Capital Market Overview.-09!01!2014

8/12/2019 Capital Market Overview.-09!01!2014

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Indian Stock Market

Year Remarks

1850s Informal group of 22 stockbrokers began trading under a banyan tree opposite the Town Hall of Bombay

1860 Stock Exchange flourished with 60 brokers

1875 Informal group of stockbrokers was formally organized as the Bombay Stock Exchange (BSE).

1928 BSE building was acquired.

1930 BSE building was constructed and occupied

1956 The Government of India recognized the Bombay Stock Exchange under the Securities Contracts (Regulation) Act.

1992 BSE member - Harshad Mehta scam.

Creation of the National Stock Exchange (NSE),



Primary Market:It is the part of the capital markets that

deals with issuing of new securities.That is the corporate and the government

looks at the primary market to raise longterm funds by issuing securities such asdebt or equity. These securities may beissued at face value, at premium or atdiscount.

The process of selling new issues toinvestors is called underwriting. In the case

of a new stock issue, this sale is an initialpublic offering (IPO).

Capital Market

Primary Market Secondary Market

Definition: “The capital market (securities markets)is the market for securities, wherecompanies and the government can raiselong-term funds. The capital marketincludes the stock market and the bondmarket”

Capital market is a market for long-termdebt and equity shares. In this market, thecapital funds comprising of both equity

and debt are issued and traded.

Secondary Market: It is the market where stocks are

traded after they are initially offered tothe investor in primary market (IPO'setc.) and get listed to stock exchange.Secondary market comprises of equitymarkets and the debt markets.

Secondary market is a platform to tradelisted equities

Stock Market



Primary Market- Listing of Securities

Meaning of Listing:A listing refers to the company's shares being on the list (or board) of stock that are officially traded on a stock exchange.

Objectives of Listing :• It provides liquidity to securities.• To expand the existing activities of the Company or to setting up of new projects.• It helps to mobilize savings for economic development.• It protects the interest of investors by ensuring full disclosures.

Benefits of ListingIt increases the company's ability to raise debt at finer rates. The company gets a continuing window for raising more capital,

both from the domestic and overseas investors.Acquisitions also become simpler as instead of cash payouts, companies can use shares as a currency.It lends liquidity to the stock, which is very critical for the success of employee stock ownership plans, which help to attract

top talent.It carries a considerable degree of prestige for the company.

Eligibility Criteria:Net tangible assets of at least Rs. 3 crore in each of the preceding three full years.Distributable profits for at least three out of the immediately preceding five years.Net worth of at least Rs. 1 crore in each of the preceding three full years.The issue size should not exceed 5 times the pre-issue net worth.

Alternative routes:1. Issue shall be through book building route, with 50% of the offer to the Qualified Institutional Buyers (QIBs).

2. The “project” is appraised and participated to the extent of 15% by FIs/Scheduled Commercial Banks of which 10% of theProject Cost shall be from the Appraiser.



The Process for Listing of Securities

Rest get refund orders.

Allocation of securities is made to the successful bidders.

At last the book runners & the issuer decides the final price.

On the closure of the process, the book runners evaluates the price levels.

Bids have to be entered within the specific price band.

Process normally remains for 5 days.

Bidding Process.

Appointing of Syndicate of Stock Brokers.

Disclose of securities to be issued & price band for bidding.

The company nominates lead merchant banker(s).



Secondary Market

It is the market where stocks are traded after the listing.

Secondary market comprises of equity markets and the debt markets.

Merits Demerits

Ensure Liquidity of capital Adhere to Regulations and Compliances

Evaluation of securities Market Volatility

Mobilize Surplus Savings Higher Cost for going public.

Investment Opportunities High Accountability to various stakeholders.

Improves Corporate Governance

Builds Trust and creates Goodwill

Raising New capital

Safety In dealings

Pubic Confidence

Offers to investors liquidity for their assets.



Stock Exchange

Functions :

1. Continuous and ready market for securities

2. Facilitates evaluation of securities

3. Encourages capital formation

4. Provides safety and security in dealings

5. Regulates company management

6. Facilitates public borrowing

7. Provides clearing house facility

8. Serves as Economic Barometer

9. Facilitates Bank Lending

The Stock exchange is a place where the buyers and sellers

meet to trade in shares in an organized manner.

Trading in the secondary market is done through stock

exchange.



