GROUP MEMBERS:SHAKSHI DWIVEDI JIML-10-129 SHAYAN FAHEEM JIML-10-130 SAURABH BORA JIML-10SAURABH KUMAR TRIPATHI SAMARTH SINHA JIML-10SAURABH

MISHRA JIML-10-128 SAURABH MISHRA JIML-10-127

VARIOUS TYPES OF FINANCIAL MARKETS

Financial market can be broadly divided into:Money Market Capital Market

WHAT IS CAPITAL MARKET ?

A capital market is market for securities (Debt or

Equity), where business enterprises (Companies) and government can raise long term funds.

CAPITAL MARKET IS DIFFERENT FROM MONEY MARKET

Capital market- Money is provided for longer than a year. Money market- money is provided for short terms (up to 1 year).

CAPITAL MARKET IS ESSENTIAL PART OF FINANCIAL SYSTEM

Because any financial system cannot provide efficient

growth to a country without a efficient and well regulated capital market. Capital market is heart of any financial system.

CAPITAL MARKET INSTRUMENT

Capital market instruments The capital market generally consists of the following long term period i.e. more than one year period, financial instruments; In the equity segment Equity shares, preference shares, convertible preference shares, non-convertible preference shares etc and in the debt segment debentures, zero coupon bonds, deep discount bonds etc.
Hybrid instruments Hybrid instruments have both the features of equity and debenture. This kind of instrument is called as hybrid instrument. Examples are convertible debentures, warrants etc.

CAPITAL MARKET INSTRUMENT

Fixed rate bonds Equity Floating rate bond Convertible bonds Asset backed securities Mortgage backed securities Interest rate swaps

TYPES OF CAPITAL MARKET

PRIMARY MARKET
In the primary market, securities are offered to the

public for subscription for the purpose of raising capital or fund.

SECONDARY MARKET
Secondary market refer 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.

MAJOR EVENTS OF INDIAN CAPITAL MARKET

By 1830s business in corporate stock started with East

India Company. BSE founded in 1875. It can be said that in 1899 the stock exchange at Bombay was consolidated. Electronic Stock Exchange started in 1992. NSE founded in 1992(as a competitor of BSE). NSDL founded in 1996. NSDL National Security Depositor Limited

CONTINUE
In 1993 private sector entry allowed in mutual fund.
In march 1995 NSE started a limit order book

market, instead of open outcry. In 1992 FII(Foreign Institutional Investor) were allowed in Indian security market. Indian companies were allowed to raise GDR & FCCBS. GDR Global Depository Receipt FCCBS Foreign Currency Convertible Bond

DIFFERENCE BETWEEN PRIMARY & SECONDARY MARKET

In the primary market, securities are offered to public for

subscription for the purpose of raising capital or fund. Secondary market is an equity trading avenue in which already existing/pre- issued securities are traded amongst investors.
Secondary market could be either

auction or dealer market. While stock exchange is the part of an auction market.

IN

WHAT ARE THE PRODUCTS DEALT SECONDARY MARKET ?

Equity shares Debentures Government securities Bonds

IMPORTANT TERMS IN THE SECONDARY MARKET

STT Rolling Settlement Pay -in day and pay- out day Short selling Arbitration Day trading

WHY IN 1991 INDIAN CAPITAL MARKET LIBERALIZED ?

Because of : Increasing oil price Double digit inflation Foreign loan chances of default creates shortage of adequate capital and brought economic crisis for India.

REGULATION OF CAPITAL MARKET

Regulating agency oversee the capital market in their

designated jurisdictions to ensure that investors are protected against fraud, among other duties. Indian capital market regulatory authority is SEBI- Securities and Exchange Board of India SEBI was established in 1988.

CAPITAL MARKET AND POVERTY REDUCTION

It works in two ways to reduce poverty.
In short term, it can move in opposite direction but in

long term it always works. 8-9% growth is needed in India to eliminate pervasive poverty within a generation. Singapore is an example of this. Till 1947 it was fishing village but amount & efficiency of capital market transfer it in a developed country.

MAJOR PROBLEMS OF INDIAN CAPITAL MARKET

Less developed debt market.
Skittishness about IPO. Stock market is very much vulnerable to FII. Frequent scams in stock market reduced public faith. Accounting standard is not very much at par with

international standard(e.g.- Satyam fraud by manipulating in accounts). Market liberalization has been slower in banking sector.

HOW EFFICIENT CAPITAL MARKET CAN BE DEVELOPED

Disclosure of relevant financial information.
Limiting transaction cost for securities. Promoting transparency of market operation.

Efficient and progressive regulating agency and policy.

Better surveillance and monitoring system.

FUTURE OF INDIAN CAPITAL MARKET

High saving rate 25% of 1993-97 of GDP(too much

higher than U.S & EUROPE). The share of saving invested in financial asset is still small. 3% - 1971 > 6% - 1981 > 10% - 1991 When this saving will infused in capital market instead of physical assets(like- GOLD, LAND, BUILDING etc.) Indian growth rate will be unbelievable.

CONCLUSION