Capital Market by Rajat Jhingan

8/4/2019 Capital Market by Rajat Jhingan

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CAPITAL MARKETCAPITAL MARKET

By: Rajat Jhingan


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CAPITAL MARKET

ORGANISED UNORGANISED

SECURITIES

STOCK MARKET

LOANS FROM

BANKS & OTHERINSTITUTES

CORPORATE

SECURITIESGOVERNMENT

SECURITIES

PRIMARY

MARKETSECONDARY

MARKET

33By: Rajat JhinganBy: Rajat Jhingan


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Unorganized Capital MarketUnorganized Capital Market

Completely insulated from any control of the RBICompletely insulated from any control of the RBI

and not subjected to any statutory reserve.and not subjected to any statutory reserve.

Such as chit funds - conducted between friends orSuch as chit funds - conducted between friends orrelatives.relatives.



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Organized Capital MarketOrganized Capital Market

Includes institutions operating onIncludes institutions operating ongiven guidelines of RBI and othergiven guidelines of RBI and other

statutory bodies like SEBI.statutory bodies like SEBI.

Two types:Two types:-Stock market-Stock market

-loans from banks and non-banks.-loans from banks and non-banks.

For example:For example:Mutual Funds (Long term)Mutual Funds (Long term)

-ICICI Bank-ICICI Bank


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- Loans- Loans

Main source of financing for the firms that doMain source of financing for the firms that do

not issue security.not issue security.

Cheapest form of finance.Cheapest form of finance.

Sources Banks( and other institutes andSources Banks( and other institutes andlenders.lenders.

Types Secured And UnsecuredTypes Secured And Unsecured (Credit Card(Credit Card

&Personal loan)&Personal loan) 66By: Rajat JhinganBy: Rajat Jhingan


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Stock MarketStock Market

Place where shares are purchased and sold.Place where shares are purchased and sold.

Size $51 trillionSize $51 trillion

Deals in long term securities (funds) fromDeals in long term securities (funds) fromboth private and government.both private and government.

Includes corporate securities andIncludes corporate securities and

government securities.government securities.

Example- Bombay Stock ExchangeExample- Bombay Stock Exchange



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- Government securities- Government securities

Instruments used for raising long termInstruments used for raising long term

capital from the public.capital from the public.

No risk involved in normal circumstances.No risk involved in normal circumstances.

Example - Government bonds.Example - Government bonds.



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-Corporate Securities-Corporate Securities

Instruments used for raising long termInstruments used for raising long term

corporate capital from the public.corporate capital from the public.

Examples-issues of shares, debentures.Examples-issues of shares, debentures.



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Corporate SecuritiesCorporate Securities

-Primary Market-Primary Market

Part of corporate securities.Part of corporate securities.

Also called as New Issues Market.Also called as New Issues Market.

Deals in issuing of new securities in the formDeals in issuing of new securities in the form

of public issues, rights issues or privateof public issues, rights issues or private

placements to raise the capital of corporateplacements to raise the capital of corporate

enterprise.enterprise.



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Corporate SecuritiesCorporate Securities

-Secondary Market-Secondary Market

Provides a market place for purchase and sale ofProvides a market place for purchase and sale of

old securities.old securities.

Provides liquidity to old stock for firm andProvides liquidity to old stock for firm and

investors.investors.

Example-Stock exchanges.Example-Stock exchanges.



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Types of Secondary MarketTypes of Secondary Market

Organized security exchanges-Organized security exchanges-

Tangible entities.Tangible entities. Physically occupy space (such as a building or partPhysically occupy space (such as a building or part

of a building).of a building). Financial instruments are traded on theirFinancial instruments are traded on their

premises.premises.

over the counter markets-over the counter markets-

Informal market where negotiated deals takeInformal market where negotiated deals takeplace.place.



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DIFFERENCE BETWEEN PRIMARY &DIFFERENCE BETWEEN PRIMARY &

SECONDARY MARKETSECONDARY MARKET

In the primary market,In the primary market,

securities are offeredsecurities are offered

to public forto public for

subscription for thesubscription for thepurpose of raisingpurpose of raising

capital or fund.capital or fund.

For exampleFor example

-Reliance Power-Reliance Power

Secondary market isSecondary market isan equity tradingan equity tradingavenue in whichavenue in whichalready existing/pre-already existing/pre-issued securities areissued securities aretraded amongsttraded amongstinvestors.investors.

For exampleFor example-Reliance Petroleum-Reliance Petroleum

-DLF-DLF

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By: Rajat JhinganBy: Rajat Jhingan


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Stock ExchangeStock Exchange

Centres for trading of securitiesCentres for trading of securities

Total 24 stock exchanges in India-Total 24 stock exchanges in India-

22 are regional stock exchanges22 are regional stock exchanges

2 are primary stock exchanges2 are primary stock exchanges

-National Stock Exchange-National Stock Exchange

-Bombay Stock Exchange-Bombay Stock Exchange

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National Stock ExchangeNational Stock Exchange

Set up in June 1994.Set up in June 1994.

Provides fully automated screen-basedProvides fully automated screen-based

trading system across the country.trading system across the country.

Has S&P NSE 50 Index( Nifty).Has S&P NSE 50 Index( Nifty).

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Bombay Stock ExchangeBombay Stock Exchange

Established in1987.Established in1987.

BSE Index- BSE Sensex comprising of 30BSE Index- BSE Sensex comprising of 30stocks.stocks.

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Facts about Indian capital MarketFacts about Indian capital Market

Indias capital market includes primary,Indias capital market includes primary,

secondary, Over the counter market.secondary, Over the counter market.

Securities Board of Exchange(SEBI)-Securities Board of Exchange(SEBI)-

Central regulatory authority andCentral regulatory authority and

regulates capital markets in India.regulates capital markets in India.



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THANK YOUTHANK YOU


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Capital Market by Rajat Jhingan