


CAPITAL MARKET


 Presented by:
 Leela
 Manish Bansal
 Megha Verma
 Neha Mahna
 Neha Modi

INTRODUCTION
Organized market is classified into two


Capital market
Money market

 Capital market is a market for financial assets
which has a long or indefinite maturity i.e. a
maturity period of more than 1 year.
IMPORTANCE OF CAPITAL
MARKET
Mobilize saving of people and avoids wastage
in unproductive uses.
The operations of different institutions in
capital market induces economic growth.
A healthy capital market promotes stability in
values of securities.
It facilitates increase in production and
productivity in the economy.
STRUCTURE
 PRIMARY MARKET
ØThis is the market for new long term capital. The
primary market is the market where the securities
are sold for the first time. Therefore it is also called
New Issue Market (NIM).
ØIn a primary issue, the securities are issued by the
company directly to investors.
ØThe company receives the money and issues new
security certificates to the investors.
ØPrimary issues are used by companies for the purpose
of setting up new business or for expanding or
modernizing the existing business.
 TYPE OF ISSUE IN PRIMARY
MARKET
 PUBLIC ISSUE :-
It involves raising of funds directly from the public and get
themselves listed on the stock exchange
Ø in case of new companies ,the face value of the securities is
issue at par, and
Ø in the case of existing companies, the face value of
securities are issued at premium

RIGHT ISSUE:-
 Right issue is the method of raising additional finance from
existing members by offering securities to them on pro rata
bases.
 The rights offer should be kept open for a period of 60 days and
should be announced within one month of the closure of
books.
 BONUS ISSUE:-
Companies distribute profits to existing shareholders by way of
fully paid bonus share in lieu of dividend.
These are issued in the ratio of existing shares held.
The shareholders do not have to make any additional payment
for these shares

 PRIVATE PLACEMENT:-



It is the direct sale by public limited company or
private limited company, of private as well as public
sector, of its securities to a limited no. of
sophisticated investors like LIC, UTI, GIC, State
Finance Corporations and Pension and Insurance
Funds.

SECONDARY MARKET
ØSecurity already issued are traded.
ØIt imparts liquidity to long term securities by providing
an auction market.
ØOperates through medium of stock exchanges
PERSONS AT STOCK EXCHANGE
Ø Objective-protect character, status,interest of stock brokers.
Ø Stock market characterized by a bull and a bear.
ØBull market-buyer (optimistic view)
ØBear market-seller(pessimistic view)
THE TYPES OF ORDER
ØLIMIT ORDERS: Order limited by a fixed price.
ØBEST RATE ORDER: Buy/sell order at best possible
price.
ØIMMEDIATE OR CANCEL ORDER: Order get
canceled.
ØLIMITED DISCRETIONARY ORDER: Provide
discretion to broker to execute order.
ØOPEN ORDER: No time fixation or price limit by the
client.
 SEBI


ØSecurity exchange board of India.

Ø
ØWas constituted by Government of India in April 1988
and given legal status in 1992.
Ø
ØConstituted, to stop the erosion of investor confidence
because of increasing malpractices on part of
companies, brokers, merchant bankers etc.

 FUNCTIONS OF SEBI


ØPromote fair dealings by the issuers of

securities.
Ø
ØProvide a degree of protection to investors and
safeguard their rights and interests.
Ø
ØRegulate and develop a code of conduct and fair
practices by intermediaries in capital market.
 POWERS OF SEBI
ØCall for periodic returns.
ØCall upon the stock exchange or any
member of stock exchange.
ØAppoint any person to make inquiries.
ØAmend bye-laws of stock exchange.
ØCompel a public company to list its share in any
stock exchange.
Trading System in Stock Market


Ø Over the counter exchange of India was the first exchange

to introduce screen based trading in India.
Ø Screen based trading received a big boost with the setting
up of national stock exchange.
Ø To give boost to trading system in stock market government
has announced many policies:
 1. Establishing SEBI.
 2. Taking steps to encourage foreign investment in
securities market.

CONT..
 3. Starting electronic linkage of 5 large stock exchanges.
4. Giving recognition to more stock exchanges
6. Allowing investment by Foreign Institutional Investors ( FIIs ).

7. There is no restriction on the amount of investment and no lock-

in-period.
9. Short term capital gains arising out of transfer of securities are

taxed at 30% and interest and dividend at 20%.


 Fully Automated Trading System
 Enable market participants to login orders, execute deals and
receive online market formation.
T H A N K YO U