Only primary market is discussed in detail.

1. INDIAN CAPITAL MARKET
S .Telinta Jenifer Priyanka

2. Capital Market
Capital Market is a type of Financial market
where in the long term securities are traded.
 Place where people buy and sell securities.
 Bundle of rights sold
 It deals with shares, stocks debentures and
bonds.
 It provides a market mechanism for those
who have saving and to those who need
funds for productive investments.
 Source of income for the investors.

4. Money market:
Money market is the market for short term securities with
a maturity period of one year or less.(always debt securities)
Capital market:
Long term securities with a maturity period of more that
one year.
 Primary market:(New Issue market)
Securities are offered to public for subscription for the
purpose of raising capital or funds.
Debt Market
Equity Market
 Secondary market:(Outstanding issue market)
Already existing or pre-issued securities are traded
among the investors.It could be either auction market or
Dealer market.Stock exchange is the part of an auction
market.

5. Over the counter(OTC):
Informal makets where trades are negotiated.Immediate delivery
and payment takes place in the OTC market.
ExchangeTraded Market:
All 23 stock exhanges in the country provide facility for trading of
corporate securities.
Gilt edged market:
 The gilt edged market refers to the market for government and
semi-government securities backed by the RBI.
 The securities traded in this market are stable in value and are
much sought after by banks and other institutions.
Industrial securities market:
It is a market for Industrial securities ie., market share and
debentures of old and new companies.It is a very sensitive market.

6. Brief History
Indian Capital Market before Independence
1. not properly developed
2. few companies and securities traded in the stock
exchanges
3. British enterprises in India looked to the London
capital market for funds than to the Indian capital
market.
4. A large part of the capital market consisted of the
gilt-edged marker for government and semi-
government securities.

7. Indian Capital Market after Independence
1. Since Independence and particularly after 1951, the
Indian capital market has been broadening
significantly and the volume of saving and
investment has shown steady improvement.
2. All types of encouragement and tax relief exist in
the country to promote savings. Besides, many steps
have been taken to protect the interests of
investors.
3. growth of joint stock companies or corporate
enterprises. In the 1950s, CenturyTextRayon,Tata
Steel, Bombay Dyeing, National Rayon, and
Kohinoor Mills.

8.  The next big boom and mass participation by retail
investors happened in1980, with the entry of Mr.
Dhirubhai Ambani.
 Dhirubhai can be said to be the father of modern capital
markets.
Recognised Stock exchanges in India:(23 stock markets)
Only few are listed below:
National Stock Exchange of India Ltd.
India International Exchange (India INX)
Calcutta Stock Exchange Ltd.
BSE Ltd.
Ahmedabad Stock Exchange Ltd
Koyambtour Stock Exchange,Coimbatore
Chennai Stock Exchange,Chennai

9. PRIMARY MARKET
Entry norm:
• Dividend payments-Minimum period of 3 year preceding the
issue.
• Networth-5 times the pre-isssue networth.
Promoter’s Contrbution:
Described in prospectus-directors,f/r,associates.
• Should not be less that 20% of issued capital.
• Promoters-before the public.
Disclosure:
• The draft prospectus filed wit SEBI is made as a public
document to enhance transparency.
 Present position
 Future prospect
 Risk factors

10. Book building:
Mode of public issue. Book building is a systematic
process of generating, capturing, and recording investor
demand for shares during an initial public offering.
Allocation of shares:
Pro-rata is the term used to describe a proportionate
allocation. It is a method of assigning an amount to a
fraction according to its share.
Market intermediaries:
First step:-Licensing of merchant banker or authorisation by
SEBI.
 Registrars
 Transfer agents
 Underwriters.

11. Conclusion
 Retail participation in India is very limited
considering the overall savings of households.
 Investors who hold shares in limited companies and
mutual fund units are about 20-30 million.Those
who participated in secondary markets are 2-
3million.
 Capital markets will change completely if they
grow beyond the cities and stock exchange
centers reach the Indian villages.
 Both SEBI and retail participants should be active in
spreading market wisdom and empowering
investors in planning their finances and
understanding the markets.