CAPITAL MARKETS

Drayton Dsilva, Ashish DaFonseca, Shanlle Fernandes, Sahil Khunteta Rohan Gandhi Pynshgain

Comparison on ROR
Misc. Financial tools

Tool

Initial investment 1,00,000

At Maturity

ROR

Fixed Deposit

1,08,500

8.50%

Treasury bills

1,00,000

1,07,280

7.28 (subject to change) 8.49%

Gold

1,00,000

1,08,900

Capital Market companies

Listed on BSE

Company

Initial Investment 1,00,000 1,00,000 1,00,000 1,00,000

1 year

ROR

Share price/unit(rs) 1 year 1109 1349 795- 920 203- 294 1950-2034

TCS RIL ITC GSK

121410 1,15,723 1,44,827 1,04,304

21.4% 15.72 % 44.8 % 4.30%

Comparison Parameters

Liquidity Risk associated Ease of access-(buy/sell) Vulnerability to macro factors a)Economy b)Global outlook c)govt. Policies Credit ratings

Section 80 (c) simplified

Tax Savings Section 80 (c)

In respect to Equity shares RGESS Maximum 1 lakh deductible for tax exemption

Definition of Capital Markets

A market in which individuals and institutions trade financial securities. Organizations/institutions in the public and private sectors also often sell securities on the capital markets in order to raise funds. Thus, this type of market is composed of both the primary and secondary markets.

Difference between Money Markets and Capital Markets

Short term Long Term Purpose of borrowing

Primary Market

Definition Public Issue Rights Issue Bonus Issue Private Placement

Initial Public Offering

The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

Understanding the Offer Document

Cover page Risk Factors About Us Financial Statements Legal and other information Regulatory & other disclosures Offer information

Intermediaries Involved in the Issue Process

Role of Lead Merchant banker Registrars to the issue Bankers to the issue Underwriters

Indian Depository Receipts (IDRs)

Foreign Capital Issuance Global Depository Receipts (GDRs) American Depository Receipts (ADRs) Foreign currency Convertible Bonds (FCCBs) External Commercial Borrowings (ECBs)

Securities Market in India

History of Capital Markets

American Civil War & Suez Canal Sir Pheroze Jeejeebhoy Securities Contract Regulation Act 1956 Dhirubhai Ambani, Reliance V.P Singhs Liberalisation Manmohan Singhs reforms 1991 P. Chidambarams continued efforts

Functions of Securities Market

Mobilization of savings and acceleration of capital formation Promotion of industrial growth Raising long-term capital Ready and continuous market Proper channelization of funds Provision of variety of services

Market participants

Investors: Retail and Institutional Issuers Intermediaries Stock Exchanges Clearing Corporations Stock Brokers and sub-brokers Custodian Merchant bankers FIIs

Mutual funds Collective Investment Scheme(CIS) Credit Rating Agency Regulators

Components of Securities Market

Equity Derivatives Market Derivatives Market Futures & Options Currency Derivatives Debt Market G-Sec Market Corporate Bond Market Mutual Funds Exchange Traded Funds

Equity Markets

Kinds of Shares

Equity Shares Blue Chip Shares Growth Shares Income Shares Cyclical Shares Speculative Shares Defensive Shares

Rights Shares Bonus Shares Preference Shares Cumulative Shares Cumulative Convertible Preference Shares

Difference between Equity & Preferential Shareholders

Equity shareholders Preference share Debentures Convertible & non-convertible Warrants

Stock market Indicators

Market Capitalization Turnover Turnover ratio Market capitalization Ratio Traded Value Ratio

Index movements

Market Capitalization Weighted Index Index = Current Market Cap * Base Value Base Market Capitalization
Free Float market Capitalization Weighted Index Free Float Base Market Capitalization

Index = Free Float Current Market Capitalization* Base Value

Reforms In Indian Securities Markets

Demutualization Screen Based trading Trading & Settlement Cycle Risk Management Investor Protection

Foreign Investment PAN as sole identification number IPO Grading Volatility Index Direct Market Access ASBA

Conclusion

A well-developed capital market is a function of economic growth