capital markets - pps

8/6/2019 Capital Markets - PPS

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C O N T E N T S

Capital Markets

- An Introduction

Keynote Capitals Ltd.



C O N T E N T S

Capital Markets

Equity Debt




C O N T E N T S

Equity: The term Equity refers to Ownership Capital. Where in theequity holder/shareholder is a partner in the company to the tune of its percentage holding. He is eligible to receive profits of thecompany in the form of dividends/bonuses.

Debt: The term Debt in itself explains what it is. It is basicallyBorrowed Capital. Where in the holder of a debt instrument does nothave any stake in the company or its profits.

Most common debt instrument will be Debenture.




C O N T E N T S

Capital Markets

Primary Secondary




C O N T E N T S

Secondary Market: This market deals in buying and selling of shares which get listed on the Stock Market after the IPO.

Primary Market: It is also called as fresh money market. Thismarket primarily deals with fund raising for various companies.

Most Common known as the IPO (Initial Public Offering)market.




C O N T E N T S

Exchange

Ø What is an Exchange?

Ø What are Its Functions?

Ø How many Exchanges do we have in India?

Ø What is the System used to make trades through the exchange?

Ø What is the volume of trade in every stock exchange?




C O N T E N T S

Ø What is an exchange?

• An Exchange is a place where the orders are matched and executed.

Ø What are the Functions of the Exchange?

• Matching and Executing orders

• Credit And Risk

• Liquidity

Ø How many Exchanges do we have in India?

• There are 24 exchanges across India including the NSE and the BSE.




C O N T E N T S

Ø What is the System used to make trades through the exchange?

• BSE - BSE Online Trading (BOLT).

• NSE – National Exchange For Automated Trading (NEAT).

Ø What is the volume of trade in every stock exchange?

• 95% of the traded volume on a daily basis is contributed by The NSE& The BSE. Remaining 5% of the volume is Through the Ahmedabad,Calcutta, Delhi & Pune Stock Exchanges.




C O N T E N T S

Broker: The function of a broker is to facilitate easy buying and sellingof instruments traded in the Stock Market for interested investors.

Margin: In order to trade in the stock market an investor needs to

deposit a particular amount of money or stock in some cases, which isknown as Margin.

Rolling Settlement: It is the amount of time required to settle a particular buying or selling transaction is called as Rolling Settlement.

The amount of time is T+2days :

Where, T = Day of Transaction (Buy/Sell) & Days = Working Days.




C O N T E N T S

Auction

Ø It is a separate market unlike the cash market.

Ø Retail Investors cannot buy/sell in the auction market.

Ø Its entry is restricted only to a few Broking outfits and Investors (Kotak

Securities included).Ø In case if either parties (buyer/seller) fail to fulfill its commitment in thestipulated amount of time i.e. T+2days, then the shares are either bought or sold in the Auction market depending on the transaction.

Ø In the event of any profits made while settling a transaction by the

exchange board, the same is credited towards the Investors Protection Fundand in the event of loss, it is debited to the brokers account.




C O N T E N T S

Depositories

•NSE – National Securities Depository Limited (NSDL).

•BSE - Central Securities Depository Limited (CSDL).

•Functions

•Depository can in many ways be compared to a bank. Securities of theinvestors are held in electronic / book entry form by the Depository.

•Apart from holding the securities, Depository also provides services relatedto transactions in securities. Several consider the Depository to be another custodian.

• But the depository has an advantage over the custodian- the Depository cantransfer the Beneficial Ownership of the Securities, legally, which acustodian cannot do.




C O N T E N T S

Depository Participant

The Depository Participant through whom the Demat accounts are operatedacts as an agent of the Depository. For Example: Kotak Securities, MotilalOswal, Share Khan, etc..

Functions

ØOpening of Account

ØDe-materialization

ØRe-materialization

ØSettlement of transactions

ØPledge and Hypothecation

ØStock lending and borrowing.




C O N T E N T S

Stock Market

Spot Market Derivatives

Futures OptionsDelivery Based Intra-day




C O N T E N T S

Spot Market: It is a market mainly for investors and not speculators or too anextent for small time speculators. This market is further classified into Delivery

based Trading and Intra Day Trading.

i. Delivery Based: It is preferred mainly by short term/long term investors.

Under this segment the trading i.e. buying/selling is done purely ondelivery basis i.e. through the rolling settlement cycle.

ii. Intra Day: It is mainly preferred by daily traders who do not understandthe modern concept of Derivatives. Under this segment the shares are

bought/sold on the same trading day without actually receiving or leavingthe actual delivery of shares.




C O N T E N T S

Derivatives: It is the derived value of the underlying asset (equity, forex,commodity, etc..). This market is broadly classified into Futures, Options,Forwards & Swaps. In India we only use Futures and Options (F&O) in thestock market.

i. Futures: A Future contract is an agreement between two parties to buy or

sell in the future. Future contracts are available only for one, two or threemonths.

ii. Options : Options, as the name suggests offers a choice to the buyer tofulfill or dishonor the contract. There are two types of Options that can betraded :

i. Call

ii. Put.




C O N T E N T S

i. Call Option

It offers a buyer the right to buy or not to buy the stock or asset at a

specific price on or before a certain date.

ii. Put Option

It offers the buyer the rights and not the obligation to sell the stock or assetat a specific price on or before a certain date.


capital markets - pps

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