capital market and investment avenues b.v.raghunandan
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Capital Market and Investment Avenues-B.V.Raghunandan, SVS College, Bantwal
Management Development ProgrammeSahyadri College, Adyar-Mangalore-India
November 12, 2011
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Capital Market
• A market for long-term funds• Securities having a life of more than one year• Based upon the interpretation of the Tax Laws
and Public Finance
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Securities in the Capital Market
• Equity Shares• Preference
Shares• Debentures• Bonds• Innovative
Bonds or Preference Shares
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Equity Shares: A Unique Investment
• Regular Income by way of Annual Dividend, Interim Dividend, Special Dividend, Surplus Dividend
• Capital Appreciation by way of Bonus Shares
• Capital Appreciation by way of Increase in market value
• Benefits from Corporate Action like share splitting, sponsored ADR, M&A
• Real Time knowledge of prices
• Voting Right
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Segments of Equity Market
Primary Market: IPOSecondary Market: Stock Exchange
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Transactions in Stock Market
• Cash Market• Derivatives Market:
- Futures and
Options
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Investor Education: The Most Difficult Exercise• Converting emotional decisions into rational decisions• Convincing them about long-term investment• Exposure to analysis of financial information• Wisdom not to be moved by the vested opinions• ignore the concept of loss of profit
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Traditional Retailers• Geographic
concentration: Gujarat, Rajastan, and West Bengal
• Community Biased: Parsis, Marwadis, Chettiars, GSBs and Brahmins
• Urban Concentration• Broker Dominated with
broker participating in the sale and purchase
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Change Agents• Dhirubhai Ambani of
Reliance Industries70s• IT Companies of the 80s• Media Companies of the 90s• Establishment of SEBI in
1988• Establishment of NSE in
1994• Entry of FIIs• Dematerialisation• Corporate Brokerage• Shorter Period of Allotment
in Book-Building• Shorter Settlement Cycle
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Investment in Primary Market• Study the Prospectus• Management Profile• Product Profile• Premium• Risk Factors• History of the Company• Industry Profile• Do not look at the
response to the Issue
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Opportunities
• Infrastructure projects• Commercial Agriculture• Bio-Technology• Pharma-Research and Pharmaceuticals• Hospitals and Hospitality• Power Sector Development• Shipping and Ship-Building
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Stock Exchange: Strategies
• Buy in the Depressed Market• Understand the Seasonality of Market• Understand the Weekly Behavior of the Market• Invest for Life Time or for Generation• Sell only in a Boom Market• Select Dividend Paying Companies
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Things to be Avoided
• Acting on Tips• Avoid Speculation and Day Trading• It should not become a Full Time
Occupation• Avoid Derivative Trading• Avoid borrowing and investing• Do not park short term funds• Avoid Distress or Emergency Sale
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Opportunities
• More Inflow of FII money• Better public finance through
disinvestment• Gains for the Government through
recapitalisation of banks• More Venture Capital Participation• Larger body of retailers• More stable operations
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Investment Avenues
• Corporate Securities• Government
Securities• Mutual Funds• Exchange Traded
Funds• Real Estate• Gold• Old Coins & Stamps
• Medals and Others• Bank Deposits• Small Savings• Introduction of Capital
for Starting Firms, Private Limited Companies and Public Limited Companies
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THANK YOU