An introduction to the financial market in India - Types of Financial Markets - Primary Market - Secondary Market - Nature of Fin. Market - Functions of the Markets - Importance of the Markets - SEBI

1. AN INTRODUCTION TO
FINANCIAL MARKET IN INDIA
Prepared By
Mr. Mohammed Jasir PV
Assistant Professor
NBS, Koratty
9605 693 266
Session on

2. Let’s Start !
Financial Market
o Primary Market
o Secondary Market
o SEBI
2

3. “"How many millionaires do you know who
have become wealthy by investing in savings
accounts? I rest my case." — Robert G. Allen
3

4. 1.
SAVINGS TO INVESTMENTS
“The flow of money”
4

5. 5

6. Financial Market
▷ The centre that facilitate buying and selling of
financial instruments, claims or services.
▷ It deals with different types of the financial assets
6

7. Types of
Financial Market
Why we need different markets?
7

8. Types of
Financial Markets
▷ Stock market
▷ Bond market
▷ Commodities market
▷ Derivatives market
8

9. Convenience
& Benefits
Generate &
Apportion credits
Intermediaries
9
Nature of Fin. Market

10. Functions
of the Markets
Mobilization of savings
Makes financial assets liquid
Pricing of securities
Lowers the cost of transactions
10

11. Importance
of the Markets
Provide place of operation
Access to capital
Employment Opportunities
11

12. 2.
CLASSIFICATION OF MARKET
12
“On the basis of the duration of financial assets and nature of
product money”

13. Classification of Market
13
1 3 4
Money Market
Primary Market
Capital Market Forex Market
2
Secondary Market
6
Commodity
Market

14. Classification of Market
14
MONEY MARKET
o Dealing with financial assets with a
maturity period of up to one year
o It is a market for purely short term
funds
CAPITAL MARKET
o It is a market for financial assets with a
long maturity
o Capital market instruments become
mature for the period above one year
o It includes the currencies in the world
and any individual, Co. or country can
participate in it
o It assist the foreign exchange trading
FOREX MARKET
o A physical or virtual marketplace for
buying, selling, and trading raw or
primary products
o Hard and soft commodities
COMMODITY MARKET

15. Capital Market

16. Primary Market
ḉ Market for new issues or new financial claims
ḉ Deals with those securities which are issued
to the public for the first time
ḉ Facilitates capital formation
ḉ Performs triple-service function: origination,
underwriting and distribution.
16

17. Related with new issues
Features of Primary Market
17
It has no particular place
It has various methods of float capital
It comes before secondary market

18. BuybackBonus IssueRight IssuePrivate Placement
Various Methods of Float Capital
18
FPOIPO
Initial
Public
Offer
Further
Public
Offer
Fixed Price Issue
Price Range
Book Building
Existing
security
holders
Selected
people
Additional
securities
without any
cost
Reacquisition
of own
securities

19. Upcoming IPOs in 2021
19

20. Capital Market

21. Secondary Market / Stock Exchange
▷ Once the IPO is done and the stock is
listed, they are traded in the secondary
market
▷ One purchases securities from other
investors willing to sell the same
▷ Equity shares, bonds, preference shares,
treasury bills, debentures
21

22. Stock Exchange
▷ A market for old/existing securities
▷ Has physical existence
▷ Nexus between savings and investments
▷ Liquidity to investors
▷ Continuous price formation
▷ To raise resources for their companies
22

23. An organized capital market
23
Characteristics of a Stock Exchange
An open market for trade
Only listed securities can trade
Established rules and regulations
For investment or for speculative purpose

24. It creates liquidity
Features of Secondary Market
24
It comes after primary market
It has a particular place
It encourages new investments
Barometer of economic conditions

25. Economic Functions of
Stock Exchange
25
Ensures liquidity to capital
Continuous market for securities
Mobilization of savings
Capital formation
Evaluation of securities
Economic developments
Platform for public debt
Helps to banks

26. 3.
SEBI
An autonomous body with statutory powers

27. 1970 - 1980
Why was SEBI formed?
27
o Malpractices
o People started losing confidence in the stock market

28. SEBI - Securities & Exchange Board of India
SEBI was officially appointed as the authority for
regulating the financial markets in India on 12th April 1988
28
It had no control over anything but later in 1992, it was
declared an autonomous body with statutory powers
SEBI plays an important role in regulating the securities
market of India

29. Objectives
of SEBI
Protection to the investors
Prevention of malpractices
Fair and proper functioning
29

30. Role of SEBI
For issuers of securities
Makes sure that they get a healthy and transparent environment for their needs
For investor
Maintaining an environment that is free from malpractices
For financial intermediaries
Linking the issuer and the investor with proper guide and rule
30

31. 31

32. 32
Functions of SEBI
Protective Function
Promote fair practices
Create awareness
Prohibit fraudulent and unfair
trade practices
Checking price rigging
Prevent insider trading
Buy-sell mutual funds directly from
AMC through a broker
Carry out research work
Training to intermediaries
Development Function
Regulatory Function
Levying of fees
Designing guidelines and code
Regulation of takeover of companies
Register and regulate credit rating agency

33. 33
Amazon Insider Trading Case
In September 2017, former Amazon.com Inc. (AMZN)
financial analyst Brett Kennedy was charged with
insider trading. Authorities said Kennedy gave fellow
University of Washington alumni Maziar Rezakhani
information on Amazon's 2015 first quarter earnings
before the release. Rezakhani paid Kennedy $10,000 for
the information. In a related case, the SEC said
Rezakhani made $115,997 trading Amazon shares
based on the tip from Kennedy.

34. “"It's not whether you're right or wrong that's important,
but how much money you make when you're right and
how much you lose when you're wrong."
— George Soros
34

35. Thanks!
Any questions?
You can find me at: jasir@nbs.ac.in
9605 693 266
35

36. Share your feedback
for our development !!!
36