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explains the Indian capital market with emphasis on stock exchanges in India
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PG DEPARTMENT OF ECONOMICS,
ST.ALOYSIUS COLLEGE,MANGALORE
Capital Market- B.V.Raghunandan, SVS College, Bantwal
Capital Market: Meaning
The capital market is the market for securities, where companies and governments can raise long-term funds. It is a market in which money is lent for periods longer than a year. The capital market includes the stock market and the bond- wikipedia
Players in the Capital Market
GovernmentsPublic Sector
UndertakingsInsurance
CompaniesMutual FundsNon-Banking
Financial CompaniesProvident Funds and
Pension Funds
Commercial Banks
Financial Institutions
CorporatesRetail InvestorsOthers:
FFI,HNI,NRI, Investment Trusts,
Capital Market Instruments
Equity SharesPreference SharesGovernment BondsCorporate Bonds / Debentures Perpetual Bonds
Classification of Markets
Primary Markets
Secondary Markets
Secondary Market for Corporate Securities:Stock Exchange
Stock Exchange is,
” an organised market for second-hand corporate and government securities”
A More Inclusive Definition
Stock Exchange is a regulated market for second-hand corporate securities, government securities, commodities, and foreign exchange
Characteristics of Stock Exchange
Organised Market
Securities Market
Secondary market
Part of Capital Market
Listed Securities
Restricted Membership
Dealing only by Members
Standardised Practices
FacilitatorSpeculation
Role and Functions of a Stock Exchange
Ready MarketLiquidity for
SecuritiesEvaluationPrice StabilityCapital FormationPromoting Saving
HabitsInvestor ProtectionCorporate
Governance
Public FinanceGrowth of Joint Stock
CompaniesEnabling Book-
Building RouteCapital MobilityForeign FundsIndex CompilationTechnical AnalysisEconomic
Development
Members of a Stock Exchange: Jobber & His Characteristics
DealerSpecialistStability in the
MarketDealing with
BrokersJobber’s Profit
Equalising Quantity
SpeculationTwo-way QuotesMatching
Demand and Supply
Company Sponsorship
Brokers & Their Characteristics
AgentGeneralistConduit
between Jobber and the Public
Income in the form of Commission
Types of Dealings
Dealings in Cash Market
Dealings in Futures & Options Market
Cash Market
Rolling Settlement
T+2 Settlement
Trading Day
Pay-In Day
Pay-Out Day
Futures & Options Marker
Meant for Risk Management Arising Out of Dealings in Cash Market
Exchange TradedBig Investors and Institutions Take
PositionsFor Protecting the Value of HoldingProviding for the Risks Arising Out of
Trading
Futures: Characteristics
Standardised FeaturesCounter-Party is the Clearing House
Margin RequirementTime SpreadThree Contracts for Settlement
Futures: Trading Mechanism
Trading Strategies
Uses: -Hedging -Speculation -ArbitrageTypes of
Futures: Stock Future and Index Future
Option
A contract to buy or sell without an obligationEuropean Option and American OptionCall Option and Put OptionUses of Options: -Hedging -Speculation -Arbitrage
Advantages of Option
No Big Investment
No Margin as in Futures
No Obligation
No Marked-to-Market
More Gain than Risk
Premium paid alone is the Disadvantage
Listing of Shares: Procedure
Initial Public OfferSize of Public Offer: Not Less than 25% of Issued
Capital & Post Issue Paid Up Capital is not less than Rs.10 CroreFiling Application: MA, AA, Prospectus, Directors
Report, Specimen Copies of Share Certificates and Debenture Certificates
-Wide Distribution of Shares: 5 for Each Rs.1 Lakh cap-Dividend & Bonus in the Past 10 years-Brief History of the Company-Management Pattern
Listing Procedure ….Continued
Payment of Listing Fees
Signing Listing Agreement
Screening the Application
Listing the Shares
SEBI: Functions
Regulation of Securities Market
Registration of FIsRegistration of
Collective Investment Scheme
Education & TrainingProhibition of Insider
TradingProhibition of Unfair
Trade Practices
Regulation of M&ARegistration of FIIRegistration &
Regulation of SEsConducting Research
Powers of SEBI
Levying FeesApproving Bye-laws of SEsOrdering Amendment of Bylaws of SEBI
InspectionCompulsory ListingPower of Punishment
THANK YOU
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