Capital markets
where stocks and bonds are exchanged serve to raise long term funds for firms and governments: they are essential to economic activity (and growth).
The term Capital Market is used in the wider sense as to include both the new IPO market and the stock market. In this sense, both primary and secondary markets are covered here.
Trading in the stock market is debt claims of a medium and long-term nature which can be classified into those of the Government sector and of the private sector. The securities of government are traded in the stock market as a separate component, called gilt-edged market. These securities include those of the Central and State Governments, local bodies, semi-government bodies and those guaranteed by the Government. In this market, there are again three types of securities - short, medium and longdated Government securities, depending on the maturity period. Another component of the stock market deals with trading in corporate securities such as equity shares, preference shares and debentures. Equities are shares of companies of the ownership category. When these equities are floated to the public for the first time by the companies as shares, they constitute the new IPO market, which is a component of the capital market and when the same securities are traded again and again as secondary items, they constitute secondary markets . Derivatives are also introduced in the capital market for the benefits of small and institutional investors.
for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds
CAPITAL MARKET
It is defined as a market in which money is provided for periods longer than a year[1], as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt).
Capital Markets
Market for borrowing and lending LONG TERM Main Characteristics
Securities Market Security Prices Participants
Financial intermediaries Non Financial Business Enterprises Households Government Banks etc
Industrial Securities
PRIMARY
Public Issue Rights Issue Private Placement
SECONDARY
Deep Discount Bonds Stockinvest Equipref shares Equity Shares with detachable warrants Pref Shares with warrants Euro Issues Non voting right Shares Other Innovative Instruments
Structural Transformation
The Indian financial system has undergone structural transformation over the past There has been improvement in banks capital position and asset quality as reflected in the overall increase in their
Structural Transformation
Significant improvement in various parameters of efficiency, especially intermediation costs, suggest that competition in the banking industry has intensified. The efficiency of various segments of the financial system also increased.
Latest Offerings
Innovative products such as securitised debt and fund products based on alternative assets are starting to break ground. But an enabling environment is not yet in place and there remains an overriding need to increase domestic investors knowledge regarding the merits and risks of capital market investing. A vibrant, well-developed capital market has been shown to facilitate investment and economic growth. We believe that persistent reforms in the sector can support Indias already impressive growth trend in the coming years.