FINANCIAL MARKET

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.Mr.CharakRay.
ASST.PROFESSOR(FINANCE)
MBA(BHU),ASSOCIATE((III),PGDHI(III)
BCM(BHSE),SENIOR(ST.JA)

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.Mr.CharakRay.

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.Mr.CharakRay.
All business firms needs funds
for…..
Long Term
Fixed Assets
Short Term
Working Capital

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.Mr.CharakRay.
The process by which
allocation of funds is done
by Banks and financial markets.

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.Mr.CharakRay.
Deposit into
banks
Buying Of
Shares And
Debentures

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.Mr.CharakRay.
Bring together borrowers and
lenders together,
For the creation and exchange
of financial assets ,
Into most productive investment
opportunity .

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.Mr.CharakRay.

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.Mr.CharakRay.
•Provides a base where the prices of financial
assets
•are determined
•
•through the forces of demand and supply
Pricing of securities
Q
P
S
S
D
D
O
Share price

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.Mr.CharakRay.
Provides common stand where buyers
and sellers can
meet each other to save time, effort
and money
Reduce the Cost of Transactions

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.Mr.CharakRay.
•Assets holders can easily sell their
financial assets and converted
•it into cash whenever funds are
required
Add Liquidity to Financial Assets

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.Mr.CharakRay.
•Provides Wider Choice To Investors To
•Use Surplus Funds Into
•The Most Productive Use.

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.Mr.CharakRay.
Financial
Markets
Capital
Markets
(Long Term)
Primary
Market
Secondary
Market
Money
Markets
(Short Term)

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.Mr.CharakRay.
Time period
Funds used
Instruments

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.Mr.CharakRay.
Time period
Funds used
Instruments

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.Mr.CharakRay.
Basis CAPITAL MARKET MONEY MARKET
Safety Risky in terms of returns and
principal repayment
Safer with minimum risk of
default
Liquidity Low liquidity High degree of liquidity
Duration Medium and long term securities Short term securities from
up to 1 year
Instruments
Traded
Equity shares, debentures,
bonds, preference shares, etc
Treasury bills, trade bills,
commercial papers,
certificates of deposit
Expected
Returns
Generally High Returns Generally Low Returns
Unit value Value of units of securities is
low( 10 Rs , 100 Rs
Instruments are quite
expensive ( T BILLS 25000)
Participants Financial institutions, banks,
corporate entities, foreign
investors.
Institutions such s RBI,
banks, financial institutions
and finance companies

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.Mr.CharakRay.

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.Mr.CharakRay.
Term finance repayable on demand, which is used for
inter bank transfer
Provide for temporary shortages of cash to maintain
cash reserve ratio
Issued for a period ranging from 1 to 15 days.
Interest paid on call money is called call rate

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.Mr.CharakRay.
Instrument in writing to pay a certain sum of money
To facilitates the credit sales
Issued for a period of 90 days.
Can be discounted with the bank before the date of
maturity

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.Mr.CharakRay.
Issued by RBI on behalf of the government of India
Used to meet short term requirements of funds for a
minimum amount of Rs.25000 and in multiples thereof
Issued for a period of 14-365 days.
Issue at discount and redeem at par , also known as
zero coupon bonds.

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.Mr.CharakRay.
Short term unsecured negotiable instruments in a bearer
form, issued by commercial banks and financial
institutions
When the deposit growth of banks is slow but the
demand for credit is high
Issued for a period of 14-365 days.
Freely negotiable instrument and are transferred by
endorsement

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.Mr.CharakRay.
Unsecured promissory notes which are issued by a
companies only by highly creditworthy, reputed leading
firms
To meet the floatation costs this as known as bridge
financing.
Issued for a period of 15 days to one year.
Freely negotiable instrument and are transferred by
endorsement

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.Mr.CharakRay.
Capital Market
The Primary Or New
Issue Market
The Secondary
Market /The Stock
Exchange

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.Mr.CharakRay.
Operating Efficiency
Primary Market
Deals with the New Issue also referred
to as the new issue market (NIM).
Securities issued by Company Directly to
investors.

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.Mr.CharakRay.
E-IPOs
Private Placement
Offer for Sale
Offer through Prospectus
Rights Issue

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.Mr.CharakRay.
Rights Issue
If existing company raises the money
Shares are first offered to the existing
shareholder at some discounted price
To maintain to the control existing
shareholder

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.Mr.CharakRay.
Offer Through Prospectus
•Most Popular Method of raising Large
Funds.
•issues a Prospectus to inform and
Attract The Investing public.
•contains the financial performance to
public about the Risk factor in the likely
investment

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.Mr.CharakRay.
Offer for Sale
• Company sells securities
• At an agreed price to brokers who, in
turn, resell them to the public at higher
price.
•To avoid the difficult procedure and
minimize the floating cost

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.Mr.CharakRay.
Private Placement
•Shares are offered to
•institutional investors and some selected
individuals.
•Cost-effective method for small
companies to Avoid floatingh costs

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.Mr.CharakRay.
E-Ipos
•Issue through the on-line system of the
stock exchange
•SEBI registered brokers appointed for
accepting applications and placing orders
with the company.
•Also appoint a registrar to the issue having
electronic connectivity with the exchange

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.Mr.CharakRay.
Basis Primary Market Secondary Market
Securities
trading
Market for new securities Market for existing
securities
Location Has no fixed geographical
location.
Has a fixed location and
fixed working hours
Involvement Of
Company
Securities are sold to
investors directly by the
company
Securities are
exchanged without
involvement of the
company
Capital formation Directly promotes capital
formation.
Indirectly promotes
capital formatiion
Estimation Of
Price
Determined by management
of the company
By demand and supply
of the securities

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.Mr.CharakRay.
Market for the purchase and sale
of existing securities
within the regulatory framework
prescribed by SEBI

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.Mr.CharakRay.
Contributes To Economic Growth
Liquidity And Marketability To Existing
Securities
Assessment Of Securities
Scope For Speculation
Spread Of Equity Culture
Ensures Better Allocation Of Capital
Safety Of Transaction And Dealing
Function of stock exchange

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.Mr.CharakRay.
Operating Efficiency
Contributes to Economic Growth
•Instead of investing money in unproductive
areas like jewelry
•Provide the opportunity for investment in
securities market
•Help in capital formation and economic
growth.

