2. Capital market is defined as a market which
provides long term capital to the industrial
sector for various items of fixed capital
expenditure under various heads such as
land, building, plant & machinery, which are
permanent in nature and are used for
production.
3. In a primary market, securities are offered to
public for subscription for the purpose of
raising capital or fund.
New issues market
New issues of common stock ( share) , bonds,
preference share are sold by the companies,
government and local authorities,
corporation, to acquire new capital
4. Secondary market is an equity trading
avenue in which already existing / pre-issued
securities are traded among investors
Securities already outstanding and owned by
investors are usually bought and sold through
secondary market
Proceeds from the sale in a secondary market
do not go to the issuing organization but to
the current owner of the security
6. Investment Companies
Corporation which uses the capital subscribed by its
shareholders to build up a portfolio of securities for
long term capital growth
Sources of Funds: for such investment company is
share capital, borrowed money, undistributed
profits, investment income and capital gains on the
sale of shares in their portfolio
7. Portfolio Management Companies
It is a company which has arrangement with a
client, advises or directs or undertakes on
behalf of the client, the management of
administration of a portfolio of securities or
funds of the client, as the case may be
8. Mutual fund companies
It is an investment company or a trust that
pools the resources of thousands of its unit
holders and invests on behalf of them in
diversified securities to achieve returns in
terms of income and growth to the investors
9. Insurance companies
Collecting premium from the people in return
providing insurance
Protection to life and property
Premium deposited monthly/ quarterly /
yearly
Investment avenue
10. Institutional investors
Financial institutions and banks bring the
savings of individuals to companies
Two ways:
Financing projects
Purchasing existing securities from the
secondary market
11. Share broker
Depository Participant ( DP)
Registrar and Share Transfer Agent
Records of shares through various folios
Capture the sign of investor in the IPO form
Big role to play in sending dividends, right
forms, bonus shares
12. Share
A holder of stock (a shareholder) has a claim to a part of the
corporation's assets and earnings. A shareholder is
an owner of a company. Ownership is determined by the
number of shares a person owns relative to the number of
outstanding shares. For example, if a company has 1,000
shares of stock outstanding and one person owns 100 shares,
that person would own and have claim to 10% of the
company's assets.
13. 1)Ordinary shares:
No special right or restriction
High risk-High return
Last to be paid if the company is wound up
14. 2)Preference shares
It gives preferential treatment to the holders
in following ways
Annual dividend
Repaid the value if the company is to be
liquidated
However, the preferential share holder is not
benefited if there is an increase in the profits
of the company
15. 3) Cumulative preference share
These shares give the holders , if a dividend
cannot be paid in one year.
Dividends are paid even if the earning levels of the
company are not stable.
Bonus Share:
Bonus shares are issued when a company
capitalizes its reserves and surplus to give bonus
shares to existing shareholder.
Bonus issue is offered in a particular ratio.
16. Redeemable shares:
can be bought back by the company at a
future date, date is not mentioned at the
time of issue.
Rights Shares:
Rights Issue is offered to the existing
shareholders when the company has to
borrow capital from the market
Rights Issue is offered in a particular ratio
18. Growth rate exceeding 8 % in the last 4 years
Mergers and acquisitions
Foreign Exchange markets
Commodity market attained scale
Banking industry
Microfinance sector emerged to outreach and
provide much needed financial services to
poor Indian households
19. Indian economy
Culture of liscensing, protection and wide
spread red tape breeding corruption
Balance of payments
GDP- 3.5% to 8.5 % in 2008
End of License Raj- new investment and
capacity creation
20. Biggest structural change- fall in the interest rates ,
reducing the cost of capital for companies
Rise in imports and exports
Share of foreign trade in India’s GDP has increased
over 50%
Due to increase in exports, increase in foreign
exchange reserves
Portfolio Investments and FDI
Bureaucracy, poor infrastructure, rigid labour laws
and unfavourable tax structure discourage FDI
21. Number of stock exchanges in India-23
At the time of independence-4
Price appreciation in the stock prices from
mid 2003 to mid 2007
Role of FIIs money
At the end of 2005, BSE was 16th largest stock
market in the world and NSE was 18th in terms
of market capitalisation
22. In 2004-05, private companies raised $ 2.7 bn
from the market
$ 378 mn by bonds/ debenture
In 2005, about 5000 cos. were listed and
traded on NSE / BSE
The dollar value of trades is much lower than
on NYSE but number of trades is 10 times
more that on Euronext or London
Its of the same magnitude that on NYSE
23.
Bombay Stock Exchange- oldest stock exchange in Asia,
established in 1875
Until 1992 was a monopoly in the market, marked with
inefficiency, high costs of intermediation and manipulative
practice
The economic reforms created 4 new institutions
The Securities and Exchange Board of India(SEBI)
The National Stock Exchange ( NSE)
The National Securities Clearing Corporation (NSCC)
The National Securities Depository( NSDL)
24.
NSE accounts for 2/3rd of the stock exchange trading in India
NSCC is legal counterparty to net obligations of each
brokerage and thus eliminates counter party risk
It follows rigorous risk management framework involving
collateral and intra day monitoring
25. Regulatory framework to ensure fairness, transparency and
good practice
Transparency
eg: when total no. of shares is more than 0.5 % of the equity
of the company
From 1996, transparency and fairness in the working of BSE;
Limit order book
Brokers disclosure
Playing a role of watch dog
Addressing consumer grievances
26.
Retail investors
Mutual fund companies
Banks
Insurance companies
Venture capital funds
FIIs
Introduction of Derivatives- Futures and options- Biggest
development in the Indian Capital markets with turnover
increasing 50 to 70 times in the past 5 years
27.
The NASDAQ Stock Market, also known as the NASDAQ, is
an American stock exchange. "NASDAQ" originally stood for
"National Association of Securities Dealers Automated
Quotations". It is the largest electronic screen-based equity
securities trading market in the United States and secondlargest by market capitalization in the world.
As of January 13, 2011, there are 2,872 listings. The
NASDAQ has more trading volume than any other electronic
stock exchange in the world.
