CAPITAL MARKET

A financial system operates through financial markets and institutions.The term financial market collectively refers to all those organisations and institutions lend funds to business enterprises and public authorities.It is composed of two constituents:1. The Money Market 2. The Capital Market While the money market or deals with provision of short term credit the capital market deals with the lending and borrowing medium term and long term credit. The capital market dose not deal in capital goods but is concerned with the raising of moe with the raising of money capital for purposes of insvestment. An ideal capital market attempts to provide adequate at reasonable rate of return for any business or industrial proposition which offers a prospective yield high enough to make borrowing worth while. STURUCTURE OF CAPITAL MARKET Following chart shows the structure of capital market:Capital market- 1. Govt. securities( Gilt edged market) 2. Industrial securities market- a) New issue market b) Old issue market 3. Development financial institutions(DEIs) a) IFCI , b) ICICI, c) SFCs, d) IDBI, e) UTI 4. Financial intermedaries a) Merchant banks b) Mutual funds c) Leasing companies d) Venture capital companies e) Others
Comment [VAC1]: The gilt edged market refers to the market for govt. $ semi govt. securities, backed by the reverse bank of india or the gilt edge market is a market in govt. securities or the securities guaranteed(as to both principle and interest by the govt. since the govt. can not default on its payment obligations, the govt. securities are risk free $ hence are known as gilt edge (which means of the best quality) FEATURES:-1.it is risk free market and returns are guaranteed. 2.the govt.securities market consists of two parts-the new issue market n the secondary market 3.rresearve bank of india plays a dominant role in the govt. securities market. 4.govt. securities are the most liquid debt instruments. 5. the transaction in the govt. securities market are very large and each transaction may run into several crores rupees. Comment [VAC2]: Corporate securities market is a market where securities issued by corporate firms( i.e shares, bonds and debentures) can be bought and sold freely. It consists of the new issue market (the primary market)and the stock exchange(the secondary market). 1=>The new issue market:-the new issue market is also known as the primary market. The new issue market is that part of the capital market which is concerned with the issue of new securities that is bond, debentures, shares and so on. The public limited companies often raise funds through the primary market for setting up or expanding there business. 2=>The old issue market ( stock exchange):- the stock exchange or the secondary market is the highly organized market for the purchase and the sale of second hand quoted or listed securities. Quoting or listing of a particular security implies incorporating that security in the register of the stock exchange so that it can be bought and sold there. The securities contracts(regulation) act,1956 defines a stock exchange as an association, organization or body of individuals, whether incorporated or not, established for the purpose of ... [1] Comment [VAC3]: DFIs supply funds for investment . financial intermediaries like merchant bankers help the corporate sector to raise funds in the capital market. Comment [VAC4]: Merchant banking:- initially, commercial banks set up merchant banking divisions, which later became separate merchant banking subsidiaries. Merchant banks in india manage and underwrite new issues; they undertake syndications of credit; they advise corporate clients on fund raising and other financial aspects. Unlike merchant banks abroad. Indian merchant banks do not undertake banking business, viz, deposit banking, lending and foreign exchange services. 1) The merchant banks were subject to two types of authorities:- The securities and Exchange Board Of India (SEBI) sought to authorize and [2] ...

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Corporate securities market is a market where securities issued by corporate firms( i.e shares, bonds and debentures) can be bought and sold freely. It consists of the new issue market (the primary market)and the stock exchange(the secondary market). 1=>The new issue market:-the new issue market is also known as the primary market. The new issue market is that part of the capital market which is concerned with the issue of new securities that is bond, debentures, shares and so on. The public limited companies often raise funds through the primary market for setting up or expanding there business.

2=>The old issue market ( stock exchange):- the stock exchange or the secondary market is the highly organized
market for the purchase and the sale of second hand quoted or listed securities. Quoting or listing of a particular security implies incorporating that security in the register of the stock exchange so that it can be bought and sold there. The securities contracts(regulation) act,1956 defines a stock exchange as an association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities. NSE:- the biggest stock exchange is national stock exchange which was set up in nov. 1992. It stared its trading operations effective june 30,1994. BSE:-the second largest stock exchange in india is the BSE i.e Bombay stock exchange. It was the first organized stock exchange established in india at Bombay as for back as 1887.
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Merchant banking:- initially, commercial banks set up merchant banking divisions, which later became separate merchant banking subsidiaries. Merchant banks in india manage and underwrite new issues; they undertake syndications of credit; they advise corporate clients on fund raising and other financial aspects. Unlike merchant banks abroad. Indian merchant banks do not undertake banking business, viz, deposit banking, lending and foreign exchange services. 1) The merchant banks were subject to two types of authorities:- The securities and Exchange Board Of India (SEBI) sought to authorize and portfolio management of their business. 2)RBI supervised those merchant

2) 3) 4) Regulate all merchant banks on issue activity and p

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55) The securities and Exchange Board Of India (SEBI) sought to authorize and regulate all merchant 56)