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.Mr.CharakRay.
Liquidity and Marketability to Existing Securities
•Liquidity: Existing securities can be easily
converted into cash (Liquidity)
• Marketability: Securities can be sold and
purchased in the market at current price

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.Mr.CharakRay.
•Share prices are determined by the
forces of demand and supply.
•provides valuable information to both
buyers and sellers.

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.Mr.CharakRay.
Scope for Speculation
•Provides scope within the provisions
of law for speculative activity in a
•Restricted and controlled manner
•liquidity in the stock market

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.Mr.CharakRay.
Spread Of Equity Culture
•Play an essential role in ensuring
•Wider share ownership by regulating new
issues,
•Better trading practices
•Taking effective steps in educating the
public about investments.

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.Mr.CharakRay.
Ensures better allocation of capital
•Reliable companies whose shares have high
value
•Can raise the additional fund in the capital
market
•
•By gaining the faith of the investors

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.Mr.CharakRay.
Safety of Transaction and dealing
•The membership of a stock exchange is well
regulated
• and its dealings are well defined according
to the
•existing legal framework.
•Investing public gets a safe and fair deal on
the market.

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.Mr.CharakRay.

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.Mr.CharakRay.
Some Common Companies In NSE
And BSE Are

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.Mr.CharakRay.

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.Mr.CharakRay.
BCM(BHSE),SENIOR(ST.JA) Selection of a
broker
Openings
demat account
with Depository
Placing the
order
Executing the
order
Settlement

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.Mr.CharakRay.
Broker buy / sell securities on behalf of the
speculator/ investor.
Trading of securities can only be done through
SEBI registered brokers who are the members
of a stock exchange.

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.Mr.CharakRay.
Demat (Dematerialized) account refers to an
account open
with the depository participant (banks,
stockbrokers) to trade in listed securities in
electronic form.
The securities are held in the electronic form
by a depository

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.Mr.CharakRay.
The order can be communicated to the broker
either personally or through
telephone, cell phone, e-mail etc.
The instructions require the securities to be
bought or sold and the price range.

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.Mr.CharakRay.
Investor instructs the broker to buys or sells
securities.
Broker issues a signed contract note.
Contract note contains the name and the price
of securities, names of the parties, brokerage
charges etc.

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.Mr.CharakRay.
Equity spot markets follow a T + 2 rolling
settlement.
Trading taking place on Monday gets settled by
Wednesday.
Delivery of shares must be made in
decartelized form

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.Mr.CharakRay.
Stocks are kept in electronic form instead of
physical form (i.E. Share certificates).
Helps in overcoming the
problem of theft, forgery, delays, misplaced
certificates
and unnecessary paper work.

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.Mr.CharakRay.
Separates the trading rights
Of members or brokers
In a stock exchange from its ownership and
control.

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.Mr.CharakRay.
Holds securities like shares, debentures,
bonds, mutual fund units etc.
In electronic form through a registered
depository participant.
Two depositories.

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.Mr.CharakRay.
Agent of the depository which interfaces
With the investor and provides depository
services.
Commercial banks, foreign banks operating in
India.

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.Mr.CharakRay.

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.Mr.CharakRay.

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.Mr.CharakRay.
The rights and interests of investors
and to guide and educate them.
Stock exchanges and the
securities industry to promote its systematic
functioning

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.Mr.CharakRay.
Trading malpractices and achieve a balance
between
self regulation by the securities industry and
its statutory regulation.
And develop a code of conduct and
fair practices by intermediaries like brokers.

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.Mr.CharakRay.

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.Mr.CharakRay.
BCM(BHSE),SENIOR(ST.JA) To Provide A Market
To Raise The Finances In An
•Easy
•Fair
•Efficient Manner

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.Mr.CharakRay.
Provide protection of investors rights and
interests through:-
•Adequate
•Accurate and
•Authentic information
On a Continuous basis.

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.Mr.CharakRay.
BCM(BHSE),SENIOR(ST.JA) Offer A
•Competitive
•Professionalized
•Efficient Infrastructure
So To Deliver Better Service To
The Investors And Issuers.

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.Mr.CharakRay.
Function Of
SEBI
Protective
Function
Regulatory
Function
Development
Function

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.Mr.CharakRay.
prevents insiders who have access to
price sensitive information regarding
securities of the company
…Like making misleading statements
and price rigging

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.Mr.CharakRay.
In the securities market from
time to time
Takes steps to create awareness
regarding
What to do and what not do

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.Mr.CharakRay.
Promotes training of intermediaries
of the securities market
Permit internet trading in A limited
way through registered stock
brokers
Accepted the system of using the
stock exchanges to market IPO’S

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.Mr.CharakRay.
Registers and regulates the working
of stock brokers, sub brokers,
share transfer agents
Regulates Takeover of companies
Conducts Inquiries And Audits of
the stock exchanges
Registers and regulates the working
of Mutual Funds etc

FINANCIAL MARKET

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