GROUP MEMBERS: NAME ROLL NO.

SNEHAL CHAWHAN 46 JITENDRA BATRA 17 SUJIT ADULKAR 56 JOERIECH ROSARIO 37 RITESH TILAK 35 ASHWIN SONI 47 YOGESH NAIR 25 MMS 1ST SEM- DIV A (2011-2013)

Definition

CAPITAL MARKET

FINANCIAL SYSTEM

Indian financial system consists: financial market financial instruments financial intermediation Financial Market: Market in which financial assets are created or transferred. Financial institutions: (also called financial intermediaries) facilitate flows of funds from savers to borrowers.

Financial System Existence of a well organized financial system

Promotes the well being and standard of living of the people of a country Money and monetary assets
Mobilize the saving Promotes investment

Financial Intermediaries

Lenders (savers)

1. Households (individuals) 2. Business (Firm, corporation, company) 3. Governments 4. Foreigners

Borrowers (spenders) 1. 2. 3. 4. Households Business Governments Foreigners

Financial Markets

Functions of Financial Markets Funds flow - 2 routes:

Financial markets: (Direct Finance) Financial intermediaries: (Indirect Finance) (banks etc.)
In direct finance borrowers borrow funds directly from lenders in financial markets by selling them securities or bonds which are claim on borrowers future income or assets.

 The

market where investment instruments like bonds, equities and mortgages are traded is known as the capital market.
primal role of this market is to make investment from investors who have surplus funds to the ones who are running a deficit.

The

Why Capital Markets Exist?

Capital markets facilitate the transfer of capital ( i.e. financial) assets from one owner to another.

They provide liquidity.

(Liquidity refers to how easily an asset can be transferred without loss of value.)

Role of Capital Markets:

Mobilization of Savings Acceleration of Capital Formation Promotion of Industrial Growth Raising of long term Capital Ready & Continuous Markets

Proper Channelisation of Funds

Provision of a variety of Services

last 140 years of existence.

1861 -The American Civil War. 1860s -The opening of Suez Canal,export with UK, US.

1875 - The Stock Exchange, Mumbai, came into existence in at Dalal street.

Turbulent times

Imposition of wealth and expenditure tax in1957, Gold Control Act in 1963. Golden times

1980 -Mass participation by retail investors. Dhirubhai Ambani. The father of modern capital markets Various Reliance companies generated huge interest.

1984- Era of liberalization, Swell in market with new companies. 1991-Mr. Manmohan Singh as FM- reform agenda. 1992 - To lift the Indian stock market trading system on par with the international standards. National Stock Exchangeincorporated. 1995- Online trading

Progress in Indian capital market, financial market

Capital Market
Primary market Secondary market

It is that market in which shares, debentures and other securities are sold for the first time for collecting long-term capital.

This market is concerned with new issues. Therefore, the primary market is also called NEW ISSUE MARKET.

 In

this market, the flow of funds is from savers to borrowers (industries), hence, it helps directly in the capital formation of the country.

The

money collected from this market is generally used by the companies to modernize the plant, machinery and buildings, for extending business, and for setting up new business unit.

 The

secondary market is that market in which the buying and selling of the previously issued securities is done. transactions of the secondary market are generally done through the medium of stock exchange. chief purpose of the secondary market is to create liquidity in securities.

The

The

EXAMPLE:

If an individual has bought some security and he now wants to sell it, he can do so through the medium of stock exchange to sell or purchase through the medium of stock exchange requires the services of the broker presently, their are 24 stock exchange in India.

 Sharp Increase in the no. of companies after 1980s

What is IPO?
Why it is required? Private and Public companies..

For growing business. More demand, More issuing of stocks.

Trading in the open market.

Increasing reputation.

less cost. Capital raised never has to be repaid.

Appreciation of the share price.

Attracts more investors.

A way of making money.

Speculative investors.

Unpredictable No past record of the company.

Potential of stock market .

Risk assessment.

BUSINESS RISK FINANCIAL RISK

MARKET RISK

Potential investors must be cautious. 3 kinds of potential investors and their objectives.
Income investor Growth investor Speculator

Fixed price process. It refers to fixed pre- determined price.

Book building process It refers to collection of bids from investors , which is based on an indicative price range, the issue price being after the bid closing date. Allotment of securities not later than 15days. Company shall pay interest @ 15% p.a if the allotment letters have not been dispatched to the applicant within 15 days from the date of the closure of the issue.

Allotment of securities within 30 days. Company shall pay interest @ 15% p.a if the allotment letters have not been dispatched to the applicant within 30 days from the date of the closure of the issue.

Arrival of SEBI Deciding Premium by Bid System What is Book Building? Person Involved in Book Building How is the Book Built?

