1. Presented by:
Habeeba Jameel
Yusuf Alvi
Gagan Varshney

2.  Macroeconomic Development
 Primary Market
 Collective InvestmentVehicles
 Mutual Funds
 Secondary Market
 Capital Market
 Debt Market
 Derivative Market
 Foreign Investment in India
 Policy Development

3.  Greater integration with the world economy made India become
vulnerable to global shocks, as evidenced by the global financial
crisis of 2008.
 After a recovery from the global financial crisis with two successive
years (2009-10 and 2010-11) of robust growth of 8.4 %, the GDP
growth decelerated sharply to 5.3-5.5 % (Q2 of 2012-13)
Inflation:
 The sluggish growth accompanied by High Inflation
 Remained high at over 9 % in the first eight months of 2011-12,

4.  The slowdown was also reflected in all the three sectors of the economy
but industrial sector suffered the sharpest deceleration.
 However, the predominance of the services sector remains a unique
feature of the overall growth story and the process of structural change in
India

5.  It provides the channel for sale of new securities.
 Provides opportunity to issuers of securities; government as well as
corporates, to raise resources to meet their requirements of
investment and/or discharge some obligation.
 They may issue the securities at face value, or at a
discount/premium and these securities may take a variety of forms
such as equity, debt etc.
 They may issue the securities in domestic market and/or
international market.
 The primary market issuance is done through:
 Public issues  Right issues  Private placement.

6.  The total resources mobilized through corporate and government
securities in 2011-2012 amounted to Rs.9,926 billion as against
Rs.8,690 billion in 2010-2011.
 14% increase.
Primary market for corporate securities witnessed a drop of
18.2% in 2011-2012, as compare to last year, due to:
▪ 8.6% drop in capital raised through private placements
▪ 65.8% decrease in resources raised through public placement
▪ 71.2% decrease in resources raised from the international capital market
But, Primary market for Govt. securities showed a growth of
30%

7. Resource Mobilisation by Corporate & Government Sector

8.  A collective investment vehicle (CIV) is any entity that allows
investors to pool their money and invest the pooled funds, instead
of buying securities directly as individuals.
 The most common types of collective investment vehicles are :
 Mutual Funds  Exchange-Traded Funds
 The Unit Trust of India (UTI) that was created in 1964 was the first
MF in India. It enjoyed complete monopoly in MFs until 1986.
 SBI Mutual Fund was the first non-UTI mutual fund established in
June 1987.
 The MF business was progressively opened to competition after
1988. This move gathered momentum in India after economic
liberalization in 1991, and the establishment of the SEBI in 1992.

9.  In 2009-10, the net resources mobilized through MFs were Rs.785
billion
The trend was reversed in 2010-11, this year witnessed a
slowdown, with the net resource mobilization by all the MFs taken
together aggregating Rs.( - 488) billion,
 (i.e. Net Outflow of Rs. 488 bn)
The MF Industry continued to see the decline in net resources
mobilization at Rs.( - 437) billion in 2011-12.

10.  It is a place where securities are traded after being initially offered
to the public in the primary market and/or being listed on the stock
exchange.
 The stock exchanges along with a host of other intermediaries
provide the necessary platform for trading in the secondary market,
and also for clearing and settlement.
 The securities are traded, cleared, and settled within the regulatory
framework prescribed by the exchanges and the SEBI.
 The secondary market is composed of
 Capital (equity) markets and
 Debt markets.

11. Turnover:
 Only the two stock exchanges, NSE and BSE, were reported significant
trading volumes.
From 2009-2010 to the first half of 2012-2013, decline in turnover on the
exchanges continued, mainly on account of the crisis and the uncertainties
in global financial markets.
The turnover on the NSE declined by 21.4% in 2011-2012 compared to the
previous year; and
The turnover on the BSE dipped by 39.6% over the same period

12. Returns:
Over 1-year ending March 2012, all the indices showed negative
returns in the range of 4% to 20%,
 Whereas 6-month and 3-month returns were positive for all the
indices as at the end of March 2011.
As at the end of September 2012, the 1-year returns indicate that all
the indices were in green.
Liquidity:
 During 2011-12, the percentage of companies traded to companies
listed on NSE was 93.1% while at BSE it was 58%.

