarantee protection against loss in a declining market.

26. Mutual Fund Investment Options
 Growth
 Dividend
 Dividend Re-investment

27. MF Portfolio Creation – Key Parameters
 Goals & Objectives
 Risk Appetite
 Allocation & Diversification
 Consistent Performance Track Record
 Fund Manager Performance Record
 AMC Experience & Total Corpus

28. Measuring MF Performance
 Benchmarking
 Peer Group Performance Comparison
 Understanding Strategies
 Statistical Measures
Equity - Sharpe Ratio
Debt - Duration, Credit Quality

29. Financial Planning usingFinancial Planning using
Asset AllocationAsset Allocation

30. What is Financial Planning
 Achieving Financial Goals
 An Individual has to deal with
 Investments
 Insurance
 Taxes
 Retirement

31. Financial Planning Concerns
Do I need to look
at my PF
everyday
Equity is very
risky !!!!
FD is the best
I must take a
money back
insurance policy
It is too late / It is
too early to plan
my finances
Is it only for
wealthy people
I have a very
small amount to
invest

32. Steps in Financial Planning
 Financial Goals
 Buying a house
 Children's Education
 Children’s Marriage
 Insurance Planning
 Tax Planning
 Retirement Planning
 Estate Planning

33. Risk Profiling / Questionnaire
 Risk profiling is a process for finding
Optimal Level of Investment Risk
Assessing Risk required
Risk Appetite
Risk Tolerance Levels

34. Financial Products
Equity Markets
Insurance
Policies
Mutual Funds
(Equity & Debt)
Fixed Deposits
Commodities
Small Saving
Schemes
Real
Estate

35. Financial Planning Life Cycle Stages
Wealth Creation Wealth Consolidation Wealth Protection

36. Power of Compounding
Monthly SIP
Amount (`)
Expected Rate of
Return
Estimated
Corpus over 10 years
2,0002,000 15%15% Rs. 5.6 lakhRs. 5.6 lakh
3,5003,500 15%15% Rs. 9.8 lakhRs. 9.8 lakh
5,0005,000 15%15% Rs. 13.9 lakhRs. 13.9 lakh
Bull Cycle once in 7-8 years pulls up Average ReturnsBull Cycle once in 7-8 years pulls up Average Returns

37. Power of Compounding
What you save
every day
How much it could
earn every year
...and after... You will have*
Rs. 30 10% 25 years Rs. 1,18,640
Rs. 30 12% 25 years Rs. 1,86,151
Rs. 30 15% 25 years Rs. 3,60,463
*(Compounded Annually)
Let us assume that instead of spending on coffee at the nearest café which
costs Rs. 30, you decide to forego the coffee and invest the amount, here is
what it could add up to after 25 years...
Clearly, the table shows that the longer you leave your money invested
and the higher the rate of return, the faster your wealth will grow.

38. Three Pillars of Investing
 Safety
 Liquidity
 Returns

39. Right Approach to Financial Planning
 Prepare Comprehensive Financial Plan
 List down all Assets
 List down all Liabilities
 Set Achievable Financial Goals

40. Asset Allocation- Importance
EQUITY if :
 Relatively High Risk Appetite
 Relatively longer time frame for
achieving goals
 Higher Investible Amount
 High Risk – High Reward
DEBT if :
 Non-Discretionary Nature of
Goals
 Diversification of Risks
 Low Risk – Low Returns
 Potential to provide Regular
Income
GOLD if :
 Asset Class of the Last
Resort
 Optimizes Portfolio Returns
 Traditional Hedge
CASH if :
 Foreseeable Near Term Goal
 Contingency Funds

41. Re-balancing Asset Allocation
 Allocate based on Economic & Market conditions
 Provide Weightages based on Outlook
 Create Asset Class Boundaries
 Rebalance based on
 Breaching Boundaries
 Changing Outlook

42. Portfolio Monitoring
 Periodically Monitor
 Adopt well defined strategy
 Review Annually
 Returns Consistency

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44. THANK YOU !!!!
FINANCIAL PLANNING IS AFINANCIAL PLANNING IS A
FULL TIME ACTIVITYFULL TIME ACTIVITY
THERE IS NO SHORT CUTTHERE IS NO SHORT CUT
TO MAKING MONEYTO MAKING MONEY