Capital Market.

INDIAN CAPITAL MARKET

By Kunwar Ajeet Singh Baghel PGDM III Sem

INTRODUCTION TO CAPITAL MARKET A nation's capital market includes such

financial institutions as banks, insurance companies, and stock exchanges that channel long-term investment funds to commercial and industrial borrowers. Unlike the money market, on which lending is ordinarily short term, the capital market typically finances fixed investments like those in buildings and machinery.

Importance of Capital Market Pooling the capital resources and and Developing enterprises investors Solve the problem of paucity of funds Mobilize the small and scattered savings Augment the availability of investible funds Growth of joint stock business Provide a number of profitable

Reasons for investments One needs to invest to: Earn return on your idle

resources Generate a specified sum of money for a specific goal in life  Make a provision for an uncertain future wisely is to meet the cost of

DEPOSITORY A depository is like a bank wherein the

deposits are securities (viz. shares, debentures, bonds, government securities, units etc.) in electronic form. There are two types of Depository in our country NSDL CDSL

Which are the securities one can invest in?

Shares Government Securities Derivative products Debenture, are some of the

securities investors in the securities market can invest in.

What is SEBI and what is its role? The Securities and Exchange Board of India (SEBI) is the regulatory authority in India established under Section 3 of SEBI Act, 1992. SEBI Act, 1992 provides for establishment of Securities and Exchange Board of India (SEBI) with statutory powers for (a) Protecting the interests of investors in securities (b) Promoting the development of the securities market and (c) Regulating the securities market

Modification of provisions relating to mode of ü

Under the existing provisions of the Income-tax Act, capital gains arising from the transfer of a capital asset are computed by deducting from the full value of the consideration,

ü

the indexed cost of acquisition and the indexed cost of any improvement of the asset; and

ü

the amount of expenditure incurred in connection with such transfer.

Classification of capital market

1. Industrial securities market 2. Government security market 3. Long term market

●

Industrial security market

PRIMARY MARKET

OR NEW ISSUE MARKET SECONDARY MARKET OR STOCK EXCHANGE

PRIMARY MARKET Primary market provide the channel

for sale of new securities Primary market provide opportunity to issuers of securities Government as well as corporate to raise resources to meet their requirement of investment and discharge some obligation

CLASSIFICATION OF ISSUES Issues Private placement

Public

Right Initial Public Offering Fresh Issue

Offer for sale

Further Public Offering Fresh Issue

Offer for sale

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 . Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.

Difference between the Primary Market and the   In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. It’s also known as issuer market where company come with IPO.

Secondary market is an equity trading venue in which already existing/pre-issued securities are traded among investors. Secondary market could be either auction or dealer market. While stock exchange is the part of an auction market, Over-theCounter (OTC) is a part of the dealer market

2. Government securities market

Stock certificates or inscribed

stock Promissory notes Bearer bonds which can be discounted

PRODUCTS IN THE SECONDARY MARKETS

Equity shares Preference shares Debenture Bond Treasury Bills Warrants

3. Long term loan market

Term loans market Mortgages market Financial guarantees market

CRITERIA OF ENTER INTO THE MARKET DEMATE ACCOUNT TRADING ACCOUNT Ø PAN CARD Ø ID PROOF Ø BANK PASS BOOK Ø PHOTOGRAPH

RECENT IPO

THANK YOU