Indian capital market and it's segments are primary & secondary market

1. INDIAN CAPITAL MARKET
R.JOTHIRAM, MBA

2. CAPITA
L
MARKE
T

3. Indian Capital Market
Market Instruments Intermediaries
Primary Secondary
Equity DebtHybrid
Regulator
•Brokers
•Investment Bankers
•Stock Exchanges
•Underwriters
SEBI
Players
Corporate IntermediariesCRA
Banks/FI FDI /FIIIndividual

4. According to P.K Dhar “This is not a market
for capital goods; rather it is a market for
raising and advancing money capital for
investment purposes”

5. 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.

6.  It Has Two Segments
 It Deals In Long-Term Securities
 It Performs Trade-off Function
 It Creates Dispersion In Business Ownership
 It Helps In Capital Formation
 It Helps In Creating Liquidity

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

8. • Allocation function
- the current savings for a period are allocated
amongst the various users and uses.
- also allocates and rations funds by a system
of incentives and penalities.
• Liquidity function
-Provides a means where by buyers and sellers
can exchange securities at mutually satisfactory
prices.
-allows better securities for the securities that
are traded

9. Indicative function
- Showing not only the progress, but also
the economy as a whole through share price
movements
Savings and Investment function
- Provides a means of quickly converting
long- term investment into liquid funds,
thereby generating confidence among
investors and speeding up the process of
saving and investment.

10. Transfer function
- facilitates the transfer of existing assets
among individual economic units or groups
Merger function
- encourages voluntary take-over
mechanism
to put the management of inefficient
companies into more competent hands

11. Equity Shares
Preference Shares
Government Bonds
Corporate Bonds / Debentures

12. 1. COMMERCIAL BANKS.
2. INSURANCE COMPANIES.
3. BUSINESS CORPORATIONS.
4. RETREMENT FUNDS.

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

14. There are two types of capital
market:
Primary market,
Secondary market

15. 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.

16. Market for new issues/fresh capital (IPO’s)
New issues mkt.
Participants
issuer
investors
intermediaries

17. 1.New long term capital
2.securities sold first time In market
3.security are issued directly to investor
4.security issued for new business or
expanding existing business
5.it is purpose of going public

18. Origination: It refers to the work of investigation,
analysis and processing of new project proposals. It
starts before an issue is actually floated in the market.
Underwriting: It is an agreement whereby the
underwriter promises to subscribe to a specified
number of shares or debentures or a specified amount
of stock in the event of public not subscribing to the
issue.
Distribution: It is the function of sale of securities to
ultimate investors. This service is performed by
brokers and agents who maintain a regular and direct
contact with the ultimate investors.

19. 1. Draft Prospectus
2. Fulfillment of Entry Norms
3. Appointment of Underwriters
4. Appointment of Bankers
5. Initiating Allotment Procedure
6. Brokers to the issue
7. Filing of Documents
8. Printing of Prospectus And Application Forms
9. Listing the Issue
10. Publication in Newspapers
11. Allotment of shares
12. Underwriters liability
13. Optional Listing

20. 1.Initial Public Offer
2.Right Issue Method
3.Bonus Issue method
4.Book-building method
5.Employees Stock Option Scheme
6.Offer for sale method
7.Private Placement method

21. Public issue made by a corporate entity for
the first time
Often prompted by venture capitalists who
wish to realize a cash return on their
investment.
Founders of the firm may wish to go through
an IPO to establish a value for their company.
There exists greater price uncertainty with an
IPO than with other new public stock issues

22. Where the shares of an existing company are
offered to the existing shareholders , it takes
the form of ‘right issue’. Under this method,
the existing company issues shares to its
existing shareholders in proportions to the
number of shares already held by them

23. A method of marketing the securities of a
company by converting its accumulated
reserves and surplus profits, it takes the form
of ‘bonus issue method’.

24. A method of marketing the shares of a
company whereby the quantum and the bid
price of the securities to be issued will be
decided on the basis of the bids received
from the prospective shareholders by the lead
merchant bankers is known as book building
method

25. A method of marketing the securities of a
company whereby its employees are
encouraged to take up shares and subscribe
to it is known as ‘Stock Option’.
Help to retain the most productive employees
in an industry , which is known for its
constant churning of personnel

26. Marketing of securities takes place in bulk
quantity to intermediaries
 Advantage
o Saves company from the hassles involved in
selling the shares
 Disadvantage
o Expensive for the investors

27. Issuer makes the offer of sale to individuals
and institutions privately without the issue of
prospectus
 Advantage
o Less expensive
o Less troublesome for the issuer
o Used when stock market is dull and public
issue is doubtful

28. Where the shares of an existing company are
offered to the existing shareholders , it takes
the form of ‘right issue’. Under this method,
the existing company issues shares to its
existing shareholders in proportions to the
number of shares already held by them

29. A method of marketing the securities of a
company by converting its accumulated
reserves and surplus profits, it takes the form
of ‘bonus issue method’.

30. 1.Merchant banker
2.Underwriters
3.Banker to an issue
4.Registers to an issue
5.Debenture trustees
6.Brokers to issue
7.Portfolio consultant

32. Definition
“security exchanges are market place
where securities that have been listed thereon
may be bought or sold for either investment
or speculation” - Pyle
It is also called secondary market

33. Stock Exchange is a market in which
securities are brought and sold and it is an
essential component of a developed capital
market .
“Stock exchange means anybody of
individual whether incorporated or not
,constituted for the purpose of assisting
,regulating or controlling the business of
buying ,selling or dealing in securities “.
(Securities Contract (Regulation) Act
,1956)

34. 1.It deal Previously issued security
2.Buying and selling security through broker
3.security exchanged from existing investor to new
investor
4.Securitites are marketability and liquidity
5.Unlisted Securities or not permitted to be dealt in the
market.
6.The Stock Exchange to regulate its day-to-day operations.
7.Individuals alone can buy and sell securities.

35. Ensure liquidity of capital
Continuous market for security
Evaluation of securities
Mobilizing of surplus saving
Help in raising new capital
Safety in dealing
Listing of securities
Platform for public dept
Clearing house of business information

36. Raising capital for businesses
Mobilizing savings for investment
Facilitating company growth
Redistribution of wealth
Corporate governance
Creating investment opportunities for small
investors
Government capital-raising for development
projects
Barometer of the economy

37. 1.Stock broker
commission broker
jobber
floor broker
security dealer
2.financial intermediaries;
commercial banks,
Development financial institutions,
Insurance company,
Mutual fund,
Non banking financial institutions
3.Individual investors

38. Mangalore Stock Exchange
Hyderabad Stock Exchange
Uttar Pradesh Stock
Exchange
Coimbatore Stock Exchange
Cochin Stock Exchange
Bangalore Stock Exchange
Saurashtra Kutch Stock
Exchange
Pune Stock Exchange
National Stock Exchange
OTC Exchange of India
Calcutta Stock Exchange
Inter-connected Stock
Exchange (NEW)
Madras Stock Exchange
Bombay Stock Exchange
Madhya Pradesh Stock
Exchange
Vadodara Stock Exchange
The Ahmedabad Stock
Exchange
Magadh Stock Exchange
Gauhati Stock Exchange
Bhubaneswar Stock
Exchange
Jaipur Stock Exchange
Delhi Stock Exchange Assoc
Ludhiana Stock Exchange