TAMIL NADU NATIONAL LAW UNIVERSITY, TIRUCIHRAPALLI

Submitted for the internal assessment for the course of 

B.COM., LL.B (Hons.) – Third Semester
Academic Year: 2020-2021

Subject:
Title of the Research project 

Course Faculty: Ms..Agila T.S, Submitted By:

    Assistant Professor of commerce , Mr.Soundarraj A.
(BC0200044)
TNNLU
 Table of Contents

 INTRODUCTION

 INDUSTRIAL SECURITIES

 FINANCE

 ORGANISATION & STRUCTURE OFPRIMARY & SECONDARY MARKET.

 PRIMARY MARKET

 FEATURES OF PRIMARYMARKET

 SECONDARY MARKET

 METHODS OF MARKETING SECURITIES IN THE PRIMARY MARKET

 LISTING OF SECURITIES.

 TYPES OF DEALINGS IN THE INDIAN STOCK MARKET

 TRADING & SETTLEMENT SYSTEMS

 INTERMEDARIES IN PRIMARY AND SECONDARY MARKETS

 CONCLUSION

 BIBLIOGRAPHY

INTRODUCTION

      The industrial stock market is known as the industrial stock market. It is an ideal market for
corporate stocks like bonds and stocks. Business organizations raise capital through three main
types of securities. These are (a) ordinary shares, (b) preferred shares, and (c) debentures or bonds.
Ordinary shares and preferred shares are also called "shares." These are the most important
primary securities in the financial markets of any country. They differ in their investment
properties and therefore meet the different preferences of different investors and enjoy different
levels of popularity. The industrial stock market in India is relatively much smaller than in other
countries. This is due to the industrial structure, investment habits and educational level of
investors in India. The role of public companies in the country's business has grown dramatically,
with state companies being much more important than private sector companies in terms of paid
capital. 
INDUSTRIAL SECURITIES
There are three types of industrial paper: common stocks, preferred stocks, and debentures or
bonds. .

(a) Ordinary shares,

(b) Preference shares,

(c) Debentures or bonds,

a) Ordinary shares: Common shares are property securities that, depending on your appetite
for risk, have certain advantages in favour of the issuing company and the investor. The
investment in this financial instrument is permanent but not illiquid. Due to the relatively active
secondary market, investors can convert their holdings to cash relatively quickly. Since the
investor assumes a high level of risk, he can participate in the profits and assets of the company
without limit. The common shares are expected to provide a hedge against inflation. This has
advantages for the company, as no partial payments are required on the common shares and the
capital raised by issuing common shares does not have to be refinanced. The par value of ordinary
shares in India ranges from Rs 1 to Rs 100, but the most common and popular denomination is Rs
10
b) Preference shares: It is a property paper like a common stock, but it has a fixed rate of
return like a bond. Holders of preferred shares are entitled to income after the Company's creditors
have paid their claims, but before the income is paid to common shareholders. There are different
types of preferred shares on the market.
1. Cumulative and Non-cumulative

2. Convertible and Non-convertible

3. Redeemable and Non-redeemable

4. Participating and Non-participating

       In the case of cumulative preferred shares, the dividend must be paid within a specified period
of time. Convertible preference shares can be converted into ordinary shares on the terms specified
at the time these shares are issued. A redeemable preferred stock has a fixed term and is treated
like a bond in the same way as a bond. Participating preferred shareholders can receive a higher
dividend than the fixed dividend if they make good profits. The most preferred shares in India are
fixed income dividend shares with cumulative rights. Both redeemable and non-redeemable stocks
are all the rage in India, but many redeemable stocks are only at the discretion of companies. The
ratio of redeemable preferred shares to total preferred shares has tended to increase over time. The
term of redeemable preference shares is typically 12-15 years. The practice of issuing preferred
shares with profit sharing and conversion rights is not common. Preferred shareholders only have
the right to vote on matters that significantly influence the rights associated with their shares. The
denomination of the preferred shares is between 1 rupee and 1000 rupees, but the most common
and popular is 100 rupees. Preferred stocks offer perfect income security and are less risky. Aside
from the uncertainty surrounding returns, marketability, and liquidity, preferred stocks are low in
practice because the market for them is narrow and less active. However, new companies continue
to play a relatively more important role than old ones

