6. Financial Market
Types of Financial Market
A financial market is a market
in which people and entities
can trade financial securities,
commodities and fungible
items of value at low
transaction cost and at prices
that reflect supply and
demand.
Money Market
Capital Market
7. Capital Market
A market deals in medium and long-term funds, both
debt and equity, is termed as Capital Market.
The market is an institutional arrangement for
borrowing medium and long-term funds and which
provides facilities for marketing and trading of
securities
8. Factors Responsible for Growth of
Indian Capital Market
• Growth of Stock Exchange
• Growth of Financial Institution
• Growth of Mutual Fund
• Growth of Merchant Bank Service
• Development of Venture Capital Funds
• Development of Credit Rating Agency
• Setting up SEBI
• National securities Clearing Corporations
• Corporate Governance
9. Capital Market Types
Primary Market Secondary Market
A market where the issuers
access the prospective investors
directly for funds required by
them either for expansion or for
meeting the working capital
needs.
A market where securities are
traded after being initially
offered to the public in the
primary market and/or listed in
the stock exchange.
11. Methods of raising capital in the
Primary Market:
Initial Public Offer
Follow-on Public Offer
Private Placement
Offer for Sale
Rights Issue
E-Ipo
Qualified Institutional Placement
11
13. Functions of Stock Markets
Liquidity for Securities
Evaluation
Promotion of Savings Habits
Ready & Continuous Markets
Public Finance
Growth of Joint Stock Company
15. Bombay Stock Exchange
Bombay Stock Exchange, commonly
referred to as the BSE, (Bombay Share
Bazaar) is a stock exchange located on
Dalal Street, Mumbai, Maharashtra,
India.
It is the oldest stock exchange
in Asia. The equity market
capitalisation of the companies
listed on the BSE was US$1 trillion
as of December 2011, making it
the 6th largest stock exchange
in Asia and the 14th largest in
the world.
The BSE has the largest
number of listed companies in the
world.
16. National Stock Exchange
The National Stock Exchange (NSE) is
stock exchange located at Mumbai,
Maharashtra, India. It is in the top 20
largest stock exchanges in the world by
market capitalization and largest in India
by daily turnover and number of trades,
for both equities and derivative trading.
NSE has a market
capitalization of around
US$1 trillion and over 1,652 listings
Fully Automated System
Universal Membership
Listing
Demat
Settlement Cycle
17. Stock Exchanges names and their
Indices Name:
Country Stock exchange name Indices name
India National Stock Exchange S & P Nifty
India Bombay Stock Exchange Sensex
Hong Kong Hong Kong Stock Exchange Hang Seng
USA New York Stock Exchange NYSE
Korea Korean Stock Exchange KRX 100
Russia Russian Stock Exchange RTS Index
18. Some Important Terms Relating
To ‘Stock Market’
Speculators
Market Capitalization
Capital Structure
Cornering
Speculation
Bull
Bear
Lame Duck
Arbitrageur
19. Source-Securities and Exchange Board of India
Getting started
To start trading the following are required –
Bank account
Trading account
Demat account
Permanent Account Number (PAN)
Unique Client Code
20. Source -Securities and Exchange Board of India
Where to trade
The secondary market is divided into two segments
Cash/ Equity segment
Derivative segment –
Equity Futures and Option (F & O)
Currency Futures/ Option
Interest Rate Futures
21. Trading Procedure in Stock
Market
Selection Of Broker
Opening Demat Account with Depository
Placing the Order
Executing the Order
Settlement
22. Source-Securities and Exchange Board of India 22
Settlement
The settlement in the securities market is
done on a T+2 Rolling Settlement Cycle
(where T = Trading Day).
Trading
(T)
Option of
Early Pay-in
(T1)
Auction
(T3)
Close out
(T4)
Pay-in and
Pay out
(T2)
TRADE SETTLEMENT
T + 2
FAILURE
TO
PAY-IN
23. SEBI Guidelines in Capital Market
Primary Market Secondary Market
Initial Public offer
Follow-on Public Offer
Underwriting
Public Issue and Right Issue
Innovative Instruments
Bonus Shares
a) source of fund
b) residual reserves
c) past profit
d) other conditions
Issue of Debenture
Compulsory Registration of
Intermediaries
Demutualization
Transparency in Trading
Compulsory Audit
Investor protection
Capital Adequacy Norms
24. Major crash and
Rallies in Indian
Capital Market
28 April 1992
18 May 2006
21 January 2008
18 may 2009