indian financial markets

27
Indian Financial Market Shruthika.N

Upload: shruthika-n

Post on 10-Apr-2015

1.017 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: INDIAN FINANCIAL MARKETS

Indian Financial Market

Shruthika.N

Page 2: INDIAN FINANCIAL MARKETS

Finance is the study of money – its nature, creation, behaviour, regulation and administration System stands for a set of bodily organs All those activities dealing in finance are organized in a system known as the financial system

Page 3: INDIAN FINANCIAL MARKETS

Financial institutions

Financial markets

Financial instruments

Financial services

Indian financial system

Page 4: INDIAN FINANCIAL MARKETS

Financial markets is the institutional arrangements for dealing in financial assets and credit instruments of different types like currency, cheques, bills, etc…

Functions:

Creation & allocation of credit & equity Mobilization of savings Cater to various credit needs Assist balanced economic growth

Page 5: INDIAN FINANCIAL MARKETS

The financial market is divided into two categories based on the credit requirement for short term or long term purposes

Money Market – Short term funds

Capital Market – Long term funds

Page 6: INDIAN FINANCIAL MARKETS

Money market is the collective name given to the various firms and institutions that deal in various grades of near money - Crowther

Loans for less than a year Credit instruments are called near

money assets

MONEY MARKET

Page 7: INDIAN FINANCIAL MARKETS

Components of Money Market:

Call money market

Collateral loan

Acceptance market

Bill market

Page 8: INDIAN FINANCIAL MARKETS

Call money market: Loan disbursed by commercial banks 1 day – 7 days Bank can recall the loan at its discretion Usually advanced to bill brokers & stock

exchange brokers.

Page 9: INDIAN FINANCIAL MARKETS

Collateral loan market: Lender - Commercial banks

Borrower - Stock brokers

Short term - Few months

Back up – Securities, bonds, stocks

If the loan is not paid the bonds or securities become the property of the lender

Page 10: INDIAN FINANCIAL MARKETS

Acceptance market: “ A draft drawn by an individual or a firm upon a bank & accepted by the bank whereby it is ordered to pay to the bearer a sum of money at a specified time in future.” - Raymond.P.Kent

Primarily used in international trade Bank merely adds a guarantee to the draft Its importance has declined now

Page 11: INDIAN FINANCIAL MARKETS

Bill market:Bills of Exchange

Written unconditional order which is signed by the drawer & the drawee to pay on demand or at a fixed time in the future a definite sum of money

Usually used by traders Popular in the West

especially London

Page 12: INDIAN FINANCIAL MARKETS

Treasury bills:

Government Paper Securities

Duration of 91 days

Promissory note of the government to pay a specified sum after a specified period

Page 13: INDIAN FINANCIAL MARKETS

Significance/Functions of Money market

Economic development Profitable Investment Borrowings by the governor Importance for Central Bank Mobilization of funds Self-sufficiency of Commercial Banks Savings & investment

Page 14: INDIAN FINANCIAL MARKETS

Defects of Indian Money market:

Unorganized money market Disparity in interest rates Seasonal diversity of the market Lack of a proper bill market Lack of a well organized Banking

system

Page 15: INDIAN FINANCIAL MARKETS

Capital market: An organized mechanism for effective & efficient transfer of financial resources from the investing parties engaged in industry or commerce in the business either be it public or private sectors of the economy.

Functions:Mobilization of funds Securing foreign capitalPromote balanced regional development

Page 16: INDIAN FINANCIAL MARKETS

Components of Capital market

Primary market

Secondary market

Page 17: INDIAN FINANCIAL MARKETS

Primary market :

New issue market New shares & bonds that have never been

issued are offered Facilitates transfer of funds from willing

investors to the entrepreneurs to set - up new enterprises

The sentiment of the stock market influences the primary market

Page 18: INDIAN FINANCIAL MARKETS

Instruments:

Equity shares

Preference shares

Deferred shares

Debentures

Page 19: INDIAN FINANCIAL MARKETS

STOCK MARKET “Stock exchanges are privately organized markets which are used to facilitate trading insecurities” - Husband & Dockeray

Functions: Ensure liquidity of capitalMarket for securitiesMobilize surplus savingsRaising new capitalListing securities

Page 20: INDIAN FINANCIAL MARKETS

Procedure for dealing at stock exchanges

Selection of Broker

Placing an order

Making a contract

Contact Note

Settlement note

Page 21: INDIAN FINANCIAL MARKETS

PRE - REQUISITES TO BUY A SHARE:

Register with a stock broker. A PAN card holder. Open a demat account.

REGISTERING AS A CLIENT:

Filing a client registration form.Sign the member constituent agreement.

Page 22: INDIAN FINANCIAL MARKETS

STAGES OF TRANSACTION: Place an order Execution Reporting the deal Settlement of transaction

Order confirmation slip Trade confirmation slip Control note slip Purchase/ Sale note

DOCUMENTS:

Page 23: INDIAN FINANCIAL MARKETS

BASIS TO BUY SHARES OF A PARTICULAR FIRM

Product manufactured. Demand. Amount of dividend. Ranking of the company. Change in prices.Reputation of the company.

Page 24: INDIAN FINANCIAL MARKETS

TYPES OF SPECULATORS :

Bull

Bear

Stag

Lame Duck

user
user
Page 25: INDIAN FINANCIAL MARKETS

Factors influencing prices on stock exchange:

Financial position of the firm Demand & Supply position Lending rates Trade cycle Speculation activities Government control

Page 26: INDIAN FINANCIAL MARKETS

Stock Exchanges in India:

Native Stock& Share Brokers Association

24 recognised Stock Exchanges in India Bombay Stock Exchange National Stock Exchange Over the Counter Exchange of India

Page 27: INDIAN FINANCIAL MARKETS

Thank you