OVERVIEW OF INDIAN CAPITAL MARKET

Daxesh Patel

FINANCIAL MARKET

Primary market

Secondary market

Public issues

Right issues

Bonus issues

Eqiuty market

Commodity market

Currency market

Primary 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.

Issuance Process
Public
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.

Issue-

Right

The issue of new securities to existing shareholders in a fixed ratio to those already held is called Right Issue. Shares issued by companies to their shareholders free of cost by capitalization of accumulated reserves from the profits earned in the earlier years.

Issue-

Bonus

Issue-

GRADING OF IPO

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.

Listing
Admission

Objectives
Provides

of securities to dealings on a recognized stock exchange

liquidity to securities Mobilize savings for economic development Protects interest of investors by ensuring full disclosures

Minimum Listing Requirements

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

Green Shoe Option

Mechanism for stabilizing post-listing price of the issue. The cause of applying Green shoe OptionThe 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

SECONDARY 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- TheCounter(OTC) Market and ExchangeTraded Market.

TRADING PLATFORMS

CURRENCY MARKET MCX-SX BSE NSE

COMMODITY MARKET MCX NCDEX

EQUITY MARKET BSE NSE

BOMBAY STOCKEXCHANGE
Oldest
The

exchange in Asia.

group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as 'The Native Share & Stock Brokers Association. 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act.

In

BSE Facts
First First First

in India to introduce Equity Derivatives. in India to launch a Free Float Index. 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 BS77992:2002. First to have an exclusive facility for financial training.

NATIONAL STOCK EXCHANGE

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.

OBJECTIVE

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.

NSE MARKET
Equity

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

& Options OR Derivatives Market {NSE's market share over 99.5%} Debt Market (WDM)

Futures

Wholesale Mutual Initial

Funds (MF) Public Offerings (IPO)

CURRENCY MARKET
FOREIGN

EXCHANGE MARKET:-

Purchase or sale of one national currency in exchange for another nations currency, usually conducted in a market setting

MCX-SX
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.

Benefits of MCX-SX

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. Arbitrageur Arbitrageurs get opportunity to trade in interest rate differentials of respective currencies implied from currency futures

COMMODITY MARKET
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.

MCX

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 nonferrous 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

FACT FILE