Capital Market

Capital Market

Presented By: Geetu Gupta Sushil Goyal Girish Matta Vinit Singh

Capital market

The capital market is the market for securities, where companies and governments can raise long term funds. The capital market includes the stock market and the bond market.

EVOLUTION One of the oldest in Asia, its history dates back to 200 years ago.. East India Co. was the dominant institution those days. Then in 1874 brokers found a street , now known as Dalal Street for the transactions. In 1887,they formally established in Bombay, as “the Native Share

Bombay Stock Exchange The

Bombay Stock Exchange was established in 1875 with 6000 Indian cos listed. The Equity Market Capitalization was US$1.79 trillion, making it largest in South Asia and 10th in World

National stock exchange  NSE

is a Mumbai based stock exchange. It is the largest stock exchange of India.  NSE is mutually-owned by a set of leading financial institutions .  The Equity Market Capitalization was US$ 1.46 trillion, making it second largest in South Asia.  It is also a fastest growing exchange with a recorded growth of 16.6%

Primary market  The

primary markets is where new stock and bonds issues are sold (underwriting) to investors  Companies come up with initial public issue to raise money directly to people

Features of IPO  Kept

open for minimum three days and maximum twenty one days  Under written by financial institution  Prospectus tell about the information like  Status of company  Performance  Promoters  capacity

16927.5

8

38

7

106

6

45141.6 24669.3

92

5

72

4

34

22753.6 30510.8

279.8 14

3

2

6

1981.5

295.8 13

1

0

125

9

36 0

2982.9

2177.2 5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

SEBI Guidelines for an IPO  The

promoter company should have three years consistent record of profitable working  The promoters take up at least fifty percent of shares in issue  All parties applying to the issue should be offered the same instrument at the same term, specially regarding the premium  Prospectus discloses the material information, which insure investors can take to intelligent decision regarding investment

Functions of IPO

1) Origination 2) Underwriting 3) Distribution Issue Mechanism:1) Public Issue through Prospectus 2) Offer for Sale 3) Private Placement 4) Initial Public Offers through Secondary Market 5) Right Issue 6) Bonus Share

 Instruments:-

1) Ownership Securities a) Equity Shares b) Preference Shares c) Sweat Equity shares

Secondary market

 The

secondary market is the financial market where previously issued securities and financial instruments such as stocks, bonds, options and futures are bought and sold

Characteristics  Bear

Market  Bull Market

Instruments of secondary market  Debenture  Equity  Giltz

securities  Derivatives  Hedge funds  Fccb

DERIVATIVE Derivative is a financial contract whose value is derived from underlying asset

TYPE OF Derivative  Future  Forward  Swap  Option

Future In cash market price of share(12 Jan)=280 (19 Jan)=330 profit=50/280*100=18% In future market price of share(12 Jan)=280 premium(20%)=56 price of share(19 Jan)=330 profit=50/56*100=89%

Some important term in Future  Vyaj

badla

broker buy=250 sell=252 Badla on tap cash price=250 Future price quoting (on one month)=253 Difference=253250=3

CONT…………………..  UDHA

BADLA

Short selling way to dealing in market

forward  Not

much difference between future and forward

Hedge funds A

smart portfolio to minimize your risk

Hedge against equity Infosys share price=4000 future one month)=4060 you hedge your position for one month Understand hedging not to earn profit its to reduce risk dollar against gold

DEBENTURE  SECURED

LOANS  OBLIGATION OF INTEREST  FOR A SHORT PERIOD

KIND OF DEBENTURE  Fully

convertible debenture  Partly convertible debenture  Non-convertible debenture

0ption  Call

option  Put option

Call option  It

give you a right to buy you buy satyam call option at=240 premium=20 after(10days)=270 new premium =35 Now sell this call option profit=15/20*100=75% if you sell share( profit) =30/240*100=12.5%

Biggest advantage of option  If

satyam plummet to =200 loss in cash market=40 But in this case loss not more than=20 so it limit to value of your premium so you have limited losses but your profit are unlimited But if you wait for expiry date what happen assume price is =281 so your total profit will=(281240)-20=21 But If satyam goes to=239 You will lose your premium =20

Put option  It

give you the right to sell suppose you buy put option to sell satyam=260 premium=11 if satyam goes to=235 total profit=25-11=14

TREASURY BILLS  These

are the government security offered By central bank

Type of treasury bills  Adhoc  ordinary

Features of treasury bills • Issued By Central Bank in 1937 • No fear of default, liquid asset • Company corporate bodies, trust and institutions can purchase Treasury Bills • Effective tolls for SLR • Also being issue for MSS( Market Stabilization Scheme)

Foreign currency convertible bond  These

bonds are subscribed by non resident in foreign country  Option of conversing in to share or gdr of issuing company  They have majority of five years  They change according to pre decide norms

BIG GUYS IN STOCK MARKET  FIIs  Mutual

funds  Financial institutes

Role of broker in stock market  He

should registered with SEBI  Agents for buying and selling securities  Thin line between a dealer and broker  Work on commission  Have good knowledge of market  Tell the time of buying and selling

Role of sub broker  Directly

contacts the clients and execute their order  Not member of stock exchange

SEBI  SEBI,

established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development & regulation of the market

Role of sebi (SEBI) has been mandated to protect the interests of investors in securities and to promote the development of and to regulate the securities market Conducted the work shop for reaching out the new investor investor It control the mutual fund ,financial institution and merchant bank Have power to give judgment Also stop inside trading

Thank You