CAPITAL MARKETPresented by:

Sneha J Chouhan (B111207)

CAPITAL MARKET

Thus,

• Capital Market is a place where money is exchanged between people who have excess of it, to those who are in deficit.

EXAMPLE

Wants to expand

business

ACE Textiles PVT. Ltd.Mr. Ace

Makes a Business Deal with GUCCI brand to export textile cloth to their

manufacturing unit

Where can he get the money from?

1. From Banks

Mr. Ace can approach banks, but it will not prove to be a healthy option because: -Bank will charge him High rate of interest.

- Lending of loans is a very tedious task. Bank first scrutinizes the papers/ documents, verifies them.

- Very time Consuming Process.Thus, this idea is not an effective one.

2. Can Go Public and get listed on the stock

companies.

Meaning of Capital Market

• Capital Market is the part of financial system which is concerned with raising capital funds by dealing in Shares, Bonds, and other long-term investments.• The market where Investment instruments

like bonds, equities and mortgages are traded is known as the capital market.

• The different types of financial instruments that are traded in the capital markets are:

1. equity instruments2. credit market instruments, 3. insurance instruments, 4. foreign exchange instruments, 5. hybrid instruments.

Significance ,Role or functions of Capital Market

• Mobilization of Savings• Capital Formation • Provision of Investment Avenue • Speed up Economic Growth and Development• Proper Regulation of Funds• Service Provision

MAJOR SUPPLIERS OF FUNDS IN THE CAPITAL MARKET

1. COMMERCIAL BANKS.

2. INSURANCE COMPANIES.

3. BUSINESS CORPORATIONS.

4. RETREMENT FUNDS.

MAJOR BORROWERS IN THE CAPITAL MARKET

1. TREASURY DEPARTMENTS.2. CORPORATIONS.3. SECURITIES DEALERS.

Types of capital marketThere are two types of capital market: Primary market, Secondary market

Primary 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.

Secondary Market

The secondary market is that market in which the buying and selling of the previously issued securities is done.

CAPITAL MARKET INVESTMENT Capital market investment takes place through

the bond market and the stock market. The capital market is basically the financial

pool in which different companies as well as the government can raise long term funds.

Capital market investments in the stock market

The stock market is basically the trading ground capital market investment in the following:

i) Company’s stocks ii) Derivatives iii) Other securities The capital market investments in the stock

market take place by: 1) Small individual stock investors 2) Large hedge fund traders.

STOCK EXCHANGE COMPANIES

• If an individual has some financial security and he wills to sell it, he can approach the Stock Exchange Companies which will help him to sell or purchase his security by the means of a Broker.

• There are 23 stock exchanges in India. • In India we have Bombay stock exchange ,

National stock exchange and the rest 21 are Regional stock exchanges.

STOCK EXCHANGE PLATFORM• There are three types of exchange platforms in

India: 1. Domestic Exchanges; 2. Regulatory Based.3. International Exchanges;

Domestic Exchanges

• Indian equities are traded on three major national exchanges:

1. MCX Stock Exchange Limited (MCX-SX),

2. Bombay Stock Exchange Limited (BSE) and

3. National Stock Exchange of India Limited (NSE).

MCX Stock Exchange• MCX Stock Exchange Limited (Multi

Commodity Exchange), India’s new stock exchange, is recognized by the Securities and Exchange Board of India (SEBI) and RBI.

• It is located at Andheri, Mumbai. • In line with global best practices and

regulatory requirements. • The Exchange received permissions

to deal in Interest Rate Derivatives, Equity, Futures and Options on Equity and Wholesale Debt segments.

• Mr. Joseph Massey, MD & CEO• Benchmark Index: SX40

Bombay Stock Exchange (BSE) • Called as “Bombay Share Bazaar ” in Hindi. • Located on Dalal Street, Mumbai. • It is the 10th largest stock exchange in the world

by market capitalisation. It is Asia’s first Stock Exchange and one of India’s leading exchange groups .

• BSE provides an efficient and transparent market for trading in equity, debt instruments, derivatives, mutual funds. It also has a platform for trading in equities of small-and-medium enterprises (SME).

