a) Money market

b) Capital market
Money market
 Money market is a market for dealing with
financial assets and securities which have a
maturity period of up to one year. In other
words,it is a market for purely short term
funds. The money market may be
subdivided into four. They are:
 Call money market
 Commercial bills market
 Treasury bills market
 Short-term loan market
 The call money market is a market for extremely
short period loans say one day to fourteen days.
So, it is highly liquid. The loans are repayable on
demand at the option of either the lender or the
borrower. In India, call money markets are
associated with the presence of stock exchanges
and hence, they are located in major industrial
towns like Mumbai, Kolkata, Chennai, Delhi,
Ahmadabad, etc. The special feature of this
market is that the interest rate varies from day-
to-day and even from hour-to-hour and center-to-
center. It is very sensitive to changes in demand
and supply of call loans.
 It is a market for bills of exchange arising out of
genuine trade transactions. In the case of credit
sale, the seller may draw a bill of exchange on the
buyer. The buyer accepts such a bill promising to
pay at a later date the amount specified in the
bill.

 In India the bill market is under-developed. The

RBI has taken many steps to develop a sound bill
market. The discount and finance house of India
was set up in 1988 to promote secondary market
in bills. In spite of all these, the growth of the bill
market is slow in India. There are no specialized
agencies for discounting bills. The commercial
banks play a significant role in this market.
 It is a market for treasury bills which
have ‘short-term’ maturity. A treasury
bill is a promissory note or a finance bill
issued by the government . It is highly
liquid because its repayment is
guaranteed by the government. It is an
important instrument for short term
borrowing by the government. There are
two types of treasury bills namely:
 (i) ordinary or regular and
 (ii) ad hoc treasury bills.
 It is a market where short term loans are
given to corporate customers for meeting
their working capital requirements.
Commercial banks play a significant role in
this market. Commercial banks provide
short term loans in the form of cash credit
and overdraft. Overdraft facility is mainly
given to business people whereas cash
credit is given to industrialists.
capital market

The capital market is a market for financial

assets which have a long or indefinite
maturity. Generally, it deals with long term
securities which have a maturity period of
above one year. Capital market may be
further divided into three namely:

(i) Industrial securities market.

(ii) Government securities market and
(iii) Long term loans market.
 Primary market is a market for new issues or
new financial claims. Hence, it is also called new
issue market. The primary market deals with
those securities which are issued to the public for
the first time. In the primary market, borrowers
exchange new financial securities for long term
funds. Thus, primary market facilitates capital
formation.
There are three ways by which a company may
raise capital in a primary market. They are:
(iii) Public issue
(iv) Rights issue
(v) Private placement
 Secondary market is a market for secondary sale
of securities . In other words, securities which
have already passed through the new issue
market are traded in this market. Generally, such
securities are quoted in the stock exchange and it
provides a continuous and regular market for
buying and selling of securities. This market
consists of all stock exchanges recognized by the
government of India. The stock exchanges in
India are regulated under the Securities Contracts
(Regulations) Act, 1956. The Bombay stock
exchange is the principal stock exchange in India
which sets the tone of the other stock markets.
 It is a market where government securities are
traded. In India there are many kinds of
government securities- short-term and long-term.
Long term securities are traded in this market
while short term securities are traded in the
money market. Securities issued by the central
government, state government, semi-
government authorities like city corporations,
port trusts ,etc. improvement trusts, state
electricity boards, all India and state level
financial institutions and public sector enterprises
are dealt in this market.
 Development banks and commercial banks
play a significant role in this market by
supplying long term loans to corporate
customers. Long-term loans market may
further be classified into:
(i) Term loans market
(ii) Mortgages market
(iii) Financial guarantees market
 Money market
 1. It is a market for short
term loan able funds for a
period of not exceeding
one year.
 2. This market supplies
funds for financing current
business operations,
working capital
requirements of industries
of the government.
 3. The instruments that
are dealt in a money
market are bills of
exchange, treasury bills,
commercial papers,
certificate of deposit.
Capital market
 1. It is a market for long
term funds exceeding a
period one year.
 2. This market supplies
funds for financing the
fixed capital
requirements of trade
and commerce as well
as the long term
requirements of the
government.
 3. This market deals in
instruments like shares,
debentures,
government bonds.
• 4. Each single money  4. Each single capital
market instrument is of
large amount. A TB is of market instrument is of
minimum for one lakh. small amount. Each
Each CD is for a share value is Rs.10.
minimum of Rs.25 lakhs. each debenture value is
 5. The central bank and Rs.100
commercial banks are  5. Development banks
the major institutions in and insurance
the money market. companies play a
 6. Money market dominant role in the
instruments generally capital market.
do not have secondary
markets.  6. Capital market
 7. Transactions mostly instruments generally
take place over the have secondary
phone and there is no markets.
formal place.  7. Transactions take
 8. Transactions have to place at a formal place
be conducted without viz., stock exchanges.
the help of brokers.  8. Transactions have to
be conducted only
through authorized
 BUYING AND SELLING OF SHARES