Indian Stock Exchange

Indian Stock Exchange

Bombay Stock Exchange(BSE)

National Stock Exchange(NSE)

Bombay Stock Exchange (BSE):An oldest stock exchange in Asia.It is the third largest stock

exchange in south Asia and thetenth largest in the world.

A Stock Exchange is a is a place whereinvestors go to buy/sell their shares aswell as it provides services for stock brokers and traders totrade stocks, bonds, andother securities.

The National Stock Exchange (NSE):India's largest and the worlds thirdlargest stock exchange in terms of

Transaction volumes & amounts.



INDEX

INDEX

BSE

SENSEX

NSE

NIFTY

An abbreviation of the Bombay Exchange

Sensitive Index (SENSEX) - the benchmark index

of the Bombay Stock Exchange (BSE).

It is composed of 30 of the largest and most

actively-traded stocks on the BSE.

Initially compiled in 1986, the SENSEX is the

oldest stock index in India.

NIFTY (National Stock Exchanges Fifty stocks) is

an Index computed from performance of top

stocks from different sectors listed on NSE

(National stock exchange).

NIFTY consists of 50 companies from different

sectors.



Functions of Capital Market Regulator & SEStock Exchange/

RegulatorDate of

IncorporationFunctions

Bombay Stock Exchange

(BSE)

1875 It helps in raising finance for corporations, governments and Local Authorities.

settlement system, timely dissemination of price sensitive information and a pricingand trade reporting system.

It also provides a legal and non-legal regulatory system for its members, market

participants and listed companies.

Securities and Exchange

Board of India (SEBI)

1992 Protective functions: It checks price rigging ,prohibits Insider trading, fraudulent and

Unfair Trade Practices, educate and protect investors interest, promotes fair practices

and code of conduct in security market.Developmental functions: It promotes training of intermediaries of the securities

market, permits internet trading through registered stock brokers, making

underwriting optional to reduce the cost of issue and permit initial public offer of

primary market through stock exchange.

Regulatory functions: It has framed rules and regulations, code of conduct to

regulate the working of intermediaries such as stock brokers, sub-brokers, sharetransfer agents, trustees, merchant bankers, underwriters, etc. It registers and

regulates the working of mutual funds, takeover of the companies an conducts

inquiries and audit of stock exchanges.

National Stock Exchange

(NSE)

1993 It provides trading facility to its trader, efficient network between buyers and sellers

all over the country, transparency in efficient trading with Electronic Trading System,

shorter settlement cycles and book entry settlements.



BULL and BEAR Market

What are Bulls?

Bull : An operator who expects the share price to rise and takes position in the market to sell at a later date.

Bull Market : A rising market where buyers far outnumber the sellers

What are Bear?

Bear : An operator who expects the share price to fall

Bear Market : A weak and falling market where buyers are absent

The stock market is affected by many economic factors. High employment levels, strong economy, and stable social and

economic conditions generally build investor confidence and encourage investors to put their money in the stock market.

Often, this can bolster bull markets.



(BOLT) BSE Online Trading System



Securities

A security or financial instrument is a tradable asset of any kind. Securities are broadly categorized into:

• debt securities (such as banknotes, bonds and debentures),

• equity securities, e.g., common stocks; and,

• derivative contracts, such as forwards, futures, options and swaps.

Securities may be represented by a certificate or, more typically, "non-certificated", that is in electronic or "book entry" only

form.



Dematerialisation of Securities and the Process

Dematerialisation is the process of converting physical shares (share certificates) into an electronic form.

Shares once converted into dematerialised form are held in a Demat account.

Physical Form Demat Form

Dematerialisation Process: An investor having securities in physical form

must get them dematerialised, if he intends to

sell them. This requires the investor to fill a

Demat Request Form (DRF) which is availablewith every DP and submit the same along

with the physical certificates. Every security

has an ISIN (International Securities

Identification Number). If there is more than

one security than the equal number of DRFs

has to be filled in.It came into existence in the year 1990.

Dematerialisation



Settlement ProcessClearing and settlement are fundamental processes in financial markets. After the trade is executed, the record is submitted to

the clearing agency, which matches the buyer and seller record and confirms that the counterparts agree to the terms.

Client/ Buyer Broker

Demat Account

has

Shares to be transferredon T+2 basis by 10.30am

In

Pool Account

Stock ExchangeClearing Department

After 10.30am

Broker

Pool Account

Shares are pulledBy the

from



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Capital Market Overview.-09!01!2014