c) Debentures or bonds: : debenture or bond is a creditorship safety with a set fee of return,
constant adulthood duration, ideal profits actuality and coffee capital uncertainty. Debentures are
secured handiest through the overall credit-worthiness of the enterprise. There are exceptional
forms of debentures: (i) Registered, (ii) bearer, (iii) redeemable, (iv) perpetual, (v) convertible,
(vi) right, (vii) non-convertible, (viii) partially convertible Almost all of the debentures which can
be indexed on Indian Stock Exchanges are loan registered debentures. Their face price varies from
Rs. five to Rs. five,000, however the maximum not unusualplace denomination is Rs. one
hundred. The adulthood duration is upto 12 years and the coupon fee is situation to the ceiling
constant through the authorities. The maximum not unusualplace adulthood duration of debentures
in India is 7 years and the ceiling fee is being constant for those debentures handiest. The
authorities authorised in January 1989, a brand new tool referred to as Partly Convertible
Debenture. It has a shorter duration of five years and the issuing enterprise gives buy-returned
facility regarding the residual non-convertible element at the choice of the investor. The public
monetary establishments had been issuing capital advantage bonds or debentures. IDBI, SIDBI,
ICICI, NHB, HUDCO are a number of the examples of establishments which issued those bonds.
They convey the hobby fee constant through RBI and are to be had thru out the 12 months at some
of outlets. They are supposed for funding of capital profits for the cause of exemption from capital
profits tax to the volume of one hundred percent. Interest tax Act as much as a sure ceiling. The
bond marketplace has additionally witnessed the problem of NRI bonds. These are US greenback
denominated financial institution devices withinside the shape of promissory notes supplied
through the SBI to NRIs. They serve the cause of remitting to India greenback denominated price
range of the
FINANCE:

          Finance is the life-blood of a business.  The business cannot run efficiently if it does not
have adequate finance to meet its requirements.  The financial requirement of business may be (a)
short-term and (b) long term, short term funds are required for meeting working capital
needs.  They are usually required for a period of one year.  These requirements are met with short
term loans or getting the bills discounted from the banks.  The long-term funds are required to
great extent for meeting the fixed capital requirements of the business.  The funds are required for
long term.  These funds are raised by the companies from issue of shares, debentures and loans
forms specialized financial institutions.

          Industrial securities market comprises the new Issue Market and Stock Exchange Market.  It
is also called as primary market and secondary market.  Companies raise capital by issuing shares,
debentures and bounds.  Individuals, Joint Stock companies and financial institutions are the major
types of owners of industrial securities.  Financial institutions have become most important group
of investors in these securities.  The major methods of issuing fresh capital are issue of prospectus,
private placement, and offer for sale, book building, rights and bonus issues.  The entire working
of the new issue (primary) market is controlled by the SEBI.

ORGANISATION AND STRUCTURE OF PRIMARY AND SECONDARY

MARKET:

          Industrial securities market comprises of the following segments:

(a)      Primary Market.

(b)    Secondary Market.

(a)Primary Market:- The primary market is the part of the capital markets that deals
with the issuance of new securities. Corporations, governments, or public institutions can
buy bonds by selling a new issue of stocks or bonds. This is usually done through a
syndicate of brokers. Selling new issues to investors is known as a subscription. In the
case of a reissue, this sale is an initial public offering (IPO). Traders earn a commission
that is included in the price of the securities offering, although it can be found on the
prospectus. Primary markets create long-term instruments that companies use to borrow
from the capital market 

FEATURES OF PRIMARY MARKETS ARE:

• This is the market for new long term equity capital. The primary market is the market where the
securities are sold for the first time. Therefore it is also called the new issue market (NIM).

• In a primary issue, the securities are issued by the company directly to investors. • The company
receives the money and issues new security certificates to the investors.

• Top themes are used by companies in order to start, expand, or modernize their existing
business.

• The primary market plays the crucial role of facilitating capital formation in the economy.

• The new issuance market excludes some other sources of new long-term external financing,
such as loans from financial institutions. New borrowers in the issuance market can raise capital to
convert private capital into public capital; This is known as "IPO".