 IN OUR STOCK MARKET MORE THAN

13,766 STOCKS
BSE NSE
(BOMBAY STOCT EXCHANGE ) (NATIONAL STOCK EXCHANGE)
• Started in 1850 in front of Town-Hall in Bombay
currently known as Horniman circle
• Formed in 1875 as Bombay Stock Exchange
• In 1986 launched its first stock index named
‘SENSEX’ with base year 1978-79
• Non-profit association & evolved as the
premier stock exchange
• Oldest stock exchange of Asia
• Accounts for 75% of listed capital & 75% of
shares in terms of market capitalization
• Its turnover is 1/3rd of the total turnover in
securities in India
 Transactions are carried by TM on behalf of
their clients
• Financial soundness, track record, experience,
infrastructure and manpower
 TM must be registered and pay fee to BSE &
Regulatory Authority
 TM’s play a role of brokers, sub-brokers,

floor-brokers, agents, jobbers, dealers,

Badla financiers, dealer in G-Sec and
underwriters
• BSE has
– A Board of 9 directors
– Executive Director
– 3 Gov Nominees
– A RBI Nominee
– 5 Public representatives
• Executive Director is responsible for day-2-
day functioning and administration of Stock
Exchange
• Outcry System
• Interaction based trading & settlement
– If paid-up value= INR 10 & or 100 Sh. Trading lot
is 50 or 100 Sh.
– Paid-up value > 100 INR, market lot of 10 Sh.
• Settlement period 14 days or more
• Permission from board or president in
special cases
• Physical settlement by TM at the clearing
house
• NSE was started in April 1993 as a
corporate body.
• In July 2005, became the largest exchange
in India.
• Trades over 1500 equity, 800 debt
instrument with a corporate membership of
980.
• Companies are selected on the basis of
record, the profitability, paid-up capital,
market capitalization and dividend
payment.
1. 6.
2. 7.
3. 8.
4. 9.
5. 10.
1 (SENSEX 30 STOCKS)

2 (NIFIY 50 STOCKS)
1. ACC 11.BHEL
21. SBI
2. GRASIM 12.GUJ AMBUJA
22.INFOSYS
3. HINDALCO 13.ICICI BANK
23.DR.REDYS
4. HLL 14.RANBAXY
24.SATYAM
5. ITC 15.REL
25.CIPLA
6. L&T 16.R.COM
26.AIRTEL
7. RIL 17.HDFC BANK
1.ACC 11.GUJ AMBUJA
21.JET AIRWAYS
2.BAJAJ AUTO 12.HCL
22.ITC
3.BHEL 13.HDFC
23.L&T
4.BPL 14.HDFC BANK
24.MTNL
5.BHARTI AIRTEL 15.HERO HONDA
25.M&M
6.CIPLA 16.HINDALCO
26.MARUTI
7.DABUR 17.HLL
31.NATIONAL ALUMINIUM 41.TATA
MOTORS
32.RANBAXY 42.TATA
POWER
33.R.COM
43.TATA STEEL
34.REL
44.WIPRO
35.RIL 45.ZEE
36.SATYAM
46.VSNL
1. BANKING SECTOR
2. CAPITAL GOODS SECTOR
3. CEMENT SECTOR
4. REAL ESTATE SECTOR
5. INFRASTRUCTURE SECTOR
6. POWER SECTOR
7. TELECOM SECTOR
8. AUTOMOBILES SECTOR
9. METAL SECTOR
10. INFORMATION TECHNOLOGY SECTOR
1.
(ASIXS BANK) 4. (PNB)

2.
(ICICI BANK) 5. (SBI)

3.

(HDFC BANK)
1. 4.

2.

3. 5.
1. 4.

2. 5.

3.
1. 4.

2. 5.

3.
1. 4.

2. 5.

