Description of capital market and various other aspects of capital market with images and charts explained with a diagram.

1. Capital market
BY: LAKSHMISHA C R
REVA UNIVERSITY

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8. Capital Market
• Capital Market is the part of financial system which is concerned with
raising capital funds by dealing in Shares, Bonds, and other long-term
investments.
• The capital market offers long term funds
 The different types of financial instruments that are traded in the capital
markets are:
 equity instruments
 credit market instruments,
 insurance instruments,
 foreign exchange instruments,
 hybrid instruments
 derivative instruments.

9. Significance ,Role or functions of
Capital Market
 Mobilization of Savings
 Capital Formation
 Provision of Investment Avenue
 Speed up Economic Growth and Development
 Proper Regulation of Funds
 Service Provision

10. MAJOR SUPPLIERS OF FUNDS IN
THE CAPITAL MARKET
 COMMERCIAL BANKS.
 INSURANCE COMPANIES.
 BUSINESS CORPORATIONS.
 RETREMENT FUNDS.

11. MAJOR BORROWERS IN THE
CAPITAL MARKET
 TREASURY DEPARTMENTS.
 CORPORATIONS.
 SECURITIES.

12. Types of capital market
 There are two types of capital market:
 Primary market,
 Secondary market

13. Primary Market
 It is that market in which shares, debentures and other
securities are sold for the first time for collecting long-term
capital.
 This market is concerned with new issues. Therefore, the
primary market is also called NEW ISSUE MARKET.
 In this market, the flow of funds is from savers to borrowers
(industries), hence, it helps directly in the capital formation of
the country.
 The money collected from this market is generally used by
the companies to modernize the plant, machinery and
buildings, for extending business, and for setting up new
business unit.

14. Features of Primary Market
 It Is Related With New Issues
 Link between Savers and Investors
 Encouragement to Saving
 Encouragement to Investment
 Promotes Economic Growth
 It comes before Secondary Market
 Benefits to Investors

15. It Has Various Methods Of Float
Capital:
 Following are the methods of raising capital in the
primary market:
 Public Issue
 Offer For Sale
 Private Placement
 Right Issue
 Electronic-Initial Public Offer

16. Secondary Market
 The secondary market is that market in which the buying and
selling of the previously issued securities is done.
 The transactions of the secondary market are generally done
through the medium of stock exchange.
 The chief purpose of the secondary market is to create
liquidity in securities.
 If an individual has bought some security and he now wants
to sell it, he can do so through the medium of stock
exchange to sell or purchase through . the medium of stock
exchange requires the services of the broker presently, their
are 24 stock exchange in India.

17. Features of Secondary Market
 It Creates Liquidity
 It Comes After Primary Market
 It Has A Particular Place
 It Encourages New Investments

18. Capital market investments in the
stock market
 The stock market is basically the trading ground capital
market investment in the following:
 Company’s stocks
 Derivatives
 Other securities
The capital market investments in the stock market take place
by:
1) Small individual stock investors
2) Large hedge fund traders.

19. STOCK EXCHANGE COMPANIES
 If an individual has some financial security and he wills to
sell it, he can approach the Stock Exchange Companies
which will help him to sell or purchase his security by the
means of a Broker.
 There are 23 stock exchanges in India.
 In India we have Bombay stock exchange , National stock
exchange and the rest 21 are Regional stock exchanges.

20. STOCK EXCHANGE PLATFORM
 There are three types of exchange platforms in India:
 Domestic Exchanges
 Regulatory Based.
 International Exchanges

21. CONCLUSION
 The lack of an advanced and vibrant capital market can
lead to underutilization of financial resources. The
developed capital market also provides access to the
foreign capital for domestic industry. Thus capital market
definitely plays a constructive role in the over all
development of an economy.