• Financial assets sold can only be realized by the original owner . be redeemed        
b)Secondary Market:- The secondary market, also known as secondary market , is the
financial market where previously issued financial instruments such as stocks, bonds, options and
futures are bought and sold. It is also known as a stock exchange. It is the base on which the
primary market depends. A strong secondary market is an essential prerequisite for efficient
primary market growth. The secondary market provides an important means of transferring values.
The sale of securities in a secondary market is carried out through the mechanism of the stock
exchanges. There are currently 24 government recognized exchanges in India. India's first
organized stock exchange was founded in Bombay in 1887. When the Securities Contracts
(Regulation) Act was passed in 1956, only 7 exchanges were recognized. There are three major
stock exchanges in Bombay, namely the Bombay Stock Exchange of India, the National Stock
Exchange and the Stock Exchange of India. The Indian capital market has grown strongly over the
past 25 years 
METHODS OF MARKETING SECURITIES IN THE PRIMARY MARKET:

        There are several methods for trading financial stocks. The following are common
practices used by public companies in India

(1)  PUBLIC ISSUE: 

         A public company can increase the amount of capital by selling its shares to the public. You
can also sell bonds and borrow money from the public. Therefore, it is known as a public issue of
stocks or bonds. To do this, you must prepare a "prospectus". A prospectus is a document that
contains information about the company, such as the name, address, registered office, as well as
the names and addresses of the company founders, CEOs, CEOs, directors, company secretaries,
advisers legal, auditors, bankers, etc. It also contains information about the project, plant location,
technology, cooperation, products, export obligations, etc. The co. You must designate brokers
and subscribers to sell the minimum number of shares and set the opening and closing dates of the
subscription list       

(2)  Private placement:
       Private placement (or non-public offering) is a round of financing securities that are not sold
through a public offering, but rather through a private offering, usually to a small number of select
investors. "Private placement" generally refers to the non-public offering of shares in a public
company (since, of course, any offering of shares in a private company is and can only be a
private offering). This has been gaining popularity in recent days. This method is less expensive
and saves time. The co. You have to do some paperwork. It is suitable for both small businesses
and startups. This method can be used when the stock market is boring  

(3) INITIAL PUBLIC OFFER:-

         An INITIAL PUBLIC OFFERING (IPO) is a type of public offering in which the
shares of a company are sold to the public for the first time on a stock exchange. It is through this
process that a private company becomes a public company. Companies use IPOs to raise
expansion capital, potentially monetize the investments of early private investors, and go public. A
company that sells shares is never obliged to return the capital to its public investors. After the
IPO, when stocks are freely traded on the open market, money flows between public investors.
While going public has many advantages, there are also significant disadvantages. Above all, this
includes the costs associated with the process and the obligation to disclose certain information
that could be useful to competitors or cause difficulties for suppliers. The details of the proposed
offer will be made known to potential buyers in the form of a detailed document known as a
prospectus. Most publicly traded companies do so with the help of an investment bank that acts as
the underwriter. Underwriters provide a valuable service, which also includes help with the correct
valuation of the value of shares (share price) and the establishment of a public market for shares

(4)  Offer for sale:-

      A company sells the securities through intermediaries, such as issuers and brokers. This is
known as the offer to sell method. Originally the co. makes an offer to sell its securities to the
broker indicating the price and other conditions. Intermediaries can negotiate with the company
and finally accept the offer and buy the shares of the company. Those securities or shares are then
resold to general investors on the stock market, usually at a higher price, for a profit. The objective
of this edition is to save time and money and avoid complicated procedures when trading
securities. 
.    

(5) RIGHIS ISSUE:-

         A rights issue is the issuance of rights to purchase additional securities of a company from
existing holders of the company's securities. If the rights are equity securities, such as shares of a
public company, this is one way to raise capital through a proven stock offering. Rights issues are
sometimes carried out as a shelf offering. With the rights issued, holders of existing securities
have the privilege of purchasing a specified quantity of new securities from the company at a
specified price within a specified time. In a public company, a rights issue is a form of public
offering (unlike most other types of public offering that issue shares to the general public). Rights
issues can be particularly useful for fixed capital companies that cannot retain profits, since they
distribute essentially all of their income and realized capital gains each year; Therefore, they
obtain additional capital through subscription rights offers. Since equity issues are generally
preferable to debt securities from a company perspective, companies typically choose a rights
issue when they have trouble getting shares from the public and ask their existing shareholders to
buy more shares. . 
(6) BONUS ISSUE:-