• Around 5000 companies are listed on BSE making it world's No. 1 exchange in terms of listed members

• Mr. Ashish Chauhan is the MD & CEO of BSE• Indexes: BSE SENSEX, BSE Small Cap, BSE Mid-

Cap, BSE 500

National Stock Exchange (NSE)• NSE is called as “Rashtriya Share Bazaar”

in hindi & is Located in Mumbai.• It is the 11th largest stock exchange in

the world. • NSE is mutually owned by a set of leading

financial institutions, banks, insurance companies and other financial intermediaries in India.

• The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National Stock Exchange Fifty), an index of fifty major stocks weighted by market capitalisation.

• Chitra Ramakrishna is the Managing Director and CEO of National Stock Exchange of India (NSE).

Other 21 Regional Stock Exchanges in India• Bombay Stock Exchange • National Stock Exchange • Ahmedabad Stock Exchange • Bangalore Stock Exchange • Bhubaneshwar Stock Exchange • Calcutta Stock Exchange • Cochin Stock Exchange • Coimbatore Stock Exchange • Delhi Stock Exchange • Guwahati Stock Exchange • Hyderabad Stock Exchange • Jaipur Stock Exchange • Ludhiana Stock Exchange

• Madhya Pradesh Stock Exchange

• Madras Stock Exchange • Magadh Stock Exchange • Mangalore Stock Exchange • Meerut Stock Exchange • OTC Exchange Of India • Pune Stock Exchange • Saurashtra Kutch Stock

Exchange • Uttar Pradesh Stock Exchange • Vadodara Stock Exchange

REGULATORY AUTHORITY

• Regulatory authority is the one which is under the government surveillance.

• A few Stock Exchange companies follow the rules which are laid down by the government of India.

• Example: 1) SEBI:- (Securities Exchange Board of India)2) RBI:- (Reserve Bank of India)

Securities and Exchange Board of India

• SEBI protects the interests of investors in securities and promotes the development of the securities market.

• The board helps in making registration and regulate the functioning.

• SEBI conducts inspection and thus prohibits fraudulent practices.

• Upendra Kumar Sinha is the Chairman of SEBI.

RBI• RBI is the appex bank of India. • RBI is also known as the banker’s bank.

- Maintains price stability .

- Provides cost effective banking services to the Public.

- Give the public adequate quantity of supplies of currency notes and coins in good quality.

- Formulate implements and monitor the monetary policy.

- Manage the Foreign Exchange.

- Issue new currency and coins and exchange/destroy currency and coins not fit for circulation.

International Exchanges

• Due to increasing globalization, There is a rising competition amongst various countries to keep their

market stable. • Therefore, it is important to keep track of international financial markets for better perspective and intelligent

investment.

• NASDAQ, is an American stock exchange. "NASDAQ" stands for National Association of Securities Dealers Automated Quotations.

• It is located in the New York city, New York, USA.

• The NASDAQ is an electronic exchange where stocks are traded through an automated network. It is where most technology stocks are traded.

• e.g. Facebook= FB Microsoft = MSFT, Dell Computers = DELL, Cisco = CSCO.

• The London Stock Exchange is a stock exchange located in the City of London in the United Kingdom.

• It is the fourth-largest stock exchange in the world.

• Deals in Equity, Derivaties etc.• Xavier Rolet, (CEO). • IndexesFTSE 100 Index

FTSE 250 IndexFTSE 350 IndexFTSE SmallCap IndexFTSE All-Share Index

Frankfurt Stock Exchange• It is situated in Frankfurt, Germany. • It is owned and operated by Deutsche

Börse. • The Frankfurt Stock Exchange has over 90

percent of turnover in the German market and a big share in the European market.

• The exchange has a few well-known trading indices of the exchange, such as DAX, DAXplus, CDAX, DivDAX, LDAX, MDAX, SDAX, TecDAX, VDAX, and EuroStoxx 50.

• DAX is a blue-chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. Prices are taken from the electronic Xetra trading system of the Frankfurt Stock Exchange.

Various NEWS Channels which telecast the Stock Prices on television.

CONCLUSION• The lack of an advanced and vibrant capital

market can lead to underutilization of financial resources. The developed capital market also provides access to the foreign capital for domestic industry. Thus capital market definitely plays a constructive role in the over all development of an economy.