Underwritters Expenses Brokerage Fees to the Managers to the Issues Fees for the Registrars to the Issue Printing Expenses Postage Expenses Advertising Expenses Listing Fees Stamp Duty

Merchant Bankers Brokers Underwriters Bankers to the issue Registrars & Transfer Agents Depositories Legal Advisors

Preliminiary Requirements Press Conference Investors Conference Road Show Newspaper Advertisement Printing Stationery -Prospectus

Stock Exchange Investors purchases an asset from another investor, rather than from an issuing company Aftermarket (Securities and Financial instruments previously issued are bought and sold)

Equity shares
Preference shares

Right issue
Bonus shares

Certificated securities
Non-Certificated Securities

Place where existing securities can be traded, regulated and controlled Organized as association, society or company Open only for members (BROKERS) Transparency Listed securities Supply and Demand of the stock affect the price of the stocks

Sr No 1 2 3 4

Stock Exchanges Ahmedabad Stock Exchange Ltd Bangalore Stock Exchange Ltd. Bhubaneswar Stock Exchange Ltd Bombay Stock Exchange Ltd

Sr No 14 15 16 17

Stock Exchanges Madhya Pradesh Stock Exchange Ltd Madras Stock Exchange Ltd Magadh Stock Exchange Ltd Mangalore Stock Exchange

5
6 7 8

Calcutta Stock Exchange Ltd

Cochin Stock Exchange Ltd Coimbatore Stock Exchange Ltd Delhi Stock Exchange Ltd

18
19 20 21

MCX Stock Exchange Ltd

National Stock Exchange of India Ltd OTC Exchange of India Pune Stock Exchange Ltd

9
10 11 12 13

Gauhati Stock Exchange Ltd

Hyderabad Stock Exchange Ltd Interconnected Stock Exchange of India Ltd Jaipur Stock Exchange Ltd Ludhiana Stock Exchange Ltd

22
23 24 25

Saurashtra Kutch Stock Exchange

UP Stock Exchange Ltd United Stock Exchange of India Ltd The Vadodara Stock Exchange Ltd

Founded in the year1875

Dalal Street, Mumbai Madhu Kannan (CEO & MD) Listed companies as of June 2011 are 5085 4th largest in Asia & 8th largest in the world (according to equity market capitalization i.e. US$ 1.63 trillion)

Index: BSE SENSEX (BSE 30)

Incorporated in November 1992

Ravi Narain (MD)

BKC, Mumbai

Listed companies as on December 2010 over 1552

9th largest stock exchange in the world (Market Capitalization i.e. US $ 1.59 trillion)

Index: NSE NIFTY (NSE 50)

Index includes a group of stocks

It is a number that measures the relative values of the group Acts as a benchmark to measure the performance of portfolios

Nifty 50 NSE 50 largest and most active stocks of NSE Sensex 30 BSE 30 largest and most active stocks of BSE

Market where debt instruments are traded It provides long term funding Examples G-Secs Corporate Bonds Debentures T-Bills Commercial Papers Certificate of Deposit (CDs)

INTRODUCTION

KEY TERMINOLOGIES USED IN C & S PAY IN DAY PAY OUT DAY

NSCCL CLEARING MEMBERS CUSTODIANS CLEARING BANKS

DECISION TO TRADE

PLACING ORDER

FUND / SECURITIE S

TRADE EXECUTIO N

SETTLEME NTN OF TRADES

CLEARING OF TRADES

ACTIVITIES TRADING ROLLING SETTLEMENT TRADING

DAYS T

CLEARING

CUSTODIAN CONFIRMATION DELIVERY GENERATION

SECURITIES FUND PAY-IN SECURITIES FUND PAY-OUT AUCTION AUCTION SETTLEMENT BAD DELIVERY REPORTING RECTIFIED BAD DELIVERY PAY IN AND PAY OUT

T+1 WORKING DAY

T +2 WORKING DAYS T+2 T+3 T+4 T+6 WD WD WD WD

SETTLEMENT

POSTSETTLEMENT

Definition

Factors

behind volatile nature

Vs Volatile Measures

Doldrums

Preventive

US Crisis

Euro Debt Crisis

Political Scams

 Latest

Information on Stock Prices

Inflation

Economic

Strength of Market and Peers Issues on Stock Prices

Psychological

Supply

and Demand

Uncertainty

 Definition

Why

required ?

Two

Types : Qualitative analysis Quantitative analysis

 Definition.

Why

is it required ? on charts

Works

Close %Chg Reliance 990 10

Open 900

Day H/L Vol 1000 1.5m

 Definition

Why

is it required ?

Types

of Charts :Lines Chart Candle Chart OHLC chart

Close

Open

Resistance

Support

CASH ORDER MARGIN ORDER order MARKET ORDER price

Entire amount needed to place order A percent of amount required to place

Order is executed at the current market

LIMIT BUY ORDER Order is executed at the price quoted or at a lower price

LIMIT SELL ORDER Order is executed at the price quoted or at a higher price
LONG POSITION You have bought some shares SHORT POSITION You have sold some shares

BULLISH Market is in the uptrend

BEARISH Market is in the downtrend STOP LOSS It is a trigger to send your limit order

TRADING ACCOUNT

STANDALONE

ONLINE TRADINGCUM DEMAT

MF ACCOUNT