SHRUTI PURI

FINANCIAL MARKET

Primary Secondry
market market

Public Right Bonus Eqiuty Commodity Currency

issues issues issues market market market
 Market for new issues.
 The main objectives of a capital issue
are given below:
 To promote a new company.
 To expand an existing company.
 To diversify the production and
modernization.
 To meet the regular working capital
requirements.
 To capitalize the reserves.
 Public Issue- It is an invitation by a company to public to
subscribe to the securities offered through a prospectus
 Initial Public Offer (IPO) - When an unlisted company
makes either a fresh issue of securities or offers its existing
securities for sale or both for the first time to the public, it is called
IPO.
 Further Public Offer (FPO) - When an already listed
company makes either a fresh issue of securities to the public or an
offer for sale to the public, it is called an FPO.
 
 Right Issue- The issue of new securities to existing
shareholders in a fixed ratio to those already held is called Right
Issue.
 
 Bonus Issue- Shares issued by companies to their
shareholders free of cost by capitalization of accumulated reserves
from the profits earned in the earlier years.
 Grade assigned by a Credit Rating Agency
(CRAs) registered with SEBI.

 Grade represents a relative assessment of the

fundamentals of that issue in relation to the
other listed equity securities in India.
 Admission of securities to dealings on a
recognized stock exchange
Objectives
 Provides liquidity to securities
 Mobilize savings for economic
development
 Protects interest of investors by
ensuring full disclosures
 In respect of Large Cap Companies
 The minimum post-issue paid-up capital of the applicant
company shall be Rs. 3 crore
 The minimum issue size shall be Rs. 10 crore
 The minimum market capitalization of the Company shall be Rs.
25 crore
In respect of Small Cap Companies
 The minimum post-issue paid-up capital of the Company shall be
Rs. 3 crore
 The minimum issue size shall be Rs. 3 crore
 The minimum market capitalization of the Company shall be Rs.
5 crore
 Mechanism for stabilizing post-listing
price of the issue.

 The cause of applying Green shoe

Option-
The management of the issuer is not so
confident about issue price what they
are claiming from the investors due to
high offer price compared to the peer
groups in the market
 Market where securities are traded
after being initially offered to the
public in the primary market and listed
on the stock exchange.
 It comprises equity markets and debt
markets.
 Secondary market further has two
components, namely the Over- The-
Counter(OTC) Market and Exchange-
Traded Market.
 Oldest exchange in Asia.

 The group eventually moved to Dalal Street

in 1874 and in 1875 became an official
organization known as 'The Native Share &
Stock Brokers Association‘.

 In 1956, the BSE became the first stock

exchange to be recognized by the Indian
Government under the Securities Contracts
Regulation Act.
 First in India to introduce Equity Derivatives.
 First in India to launch a Free Float Index.
 First in India to launch US$ version of BSE
Sensex.
 First in India to launch Exchange Enabled
Internet Trading Platform.
 First in India to obtain ISO certification for
Surveillance, Clearing & Settlement.
 'BSE On-Line Trading System (BOLT) has
been awarded the globally recognised the
Information Security Management System
standard BS7799-2:2002.
 First to have an exclusive facility for
financial training.
 India's largest Stock Exchange &
World's third largest Stock Exchange in
terms of transactions.

 In April 1993, NSE was recognized as a

Stock exchange under the Securities
Contracts (Regulation) Act-1956.
 Establishing nationwide trading facility for all types
of securities.

 Ensuring equal access to investors all over the country

through an appropriate telecommunication network.

 Providing fair, efficient & transparent securities

market using electronic trading system.

 Enabling shorter settlement cycles and book entry

settlements.

 Meeting International benchmarks and standards.

 Equity OR Capital Markets {NSE's market
share is over 65%}

 Futures & Options OR Derivatives Market

{NSE's market share over 99.5%}

 Wholesale Debt Market (WDM)

 Mutual Funds (MF)

 Initial Public Offerings (IPO)

 FOREIGN EXCHANGE MARKET:-

Purchase or sale of one national

currency in exchange for another
nation’s currency, usually conducted in a
market setting
 India's New Stock Exchange was launched
in October 2008, under the regulatory
framework of Securities & Exchange Board
of India (SEBI)
 Currently MCX-SX offers Currency
Futures contracts. Clearing and Settlement
is conducted through the MCX Stock
Exchange Clearing Corporation Ltd (MCX-
SX CCL).
 During its one year of operations, MCX-SX
has achieved stupendous growth rate in
average daily turnover and Open Interest .
 MCX-SX provides a host of benefits to a wide range of financial
market participants, including hedgers (i.e. exporters, importers,
corporates, and banks), investors, and arbitrageurs.
 Hedgers: MCX-SX provides a high-liquidity platform for hedging
against the effects of unfavorable fluctuations in foreign exchange
rates. Banks, importers, exporters and corporates can hedge on
MCX-SX at low entry and exit costs.
 Investors: All those interested in taking a view on appreciation (or
depreciation) of exchange rate in the long and short term can
participate in the MCX-SX currency futures. For example, if one
expects depreciation of Indian rupee against US dollar, then he can
hold on long (buy) position in the USD/INR contract for returns.
Contrarily, he can sell the contract if he sees appreciation of the
Indian rupee.
 Arbitrageurs: Arbitrageurs get opportunity to trade in interest rate
differentials of respective currencies implied from currency futures
 COMMODITY:-Something that has
commercial value, which can be produced,
bought, sold, consumed and has liquidity.
 COMMODITY MARKET:-A commodity
market is an exchange where buyers and
sellers come together to trade
commodities.

There are three national and 19

regional commodity exchanges in India.
 Headquartered in the financial capital of
India, Mumbai.

 It is a demutualised nationwide electronic

commodity futures exchange set up by
Financial Technologies (India) Ltd. with
permanent recognition from Government of
India for facilitating online trading, clearing
& settlement operations for futures market
across the country.

 The exchange started operations in

November 2003.
 MCX has achieved three ISO certifications
 ISO 9001:2000 for quality management
 ISO 27001:2005 - for information security
management systems
 ISO 14001:2004 for environment management
systems
MCX offers futures trading in more than 40
commodities from various market segments
including bullion, energy, ferrous and non-
ferrous metals, oil and oil seeds, cereal,
pulses, plantation, spices, plastic and fibre
 MCX is India's No. 1 commodity exchange with 84% Market
share in 2008($0.84 trillion)
 The exchange's competitor is National Commodity & Derivatives
Exchange Ltd (NCDEX)
 Globally, MCX ranks no. 1 in silver, no. 2 in natural gas, no. 3 in
crude oil and gold in futures trading
 The crude volume touched 23.49 Million barrels on January 3,
2009
 The highest traded item is gold with an average monthly
turnover of Rs 1.42 Trillion ($29 Billion).
 MCX has 10 strategic alliances with leading commodity exchange
across the globe
 MCX recorded its Highest Daily Turnover since inception of Rs.
51,626.51 crores on November 27, 2009  
 The average daily turnover of MCX is about US$ 2.4 billion
 MCX COMDEX is India's first and only composite commodity
futures price index