Secondary Markets

Secondary markets
2010 BSE Institute Limited
What is Stock Exchange

It is a platform where buyers and sellers meet It provides a place to buy and sell shares It acts as a bridge between demanders of fund and suppliers of fund Canalize savings into investments
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Participants
Govt. Companies Institutions Retail Investors Mutual Funds
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History of Stock Exchanges

BSE first stock exchange started on 9th July 1875 Known as Native Shares and Stock Broking Association Membership fees was Rs. 1 There were 318 members
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History of Stock Market

First stock market started in 9th July 1875. Native Share and Stock Brokers Association Now known as BSE At that time membership fees Rs. 1 There were some 318 members
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Major reforms in capital Market

1991 LPG 1992 FII were allowed in india 1993 Private Sector Mutual Funds were launched 1996 First time SEBI came out with Guidelines for MF industry
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Reforms cont
1996 Depository act passed 2000 Derivatives markets gets going 2003 Commodities Market started 2008 Currency futures market launched
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Current scenario
Today 23 stock exchanges in India Major ones BSE (Bombay Stock Exchange ) and NSE (National Stock Exchange) NSE formed in 1994
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Daily Turnover of stock markets

BSE Cash segment NSE cash segment NSE FO Rs. 4000 crores Rs. 15000 crores Rs. 1,00,000 crores
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Financial Markets Classification

Capital Market is market for long term source of funds Market having maturity of more than one year Instruments like Shares Preference shares Debentures Bonds
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Capital market and Economic Growth

US,UK,Japan have high economic growth due to developed Capital markets Fund raising very easy activity
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Money Markets
It is a market for short term source of funds The maturity of these instruments is less than one year Instruments like T- Bills Commercial Paper Inter-corporate Deposit Certificate of Deposit
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Call Money Market

Liquidity management main object 2007 Call money rate 0.25 % 2008 call money rate 21 % Currently call money rates 7.25 % to 7.5 %
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Secondary Market
It is known as the Stock Market Companies trade on the stock market On BSE 6500 companies are listed On NSE 2500 companies are listed
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Regulation of Stock Market

It is regulated by SEBI (Securities and Exchange Board of India) All the stock exchanges of the country are regulated by SEBI All the matters related to scams in the stock market are looked after by this agency
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Relationship between Primary and Secondary market

Both are inter related If there is bull run in secondary market more IPO will come in Primary Market If there is bear run in the secondary market then less IPO will come in Primary market
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Years of IPO
2007 saw maximum IPO as the market was in bull mode 2008 there were no IPO after Reliance Power failure 2009 again saw many IPO as stock market recovered
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Classification of stocks
Large Cap stocks which have market cap greater than Rs. 9000 crore Mid cap stocks which have market cap between Rs. 2500 to 9000 crore Small Cap stocks which have market cap between Rs. 250 cr to 2500 Crores Micro cap less than Rs. 250 crores
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Another classification
A Blue Chip stocks which are fundamentally very sound B1 B2 which are sound but they are small in size. Normally known as Mid cap T group refers to Trade to Trade and most risky as only delivery base trade allowed. This stocks have abnormal volatility
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Another classification
S group stocks are small companies which are listed on Indonext exchange but trade on BSE Z group stocks are those which are very risky as they may get delisted or suspended anytime by SEBI.
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Settlement Process
The payin and payout of funds and securities takes place on T + 2 basis T is Monday so plus two working days means on Wednesday the payin of funds and securities will take place in the morning Also on Wednesday the payout of funds and securities will take place in afternoon
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Economic Indicators affecting markets

GDP Inflation Interest Rates Exchange Rates Fiscal Deficit IIP data Purchasers Manager Index Balance of Payment
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GDP
It is Gross Domestic Product It measures countrys Economic Progress Sole vital indicator for the economic scenario of the country Indian GDP has been at 8.5 % average for last 5 years For this fiscal year it is projected at 7.8 %
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GDP
World Economy likely to grow only at 3.2 % From 1999 to 2008 World Economy grew at 2.9 % US alone contributes 24 % of world GDP India contributes 1.6 % of world GDP
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Inflation the Evil

Inflation is monetary phenomenon in which there is continuous price rise Inflation reduces the purchasing power of rupee Higher inflation would mean that more money is required to buy same quantity of goods
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Causes of Inflation
There are 2 main causes of Inflation 1. Excessive Money supply 2. Demand supply mismatch Indian Economy has actual problem of demand supply on agriculture side Black marketing and hoarding results in rise of food grain prices
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Inflation and Interest Rates