3.
1. 4.

2. 5.

3.
1. 4.

2. 5.

3.
1 4.

2. 5.

3.
1. 4.

2.

3.
1. 4.

2. 5.

3.
3. INFLATION
4. MARKET TRENDS
5. GLOBAL MARKETS
6. GOVT. POLICIES
7. FINANCIAL STATEMENT OF
COMPANIES
 INFLATION RATE CURRENT 0.57
 MAIN FACTOR CRUDE earlier147$
BARRAL
 NOW CRUDE IS ON 49$ BARRAL
1.BULL MARKET 2. BEAR MARKET
 PROFITS

 LOSSES

 GROWTH
 FINANCIAL STATEMENT OF COMPANIES
 GROWTH OF CONPANIES
 ORDER BOOK
 MANAGEMENT
 LAND BANK
 POLICIES
 PLANS
1. GDP GROWTH RATE
2. ORDER BOOK OF INDIAN COMPANIES
3. Stock MARKET GROWTH
4. INDIA GORWING FASTER
5. FIIS INVESTING IN INDIA
6. BIG FISHS GETTING BIGER
7. NUCLEAR DEAL
8. STRONG FUNDAMENTALS
 ORDER BOOK  ORDER BOOK
Rs 85,000 Rs 52,683
CRORE CRORE
 INCOME GROWTH  INCOME
26% GROWTH 40%
 NET PROFIT Rs  NET PROFIT
27,OOO CRORE Rs 29,883
CRORE
25000

20000

15000

SENSEX
10000

5000

0
1990 1994 1998 2002 2006
INFR AS TRUC TURE POWER
PROJECTS
3. FOREGIN ECONOMY 2.INDIAN
 2% GROWTH RATE ECONOMY
 DEVELOPED ECONOMY  8.5% GROWTH
 LESS EXPANSTION RATE
 DEVELOPING
ECONPMY
 MORE EXPANSTION
75000 MW 15000 MW
BY 2017 BY 2015
 POWER FOR INDUSTRY
 GROWTH OF POWER SECTOR
 CHEAPER POWER
 OPPORTUNITY FOR COMPANIES
 1. DIRECT
INVESTMENT

 BY OPENING TRADING
ACCOUNT
 BY OPENING DEMAT ACCOUNT
1. 4.

2. 5.

3.
3. 2.
 2. MUTUAL FUNDS

FUND MANAGERS
SAFeTY OF YOUR MONEY
 ESTABLISHMENT OF SEBI

The Securities and Exchange Board of India was

established on April 12, 1992 in accordance with
the provisions of the
Securities and Exchange Board of India Act, 1992.
Basic functions of the Securities and Exchange
Board of India
“…..to protect the interests of investors in
securities and to promote the development
of, and to regulate the securities market and
for matters connected there with or
incidental there to”
As an important entity in the market it
works with following objectives:

1. It tries to develop the securities market.

2. Promotes Investors Interest.
3. Makes rules and regulations for the
securities market.
 1.1 Definition of Venture Capital Fund :
The Venture Capital Fund is now defined as
a fund established in the form of a Trust, a
company including a body corporate and
registered with SEBI which: 
◦ has a dedicated pool of capital; 
◦ raised in the manner specified under the
Regulations; and
◦ to invest in Venture Capital Undertakings in
accordance with the Regulations."
 1.2 Definition of Venture Capital
Undertaking: Venture Capital Undertaking
means a domestic company :- 
◦ Whose shares are not listed on a recognised stock
exchange in India
◦ Which is engaged in business including providing
services, production or manufacture of articles or
things, or does not include such activities or
sectors which are specified in the negative list by
the Board with the approval of the Central
Government by notification in the Official Gazette
in this behalf.
 1.3 Minimum contribution and fund
size : the minimum investment in a Venture
Capital Fund from any investor will not be
less than Rs. 5 lacs and the minimum
corpus of the fund before the fund can start
activities shall be atleast Rs. 5 crores.
 1.4 Investment Criteria : The earlier
investment criteria has been substituted by
a new investment criteria which has the
following requirements : 
◦ disclosure of investment strategy; 
◦ maximum investment in single venture capital
undertaking not to exceed 25% of the corpus of
the fund;
◦ Investment in the associated companies not
permitted; 
◦ atleast 75% of the investible funds to be invested
in unlisted equity shares or equity linked
instruments. 
◦ Not more than 25% of the investible funds may be
invested by way of: 
 subscription to initial public offer of a
venture capital undertaking whose shares
are proposed to be listed subject to lock-in
period of one year;
 debt or debt instrument of a venture capital

undertaking in which the venture capital

fund has already made an investment by
way of equity. 
 It has also been provided that Venture