13.  The debt market in India consists of mainly two categories—
 the government securities (or the g-sec) markets, comprising
central government and state government securities; and
 the corporate bond market (also known as the non-gsec market)
 In order to finance its fiscal deficit, the government floats
fixed income instruments and borrows money by issuing g-
secs that are sovereign securities issued by the RBI on
behalf of the GOI.
 The corporate bond market consists of financial institutions
(FI) bonds, PSU bonds, and corporate bonds/debentures.

14.  In 2011-12, the government and the corporate sector collectively
mobilized 33.3% more resources from the primary debt market, as
compared to the preceding year.
 72.6% of resources were raised by government sector; & remaining
27.4% by corporate sector.
The turnover in the secondary debt market in 2011-12 was 4%
higher than that in the previous fiscal year.

16.  Derivative instruments are used as risk averse economic agents
 Its value is derived from the value of one or more basic variables,
called underlying.
 The underlying asset can be equity, index, foreign exchange (forex),
commodity or any other asset.
 By locking in asset prices, derivative products minimize the impact
of fluctuations in asset prices, on the profitability and cash flow
situation of risk-averse investors, and thereby, serve as instruments
of risk management.
 India is one of the most successful developing countries in terms of
a vibrant market for exchange-traded derivatives.

17.  Following the growing instability in the financial markets, the
financial derivatives gained prominence after 1970.
The turnover of derivatives on the NSE increased from
 Rs.24 billion in 2000–2001
 to Rs.292,482 billion in 2010–2011, and
 reached Rs.313,497 billion in 2011–2012.
The total trading volumes in the equity derivatives at NSE and BSE
increased by 10% in 2011-12 as compare to previous year.
 at NSE, 1205 million contracts were traded with a turnover of
Rs.313,497,318 million were traded; while
 at BSE 32 million contracts traded with trading volumes of Rs.8,084,770
million.

18.  From 1992, foreign institutional investors (FIIs) have been
allowed to invest in all securities traded on the primary and
secondary markets.
 In the Budget 2011-I2, the Government of India permitted
qualified foreign investors (QFIs), who meet the KYC norms,
to directly invest in Indian mutual fund that invest in
infrastructure. (first time in India)
 In January 2012, the Government expanded this scheme to
allow QFIs to directly invest in Indian equity markets.
 In the budget 2012-13, Government announced its intention
to permit QFIs to invest in corporate bonds in India.

19.  Number of Foreign Institutional Investors (FIIs): There was a net
addition of 43 SEBI-registered FIIs in 2011–2012, which took their
total number to 1,765.
In 2011–2012; the net FII investments in equity fell by 60.3% from
last year
The net investments by FIIs in the debt segment grew by 37.6 % in
2011–2012
 NRI Investment:
The NRI turnover at the cash market of the NSE registered a decline of
8.3% in 2011-2012,
In the derivatives market of the NSE, the total NRI increased by 43.2%
in 2011-2012

20. In Indian Security Market

21.  Maintaining fair and efficient markets
 Developing new products
 Improving the securities market arena
 Enhancing operational efficiencies
 Encouraging small investors
 Attracting new players
 Various regulatory changes

22.  Primary Market
 Capital Markets
 Debt Market

23.  ASBA facility (SEBI Circular dated April 29, 2011)
 To enhance the role of the Applications Supported by Blocked Amount
(ASBA) facility in public issues and to increase the reach of ASBA
syndicate/sub-syndicate members were mandated to commence this
facility initially from the twelve bidding centres that account for the
maximum number of applications in public issues.
 The ASBA facility was made mandatory for non-retail investors—
qualified institutional buyers (QIBs) and non-institutional investors
(NIIs)—making applications in public/rights issues, with effect from May
01, 2011
 Adjustment of differential pricing amount(SEBI Circular dated May
16, 2011)
 It was decided to allow the investors who are eligible for differential
pricing in public issues to make the payment at a price net of discount (if
any) at the time of application itself.

