CAPITAL MARKET

By: Rajat Jhingan

Meaning of Capital Market

Market for securities, where companies and the government can raise long-term funds. Refers to all institutions and procedures that are involved in issuing, raising or trading of long term financial instruments. Term loans, corporate equities, and bonds

By: Rajat Jhingan

CAPITAL MARKET

ORGANISED

UNORGANISED

SECURITIES STOCK MARKET CORPORATE SECURITIES

LOANS FROM BANKS & OTHER INSTITUTES GOVERNMENT SECURITIES

PRIMARY MARKET

SECONDARY MARKET
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Unorganized Capital Market

Completely insulated from any control of the RBI and not subjected to any statutory reserve. Such as chit funds - conducted between friends or relatives.

By: Rajat Jhingan

Organized Capital Market

Includes institutions operating on given guidelines of RBI and other statutory bodies like SEBI. Two types: -Stock market -loans from banks and non-banks. For example: Mutual Funds (Long term) -ICICI Bank

Organized Capital Market - Loans

Main source of financing for the firms that do not issue security. Cheapest form of finance. Sources Banks( and other institutes and lenders. Types Secured And Unsecured
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(Credit Card &Personal loan)

Organized Capital Market Stock Market

Place where shares are purchased and sold. Size $51 trillion Deals in long term securities (funds) from both private and government. Includes corporate securities and government securities. Example- Bombay Stock Exchange

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Stock Market - Government securities

Instruments used for raising long term capital from the public. No risk involved in normal circumstances. Example - Government bonds.

By: Rajat Jhingan

Stock Market -Corporate Securities

Instruments used for raising long term corporate capital from the public. Examples-issues of shares, debentures.

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Corporate Securities -Primary Market

Part of corporate securities. Also called as New Issues Market. Deals in issuing of new securities in the form of public issues, rights issues or private placements to raise the capital of corporate enterprise.
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Corporate Securities -Secondary Market

Provides a market place for purchase and sale of old securities. Provides liquidity to old stock for firm and investors. Example-Stock exchanges.

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Types of Secondary Market

Organized security exchanges

Tangible entities. Physically occupy space (such as a building or part of a building). Financial instruments are traded on their premises. over the counter marketsInformal market where negotiated deals take place.
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DIFFERENCE BETWEEN PRIMARY & SECONDARY MARKET

In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. For example -Reliance Power

Secondary market is an equity trading avenue in which already existing/preissued securities are traded amongst investors. For example -Reliance Petroleum -DLF
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By: Rajat Jhingan

Stock Exchange

Centres for trading of securities Total 24 stock exchanges in India22 are regional stock exchanges 2 are primary stock exchanges -National Stock Exchange -Bombay Stock Exchange
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National Stock Exchange

Set up in June 1994. Provides fully automated screen-based trading system across the country. Has S&P NSE 50 Index( Nifty).

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Bombay Stock Exchange

Established in1987. BSE Index- BSE Sensex comprising of 30 stocks.

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Facts about Indian capital Market

Indias capital market includes primary, secondary, Over the counter market. Securities Board of Exchange(SEBI)Central regulatory authority and regulates capital markets in India.

By: Rajat Jhingan

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THANK YOU

By: Rajat Jhingan

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