        A bonus share is a free share that is awarded to current shareholders of a company based on
the number of shares the shareholder already owns. The issuance of bonus shares, while increasing
the total number of shares issued and owned, does not change the value of the company. Although
the total number of shares issued increases, the relationship between the number of shares held by
each shareholder remains constant. An issue of bonus shares is called a bonus issue. Depending on
the company's bylaws, only certain classes of shares may be eligible for premiums or other classes
of shares may be eligible for premiums. Bonus shares are distributed to shareholders in a fixed
proportion. Sometimes a company changes the number of shares in issue by activating its reserve.
In other words, you can convert shareholders' rights since each individual has the same proportion
of shares outstanding as before. An issue of bonus shares is not a dividend. Although these shares
are "distributed" by a company to its shareholders, it is almost never a "distribution" in the sense
of company law 

(7) STOCK OPTION:-

         A co. You can encourage your employees to buy and subscribe for shares, known as a stock
option or employee stock option program. This is a voluntary business program to encourage
employee participation in the company's capital stock. It also offers employees an incentive to stay
with the company. The program is useful for companies whose business relies on talented people
like Software Company. SEBI has issued guidelines in this regard.

LISTING OF SECURITIES

          Listing is a process that consists of listing something with someone. It is a permit to

officially list stocks and bonds on the trading floor of the stock market. Listed shares appear in the
official securities register for trading purposes. The listing of securities is a necessary step to
register the securities of a company with the competent authority, i. H. the recognized stock
exchange to register and register. Securities must be listed under Section 9 of the Securities
Contract (Regulation) Act of 1956. Therefore, listing simply means listing a security for the
purpose of trading on a recognized stock exchange

The Following are the characteristics of listing of securities:-

(a) Agreement: - The listing contract is concluded between the respective stock exchange and
the company. The co. offers or issues the securities publicly by issuing offering documents, such
as prospectuses or offering letters. The stock exchange is a recognized stock exchange in which its
securities are admitted to trading .

(b)  Purpose: - The purpose of the listing is to ensure the free transferability of securities to

allow clear transparency and open disclosure of information on company affairs. whose securities
are listed. In addition, the official quotation and liquidity in the trading of listed securities is
guaranteed
(c)  Restriction: - A ko. you are free to list your securities on any number of stock exchanges.
It is important that the securities are listed at least on the regional stock exchange
(d)  Investor Protection: - The listing offers investors some protection. It is a performance
barometer and continued good performance of Co

TRADING AND SETTLEMENT SYSEMS:TRADING:-

            Buying and selling securities on a stock market is known as stock trading. Jobbers and
Brokers are the two categories of traders on the exchange. An intermediary is a securities dealer,
while a broker is a securities dealer or seller. Each year, a member must decide in advance and
explain whether she wants to act as a go-between or go-between. As a securities dealer, a broker
gives two prices, a lower price to buy and a higher price to sell. The difference between the two
listings is their remuneration. This system enables the two offers is your remuneration. This
system allows specialization in trading and each intermediary specializes in a certain group of
securities. It also ensures a smooth and fast execution of the transaction

THERE ARE THREE TYPES OF DEALINGS IN THE INDIAN STOCK

MARKET:

(a)  Spot Delivery Contract: The cash delivery contract is a contract in which the payment
and delivery of the securities is made on the spot, the same day or the next day. The sale is
completed on the day the contract is signed. These are primarily cash transactions for investors.
All listed securities are admitted to the cash market.
(b)  Ready Delivery Contract: -  If payment and delivery are made within a fixed period of
no more than 7 days from the conclusion of the contract, which is known as a "completed delivery
contract", delivery is generally made against full payment in hand
(c)  Forward Delivery Contract:-  if the payment and delivery of the securities is made
once every 14 days by the clearing house, it is referred to as a forward delivery contract. This
contract also has transfer options. speculators are the parties interested in these deals.

SETTLEMENT:
         The procedure for processing transactions differs depending on the type of collateral. On the
settlement day, checks / bills of exchange and securities are exchanged according to the delivery
order. The clearinghouse makes the payment and delivers the securities certificates to the
members on the payment date. Each broker settles the account with each client by receiving or
delivering securities certificates and receipts or paying checks  

INTERMEDIARIES IN PRIMARY AND SECONDARY MARKETS:-

        There are several intermediaries that carry out different activities in the primary market.
These intermediaries are the following: These are the intermediaries in the primary market