24.  Redemption of Indian Depository Receipts (IDRs) into
underlying equity shares (SEBI Circular dated June 3, 2011)
 On completion of one year from the date of issuance of IDRs,
redemption of IDRs are permitted only if the IDRs are infrequently
traded on the stock exchanges in India.
 “InfrequentlyTraded”
 If the annualised trading turnover in the IDRs during the six
calendar months immediately preceding the month of redemption
is less than 5 % of the listed IDRs.
 Applications for redemption of IDRs should be submitted within a
period of thirty days from the date of the public announcement to
the domestic depository
 Redemption of IDRs should be completed within a period of thirty
days

25.  Eligibility criteria for companies coming out with IPOs through
the profitability track record (SEBI Press Release dated July 28,
2011)
 In the case of a pure offer for sale, the requirement that not more
than 50% of the net tangible assets should be held as monetary
assets will not be applicable.The requirement of a track record of
distributable profits for at least three of the immediately
preceding five years would have to be complied with on both a
stand-alone as well as a consolidated basis.
 Disclosure of quarterly financial results (SEBI Press Release
dated July 28, 2011)
 it was mandated that companies have to disclose the financial
results of the immediately preceding quarter in addition to the
disclosures of the financial results pertaining to the corresponding
periods in the previous year.

26. Review of Internet-based trading and securities trading using
wireless technology (SEBI Circular dated June 30,2011)
Broker should capture the Internet Protocol (IP) address .
The broker system should have built-in high system availability to
address any single point failure.
There should be secure end–to-end encryption for all data
transmission between the client and the broker
 The broker system should have adequate safety features to ensure
it is not susceptible to internal/external attacks.
 In the event of a failure of either the IBT or the STWT, the
alternate channel of communication should have adequate
capabilities for client identification and authentication

27.  Clarification regarding admission of limited liability partnerships as
members of stock exchanges (SEBI Circular dated July 11, 2011)
 As per the LLP Act, the LLP is a corporate body. Sub-rules 4A and 5 of
Rule 8 of the SCRR state that LLPs are similar to LLCs and partnership
firms.
 SMS and email alerts to investors from stock exchanges (SEBI Circular
dated August 2, 2011)
 Stock exchanges are now required to send the details of the transactions
to the investors through SMSs and email alerts by the end of the trading
day
 Permanent Account Number to be used to verify the customer
 Simplification and rationalisation of opening process for trading
accounts (SEBI Circular dated August 22,2011)
 Simplification included the replacement of all the client-broker
agreements with the Rights and Obligations document, which would be
mandatory and binding.

28.  Guidelines for issue and listing of structured products/market linked
debentures (SEBI Circular dated September28, 2011)
 Eligibility criteria for issuers: minimum net worth of ` 100 crore issue
such instruments.
Minimum ticket size: 10 lakh.
 Appointment of third party valuation agency:Third party valuation of
such securities by a credit rating agency was made mandatory, and the
same should be disclosed to the public.
 Primary issuance and sale of securities to retail investors:The issuer
should ensure that such securities are sold to retail investors with the
prescribed safeguards
 Ban on incentives in public issues of debt (SEBI Circular dated
December 26, 2011)
 No person connected with the issue should offer any incentive, whether
direct or indirect, in any manner, whether in cash, kind , services, or
otherwise, to any person for making an application for the allotment of
specified securities.

29.  Standardisation of application form and abridged prospectus for public
issue of debt securities (SEBI Circular dated July 25, 2012)
 The structure, design, format, contents, and organisation of information in
the application form and abridged prospectus were standardised and made
uniform for all public issues of debt securities to avoid any discrepancies.
 System for making online applications for public issue of debt securities
(SEBI Circular dated July 27, 2012)
 SEBI decided to extend the ASBA facility to the public issues for subscribing
to debt securities through an online interface with the facility to make online
payment.

30.  ‘Enhancing Liquidity in the Government Securities Market' (RBI
Notification dated August 13, 2012)
 Government Securities Market:
 Consolidation of outstanding government securities, based on model
plan
 Allocation of specific securities to each primary dealer for market
making.
 Retail Participation
 The services of banks—and post offices at a later stage, may be utilised
as a distribution channel and nodal point for interface with individual
investors.
 A centralised market maker for retail participants in government
securities in the long term, who would quote two-way prices of
government securities for retail/individual investors.

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