Inflation is monetary phenomenon Inflation has direct impact on the economy Higher Inflation leads to higher interest rates Higher interest rates leads to higher cost of capital Loans becomes costly
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Inflation and Interest Rates

Corporate expansion stops Consumption comes down as people avoid taking housing, car loans Reduces the sales of companies Profitability of companies come down GDP slows down ultimately Stock market goes down
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Interest Rates Globally

USA 0.25 % Bank of England 1 % European Central Bank 1 % China 3.3 % Australia 1 %
India 8 to 9 %
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Exchange Rate
It is unbiased indicator of the Economy Rupee Appreciation means that Economy has become strong and foreign flows coming in Rupee Depreciation means that Economy is getting weak and that foreign Flows are going out
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Appreciation of Rupee
1 $ = Rs. 45 1 $ = Rs. 40 This is appreciation of rupee IT is harmful for export oriented sector like Gems, Jeweller, IT, Textiles, Auto Good for Oil as we import 73 % of total oil requirement
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Depreciation of Rupee
1 $ = Rs. 45 1 $ = Rs. 50 This is Depreciation of Rupee It is good for all export oriented sector like IT, Textile, Gem and Jewellery, Auto It hurts oil pool as we import 73 % of total oil requirement
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Methods of Exchange Rate

Demand Supply Method ( US, UK, India, Japan) Fix Rate method (China) Snake in Tunnel (European Union) Dirty Float ( Central Bank Intervention) Hybrid Method (Central Bank & Market related method)
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Fiscal Deficit
Fiscal deficit is the gap between Government Income and Government Expenditure High fiscal deficit countries are avoided by FII and FDI Indian Fiscal Deficit lowered from 5.4 % to 5.1% Target for 2012 is 4.6 %
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Fiscal Deficit
P.I.I.G.S (Portugal, Italy, Ireland, Spain, Greece) are having fiscal deficit of around 11% to 14 % Austery measures have been adopted by Greece This includes reduction in salaries, cut in government spending
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IIP Data
IIP stands for Index for Industrial Production It shows the demand in the manufacturing sector High the data the better it is Lower data means that demand is slowing down
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Purchasers Manger Index

PMI is also indicator of the industrial activity in the country It has a base reading of 50 Reading above 50 indicates that economy is expanding Reading below 50 indicates that economy is weakening India current reading is 57
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Balance of Payments
Balance of Payment is the statement of transaction of one country with the rest of the world It has two main accounts Current Account Capital Account
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Current Account
It is account which deals with imports and exports of goods and services This includes both visible and invisible goods Imports more than exports then current account deficit Exports more than imports then current account surplus
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Capital Account
Capital account deals with all inflows and outflows of capital It includes Loans, FII money, FDI money, Grant, Aid etc India allows only Partial capital account convertibility
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Types of Capital Flows

Two main types of flow
FII (Foreign Institutional Investors) FDI (Foreign Direct Investment) FII flows comes to stock market FII responsible for new highs and new lows In 2007, FII invested Rs. 70,000 crores-21206 In 2008, FII sold Rs. 52,000 crores-7697 In 2009, FII invested Rs. 82,000 crores-18000 In 2010, Fii Invested Rs. 1,30,000 crores-22000
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FII data
Currently 1746 FII registered with SEBI 70 % FII are from USA So we cannot ignore USA IN 2010 FII have invested record money since 1992.
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FII inflows
In 2009 and 2010 together FII have invested Rs.2.15 lakh crore This is 50 % of the total investment made from 1992 to 2010. Total FII inflow since 1992 Rs.443626 Crores 29% of FII inflow in 2010 since 1992
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FII registered and Sensex Return

2003 2004 2005 2006 2007 2008 2009 2010 517 637 823 993 1219 1594 1706 1747 63.78 % 9.56% 40.70% 46.82% 45.50% -52.86% 75.38% 14.65%
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Thank You
Questions and Answers
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Secondary Markets

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Secondary Markets

Hochgeladen von

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Verfügbare Formate

Secondary markets

2010 BSE Institute Limited

What is Stock Exchange

History of Stock Exchanges

History of Stock Market

Major reforms in capital Market

Daily Turnover of stock markets

Financial Markets Classification

Capital market and Economic Growth

Call Money Market

Regulation of Stock Market

Relationship between Primary and Secondary market

Economic Indicators affecting markets

Inflation the Evil

Inflation and Interest Rates

Inflation and Interest Rates

Interest Rates Globally

Methods of Exchange Rate

Purchasers Manger Index

Types of Capital Flows

FII registered and Sensex Return

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