(a)  Merchant Bankers:- Commercial bankers carry out the activities of underwriting and

portfolio management, issuance management, etc. You must register separately with SEBI as a
portfolio manager. Subscription can take place without additional registration. Only legal persons
with net worth of Rs 5 crore can operate as Category I commercial banks. You must perform the
work related to the new issue, such as determining the combination of securities to be issued,
preparing brochures, application forms , award letters, appoint registrars to process requests and
transfers of shares, arrangements for the placement of shares, the issue of publicity yes. You are
also known as the lead manager of an issue.
(b)  Underwriters:- The issuing company must appoint insurers in consultation with the
commercial bankers or the chief administrator. Subscribers play an important role in the
development of the primary market. Subscribers are the institutes or agencies that undertake to
assume the issuance of securities if the co. you cannot get a full subscription from the public. You
receive a commission for your services
(c) Bankers to the Issue:-  Bankers play an important role in the functioning of the primary
market. They collect applications for stocks and bonds along with money from investor
applications in connection with the issuance of securities. They also refund the application money
to applicants who have not been able to assign values to half of the issuing company. A co. You
do not have the right to collect the application money. The co. The 1956 law provided that money
for the issuance of stocks and bonds should be collected by the cheeks. Bankers who wish to act as
bankers on an issue must obtain the required certification of registration fees of Rs. 2.5 lakhs for
the first two years and Rs. 1 lakh for the third year.
          
(d)  Registrars and shares transfer agents:- The registrar is an intermediary who
performs functions such as the proper recording of requests and receipts of funds from investors,
helps companies determine the basis for the allocation of securities in accordance with exchange
guidelines and, in consultation with exchanges, helps complete allotment and securities processing
Sending allotment letters, redemption requests, share certificates and other documents related to
equity issue.
(e)  brokers to an Issue:-  Brokers are the intermediaries who represent an important link
between potential investors and the issuing company. Assists in the public subscription of
issuance. However, the appointment of brokers is not mandatory. 4,444 brokers receive their
commission from the issuing company. in accordance with the provisions of the Corporations Law
and the rules and regulations

INTERMEDIARIES IN THE SECONDARY MARKET:

The following are the intermediaries in the secondary market:

(a)  Brokers:-  Members of an exchange who transact securities are known as brokers. Trading

between members of a recognized exchange is carried out in accordance with the legal provisions
of the exchange. Brokers execute client orders to buy and sell listed securities. You receive a
commission for these transactions
(b)  Jobber:-  A broker is a specialist and an independent securities broker. As a securities
dealer, an intermediary must file two listings. Indicates a lower price to buy and a higher price to
sell the securities. Jobber only deals with brokers and not investors. his margin is determined by
competition among himself as a distributor. When there is strong competition, there is little room
for maneuver. Each broker specializes in a certain group of securities.
(c)  Taraniwala:-  A broker who conducts a proper auction and continues it on the stock
exchange is called Taraniwala. is a localized merchant that processes commission-based
transactions for other brokers acting on behalf of their clients. Listed on the stock market even
with small price differences and helps maintain liquidity on the stock market..
(d)  Security Dealer:- Members who buy and sell government bonds on the stock exchange
are known as securities dealers. Each transaction must be negotiated separately. Traders should
have information about the different types of government bonds. You take risks when buying and
selling securities for your current needs. Its function is limited by the participation of LIC and
commercial banks

BIBLIOGRAPHY
1. Bala, A. (2013)., “ INDIAN STOCK MARKET - REVIEW OF LITERATURE”, TRANS Asian
Journal of Marketing & Management Research , 2 (7).
2. Dr. Ranjan Dasgupta, S. C. (2014)., “Stock Market-Driven Factors of Investors’
Sentiment A Review of The Stylized Facts”, European Journal of Business and
Management , 6 (17), 208-217.
3. Goswami, C. (2003)., “How Does Internet Stock Trading in India Work?” Vikalpa, 28 (1),
91-98.
 4. Hoang Thanh Hue Ton, T. M. (2014)., “The Impact of Demographical Factors on
Investment Decision: A Study of Vietnam Stock Market”, International Journal of
Economics and Finance , 6 (11).
5. Jadhav, N. (2011)., “Development of Securities Market – The Indian Experience”,
Annual conference Association for Financial Professionals (AFP), (pp. 1-21).

K.S. Chalapati Rao, M. M. (1999).,”Some Aspects of The Indian Stock Market in The Post-
Liberalisation Period”, Journal of Indian School of Political Economy , 11 (4

CONCLUSION

           

     
 CONCLUSION