2. Ways of raising capital
Equity
– Owned Funds
– Owner receives profit in the form of dividend
Debt
– Borrowed Funds
– Borrower pays interest
– Secured or unsecured
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4. Preference Capital
Preferential shareholders enjoy a
preferential right
over equity shareholders with regards to:
Receipt of dividend
Receipt of residual funds after liquidation
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5. Debentures
A ‘Debenture’ is a legal contract
where the company will pay the
lender the initial amount
(principal) and interest (rate of
interest predefined at the
beginning) after a pre defined
period of time (maturity date)
Types of Debentures
– Convertible
– Non Convertible
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6. Venture capital
Capital typically provided by investors
for financing of new, growing or
struggling businesses. High risk
investments. Potential for above
average returns
Pooled investment vehicle
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7. Limited company
Liability limited to capital invested
Protects personal assets of shareholders
Types of limited companies
– Private limited
– Public limited
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8. Segments of the capital market
Primary market
Secondary market
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9. Primary market
Primary market provides opportunity to
issuers of securities; Government as well
as corporate, to raise resources to meet
their requirements of investment
They may issue the securities at face
value, or at a discount/premium and
these securities may take a variety of
forms such as equity, debt or hybrid
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10. Secondary market
Secondary market refers to a
market where securities are
traded after being initially
offered to the public in the
primary market and/or listed on
the Stock Exchange
Provides liquidity to investors
Majority of the trading is done in
the secondary market
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11. Initial Public Offering (IPO)
Initial Public Offering (IPO) is when an
unlisted company makes either a fresh
issue of securities or an offer for sale of
its existing securities or both for the first
time to the public
This paves way for listing and trading of
the issuer’s securities
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12. Pricing of an issue
Fixed Price
Price discovery through Book Building Process
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13. Book building process
Book building is basically a process used in
IPOs for efficient price discovery
Floor price and Cap price
It is a mechanism where, during the period
for which the IPO is open, bids are collected
from investors at various prices, within the
price band
The offer price is determined after the bid
closing date
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14. Index
Number which measures the change in a set of values
over a period of time
Stock index represents the change in value of a set of
stocks which constitute the index
A good stock market index is one which captures the
behavior of the overall equity market
It has to be well diversified yet highly liquid
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15. Importance of a market index
A market index is very important for its use as
a barometer for market behavior
as a benchmark portfolio performance
an underlying for index futures and options
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16. Circuit breakers
An index based market-wide circuit breaker system
applies at three stages of the index movement either way
at 10%, 15% and 20%
The breakers are triggered by movement of either S&P
CNX Nifty or Sensex, whichever is breached earlier
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17. Circuit breakers
As an additional measure of safety, individual scrip-wise price bands has
been fixed as below:
Daily price bands of 2% (either way) on a set of specified securities
Daily price bands of 5% (either way) on a set of specified securities
Daily price bands of 10% (either way) on another set of specified securities
Price bands of 20% (either way) on all remaining securities (including
debentures, warrants, preference shares etc. which are traded on CM
segment of NSE)
No price bands are applicable on scrips on which derivative products are
available or on scrips included in indices
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18. Market timings
Trading on the equities segment takes place on all days of
the week (except Saturdays and Sundays and holidays
declared by the exchange in advance)
The market timings of the equities segment are:
– Normal market open : 09:00 hours
– Normal market close : 15:30 hours
– The closing session is held between 15.50 hours and 16.00 hours in NSE and 15.40
hours and 16.00 hours in BSE
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25. Clearing and settlement
Stock Markets follow a system of settling trades on T+2
basis, which means transactions done on Monday, are to
be settled by Wednesday by way of giving securities or
funds.
Providing of securities or funds to Exchange / Clearing
Corporation is called ‘Pay-In’.
Receiving securities or funds from Exchange / Clearing
corporation is called ‘Pay-Out’.
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26. Clearing and settlement
Sometimes trades don’t get settled because of short or bad
delivery or company objection
In such cases ,trade is settled through auction of securities
If a trade remains unsettled even after auction, then
Exchange carries ‘Close Out’
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27. Our brokerage rates
Broking Services
Brokerage (Cash)
Intra-day 0.05%
Delivery:(Normal) settlement 0.50%
Trade to Trade and Z group scrip 0.75%
Brokerage(Futures) 0.05%
Brokerage(Options) 1% of Premium
Minimum Rs. 100/- per lot
Minimum per share brokerage Rs.0.05
Minimum Initial Margin Rs.10,000
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28. Regulatory charges
Trading Cash (NSE & BSE) : 0.0037% on turnover
Delivery (NSE & BSE) : 0.0037% on turnover
Futures : 0.0037% on turnover
Options : 0.0568% on premium
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29. Stamp Duty
Trading Cash (NSE & BSE) : 0.002% on
turnover
Delivery (NSE & BSE) : 0.01% on turnover
Futures : 0.002% on turnover
Options : 0.002% on premium
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30. Service Tax and STT
Service Tax is 10.30% on brokerage
Securities Transaction Tax
– For trading transactions in cash– 0.025% (Charged to seller only)
– For delivery transactions – 0.125% (Charged to buyer and seller)
– For trading transactions in ‘F n O’
Intra day – 0.017 % (Charged to seller)
For exercise – 0.125 % (Charged to seller)
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31. Trader Terminal
Investors get the facility to buy and sell
stocks in NSE and BSE and Futures and
Options through NSE
Trader Terminal is for the dedicated day
traders, who churn their portfolio on
minor movements in the market,
sometimes several times a day
The Trader Terminal offers…..
– lightning fast order execution
– Monitoring of marked to market positions on a minute-
to-minute basis
– Intra-day charts, market gossip, price and volume
information and much more
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