Capital Fund seeking to avail benefit under

the relevant provisions of the Income Tax
Act will be required to divest from the
investment within a period of one year from
the listing of the Venture Capital
Undertaking.
 1.5 Disclosure and Information to
Investors: In order to simplify and
expedite the process of fund raising, the
requirement of filing the Placement
memorandum with SEBI is dispensed with
and instead the fund will be required to
submit a copy of Placement Memorandum/
copy of contribution agreement entered
with the investors along with the details of
the fund raised for information to SEBI.
 2. QIB status for Venture Capital Funds
: The venture capital funds will be eligible to
participate in the IPO through book building
route as Qualified Institutional Buyer subject
to compliance with the SEBI (Venture
Capital Fund) Regulations. 
 3. Relaxation in Takeover Code: The

acquisition of shares by the company or any

of the promoters from the Venture Capital
Fund under the terms of agreement shall be
treated on the same footing as that of
acquisition of shares
bypromoters/companies from the state level
financial institutions and shall be exempt
from making an open offer to other
shareholders.
 4. Investments by Mutual Funds in
Venture Capital Funds: In order to
increase the resources for domestic venture
capital funds, mutual funds are permitted to
invest upto 5% of its corpus in the case of
open ended schemes and upto 10% of its
corpus in the case of close ended schemes.
Apart from raising the resources for Venture
Capital Funds this would provide an
opportunity to small investors to participate
in Venture Capital activities through mutual
funds.
 5. Government of India Guidelines: The
Government of India (MOF) Guidelines for
Overseas Venture Capital Investment in India
dated September 20, 1995 will be repealed
by the MOF on notification of SEBI Venture
Capital Fund Regulations. 
 6. The following will be the salient features of

SEBI (Foreign Venture Capital Investors)

Regulations, 2000 :
 6.1 Definition of Foreign Venture Capital

Investor : any entity incorporated and

established outside India and proposes to
make investment in Venture Capital Fund or
Venture Capital Undertaking and registered
with SEBI. 
 6.2 Eligibility Criteria : entity
incorporated and established outside India
in the form of investment company, trust,
partnership, pension fund, mutual fund,
university fund, endowment fund, asset
management company, investment
manager, investment management
company or other investment vehicle
incorporated outside India would be eligible
for seeking registration from SEBI. SEBI for
the purpose of registration shall consider
whether the applicant is regulated by an
appropriate foreign regulatory authority; or
is an income tax payer.
 6.3 Investment Criteria : 
◦ disclosure of investment strategy; 
◦ maximum investment in single venture capital
undertaking not to exceed 25% of the funds
committed for investment to India however it can
invest its total fund committed in one venture
capital fund;
◦ atleast 75% of the investible funds to be invested
in unlisted equity shares or equity linked
instruments. 
◦ Not more than 25% of the investible funds may be
invested by way of: 
subscription to initial public offer of a venture capital
undertaking whose shares are proposed to be listed
subject to lock-in period of one year;
debt or debt instrument of a venture capital
undertaking in which the venture capital fund has
already made an investment by way of equity. 
 7. Hassle Free Entry and Exit : The
Foreign Venture Capital Investors proposing
to make venture capital investment under
the Regulations would be granted
registration by SEBI. SEBI registered Foreign
Venture Capital Investors shall be permitted
to make investment on an automatic route
within the overall sectoral ceiling of foreign
investment under Annexure III of Statement
of Industrial Policy without any approval
from FIPB.
 8. Trading in unlisted equity : The Board
also approved the proposal to permit OTCEI
to develop a trading window for unlisted
securities where Qualified Institutional
Buyers(QIB) would be permitted to
participate. 
 Some of the members of the Board felt that
the mandated post listing exit time frame of
one year for availing tax pass through by a
domestic Venture Capital Fund could be
reconsidered by the Government in the light
of international experience and the need to
avoid operational restrictions and optimize
inflow of venture capital in the country. The
Board also desired that a small Group within
SEBI could be set up to codify the
experience of the existing players,
international experience including tax
treatment and potential areas for venture
capital funding
 PRESENTATION

BY
--VAIBHAV BIRLA
MBA -
II