CAPITAL MARKET:

INTRODUCTION AND
CHARACTERISTIC
Capital market is a market

for borrowing and lending

long term capital funds required by corporate.

1.
2.

CHARACTERISTICS:They deal in securities

Price depends on factors like
- returns
- D&S
- flow of cash.

Allocation
Liquidity
Other
Saving
functions.
functions.
function.
and invest

Functions:

Evolution and growth of

capital market

Constituents of
Indian Capital
Market
Constituents
of Indian
Capital Market
The gilt edged
market

Primary Market: Meaning

& Services
Primary market involves in fresh capital
funds by both new & existing companies.
Services of N.I.M.(New Issue Market )
Investigative services
Advisory
Transfer
Guarantee
Distribution

Methods of Marketing
Securities
Methods:
Pure prospectus
Offer for sale
Private placement
Initial public offers
Bough-out-deals
Deguts issue
Bonus issue
Stock option
Book building methods

SEBI Guidelines
1. Listed companies
. Filling of offer document
. Letter of offer
. Companies barred
. Application of listing
. Issue of securities in DEMAT form
2. Unlisted companies
. Track record
. Project appraisal

Intermediaries in NIM
Name of intermediaries
1. Merchant bankers
2. Underwriters
3. Bankers to an issue
4. Brokers to an issue
5. Debenture trustees
MERCHANT BANKERS: INTRODUCTION
Intermediaries in the stock market who are
responsible for public issue management.

Conditions and Role of

Merchant Banking
Conditions for registration:
1. Capital adequacy
2. Infrastructure
3. Expertise
4. Fees
5. Undertaking

Roles
1. Contract
2. Registration
3. Minimum underwriting
4. Due diligence certificate
5. Document submission

Underwriters
Meaning: institutions that provide a
commitment to take up the issue of securities
even at the failure of subscription from public.
Roles:
1. Registration
2. Agreement
3. Code of conduct
4. Compliance
5. Termination of agreement.

Bankers to an issue
Roles:
1. Registration
2. Fees to SEBI
3. Contract
4. Daily statement
5. Info to SEBI
6. Book and records
7. Code of conduct

Registrars to an issue
&share transfer agents
Functions:
1. Registration
2. Maintenance of records
3. Absorbing of code of conduct.

Debentures trustee
Roles:
1.
Registration
2.
Content
3.
Possession
4.
Protector of interest
5.
Due diligence
6.
Meeting
7.
Code of conduct
8. Maintenance of books of A/C
9.
Information to SEBI
10. Inspection

SECONDARY MARKET
Meaning:
A market which deals in securities that have
been already issued by companies.

New Financial Institutions

Venture fund institutions
2.
Mutual funds
3.
Factoring institutions
4. Credit rating institutions
5. OTCEI (Over The Counter Exchange of India)
6.
NSEI
7. NCDS(National Clearance & Depository System)
8.
NSDL
9. SHCIL(Stock Holding Corporation of India
Limited)
1.

New Financial Instruments

1.
Commercial paper
2.
Certificate of deposit
3.
Secured premium notes
4. Non-convertible debentures with detachable

warrants
5.
Zero compound bonds
6.
Stock invest
7. Zero interest fully convertible debentures
8.
Deep discount bonds
9. Equity shares with detachable warrants
10. Euro issues

CAPITAL MARKET

6.

Index:
1.
Meaning
2.
Characteristics
3.
Participants
4.
Functions
5.
Different phases of capital market
Constituents of capital market gilt edged: industrial securities
a.
Primary
b.
Secondary
7.
New financial institutions
8.
Capital market doldrums
9.
Recent initiatives in capital market
10.
New issue market
a.
Meaning
b.
Services
c.
Methods
11.
SEBI guidelines for different companies
12.
Merchant banking
13.
Underwriters

STOCK EXCHANGE
Meaning: Organized market place for the
investors to buy and sell securities freely. They
ensure liquidity and transferability of financial
assets of country.
Definition: Securities or stock exchanges are
privately organized market which are used to
felicitate trading in securities
-Husband & Dockeray

FUNCTIONS AND ROLES:

Ideal meeting place
Mobilization of savings
3.
Providing safety to the investors
4.
Distribution of new securities
5.
Ready market
6.
Liquidity
7.
Capital formation
8.
Speculative trading
9.
Sound price setting
10.
Economic barometer
11.
Efficient channeling of savings
12.
Evaluation of savings
13.
Industrial financing
14.
Company regulation.
1.
2.

ORGANISATION STRUCTURE
Governing board
Six members of stock exchange
Three members of government
Three public representatives.
Vice-President & President

MODE OF ORGANISATION
AND MEMBER
Mode of Organization

Voluntary association

Public limited companies

Companies limited by guarantee

Membership
Stock exchange traders

Remises
Authorized clerks
Brokers & robbers