1. CAPITAL MARKET
Presented by,
Group- 4

2. Financial Markets
FINANCIAL MARKETS
ORGANIZED MARKET
CAPITAL MARKET
MONEY MARKET
UNORGANIZED MARKET
MONEY
LENDERS,INDIGENEOU
S BANKERS

3. Capital Markets
Provided resources needed by medium and large
scale industries.
Purpose for these resources
Expansion
Capacity Expansion
Investments
Mergers and Acquisitions
Deals in long term instruments and sources of
funds

4. Main Activity
Functioning as an institutional mechanism to
channelize funds from those who save to those who
needed for productive purpose.
Provides opportunities to various class of
individuals and entities.

5. SIGNIFICANCE
• Growth of savings,
• Efficient allocation of investment resources,
• Better utilization of the existing resources

6. Capital market instrument
• Debt
• Prefernce share
• Equity
• ADRs/GDRs
• Derivatives

7. Primary market
• The primary market is that part of the capital
markets that deals with the issue of new
securities
• The primary market provides the channel for
creation of funds through issuance of new
securities by companies, governments, or
public institutions.

8. Types of issues in Primary market
• Initial public offer (IPO)
• Follow-on public offer (FPO)
• Rights offer
• Preferential issue/ bonus issue/
• Composite issue

9. Secondary market
• The secondary market is the financial market
where previously issued securities and
financial instruments such as stocks, bonds,
options, and futures are traded

10. Structure of Capital Markets
Primary Markets Secondary Markets
When companies need financial resources for
its expansion, they borrow money from
investors through issue of securities.
The place where such securities are traded
by these investors is known as the
secondary market.
Securities issued
a) Preference Shares
b) Equity Shares
c) Debentures
Securities like Preference Shares and
Debentures cannot be traded in the
secondary market.
Equity shares is issued by the under writers
and merchant bankers on behalf of the
company.
Equity shares are tradable through a private
broker or a brokerage house.
People who apply for these securities are:
a) High networth individual
b) Retail investors
c) Employees
d) Financial Institutions
e) Mutual Fund Houses
f) Banks
Securities that are traded are traded by the
retail investors.
One time activity by the company. Helps in mobilising the funds for the
investors in the short run.

11. Stock exchange
•
• A marketplace in which securities,
commodities, derivatives and other financial
instruments are traded. The core function of a
stock exchange is to ensure fair and orderly
trading, as well as efficient dissemination of
price information for any securities trading on
that exchange

12. Leading stock exchanges:
• Bombay Stock Exchange Limited
• National Stock Exchange
• New York Stock Exchange NYSE)
• NASDAQ
• London Stock Exchange

13. Functions of Stock Exchanges
• Liquidity and marketability of securities
• Fair price determination
• Source of long-tern funds
• Helps in capital formation
• Reflects general state of economy

14. Capital Market Intermediaries

15. Merchant Banks
• mostly in international finance.
• long-term loans for companies.
• no regular banking services to the general public.
• (e.g.) Goldman Sachs etc..

16. Custodian
• customers' securities for safekeeping.
• electronic or physical form.
• tend to be large and reputable firms.

17. Stock brokers
• Buys and sells shares and other securities
• Sub-brokers
• Stock brokers- Sharekhan, Angel broking ltd,
Kotak Securities etc..

18. Foreign Institutional Investors (FII)
• registered in a country outside of the one in
which it is currently investing.
• include hedge funds, insurance companies,
pension funds and mutual funds.
• (e.g.) Kotak Mahindra (UK)ltd, Morgan Stanley
investment management etc..

19. Mutual Fund
• a pool of funds collected from many investors
• portfolio is structured
(e.g.) Kotak Mahindra, HDFC mutual fund etc..

20. Registrar
• An institution or organization that is responsible
for keeping records of bondholders and
shareholders.

21. Venture Capital
• investors seeking private equity stakes in
startup and small- and medium-size
enterprises.
• high-risk/high-return opportunities.
• (e.g.) Reliance venture, DFJ India etc..

22. Underwriter
• an intermediary between the issuing company
and the investors
• buys the newly issued securities from the
company and sells them to investors on
the secondary market.

23. Portfolio Managers
• persons responsible for investing
• implements investment strategy
• manages the day-to-day portfolio trading.
• (e.g.) UTI etc..

24. ORGANISATIONS

25. BSE(Bombay Stock Exchange)
NSE(National Stock Exchange)

26. National Securities Depository Limited (NSDL)
and Central Securities Depository Limited
(CSDL)