Points Money Market Capital Market

Money market refers to the market where Capital markets are the markets where
money and highly liquid marketable securities securities such as shares and bonds are
1. Meaning are bought and sold having a maturity period issued to raise medium to long-term
of one or less than one year. financing, and where the securities are
traded.
In money market, the instruments traded In capital market, the instruments traded
have maturity period of one year or less than have maturity period of more than one year.
2. Time Period
one year. It can be one day, one week, one For equities up to dissolution of company and
month or up to one year. for debt up to 30 years.
By the money market to satisfy the working By the capital market to satisfy the fixed
3. Purpose of capital needs of the organization or for small capital needs of the organization, such as
Borrowing investments. establish new business, expand or diversify
business or purchase of fixed assets.
Money market is regulated and controlled by Capital market is regulated and controlled by
4. Regulated by
Reserve Bank of India (organized). SEBI.
Participants of money market include RBI, Participants of Capital market include Stock
Central & State Government, Public Sector exchanges, Commercial banks and Non-
Undertakings, Commercial Banks, Cooperative banking Institutions, Financial intermediaries,
5. Participants
Banks, Insurance Companies, Mutual funds, Corporates, Government firms, etc.
Non-Banking Finance Companies, Corporates,
Primary Dealers, Money Lenders, etc.
Instruments of money market include Call Instruments of Capital market include Equity
Money & Notice Money, Treasury bills, Trade shares, preference shares, debentures,
bills, Commercial bills, Commercial Papers, bonds, securities of the government etc.
6. Instruments Certificate of Deposits, Government
Securities, Repo rate/ Repurchase agreement,
Money Market Mutual Fund, Advances from
banks, Loans from Unorganized Market, etc.
In the money market, risk factor is very lessIn capital market, the risk is high as compared
because maturity period of the instruments isto in the money market, due to longer
7. Risk
less than one year and value fluctuation is maturity period and value fluctuation is
less. more.
In the money market return on investment is In the capital market return on investment is
8. Return on
less as they are highly liquid and safe. comparatively higher than money market,
Investment
because they are more risky.
9. Role in Money market increases liquidity of funds in Capital market helps in mobilization savings
Economy the economy. in the economy.
It has the following types. It has the following types.
1. Organized 1. Industrial Securities Market
10. Types
2. Unorganized 2. Government Securities Market
3. Long Term Loan Market
In money market instruments are In capital market instruments are
11. Nature of
homogeneous nature (all borrowed heterogeneous nature.
Instrument
instruments).
Generally money market is only limited up to Capital is not limited up to particular place.
12. Market Area domestic or local. Companies raise funds from domestic as well
as foreign market.
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 Points Primary Market
1. Meaning Primary Market is a place where companies
bring new issues of shares for being subscribed
by the general public for raising funds in order
to fulfill their long term capital requirements.
2. Mode of Direct investment in the securities. Securities
Investment are purchased directly from the company.
3. Parties In the primary market, there is transaction
between company and investors.
4. Intermediary In primary market underwriters work as an
intermediary.
5. Value of The price of securities in the primary market is
Securities fixed as it is decided by the company.
Company raises finance from primary market to
6. Benefits/Purp
satisfy long term capital requirements such as
ose
expansion and modernization of business.
Listing is not required in case of primary
7. Listing
market.
In primary market there is very less frequency
8. Frequency of
regarding transactions. It may be even once in
Transactions
the lifetime of company.
The primary market is also known as New Issue
9. Another
Market or Fresh Issue Market.
Name
The participants include financial institutions,
10. Participants mutual funds, corporates, under writers and
investors.
Secondary Market
Secondary Market is a type of capital
market where existing shares, debentures,
bonds, options, derivatives etc. of the
corporate are traded among investors.
Indirect investments as the securities are
purchased from other stakeholders
(investors).
In secondary market, there is transaction
between two investors (buyer and seller).
In secondary market stock brokers work as
an intermediary.
The price of securities is fluctuating,
depending on the demand and supply
conditions in the market and also image of
the company.
Secondary market provides benefits to the
investors such as convert their securities
into cash.
Only listed securities can be dealt in the
secondary market.
In secondary market multiple transactions
are done everyday transaction in stock
exchange.
The secondary market is also known as
After Market or Second-Hand Market or
Stock Exchange.
The participants include investors, brokers,
investment firms, jobbers and stock
exchanges.

Points Jobber Broker

1. Meaning Jobber is a professional speculator who deals in Broker is an agent who deals in buying or
buying and selling of securities on his own selling the securities on behalf of his client.
name.
2. Nature of Jobber carries out trading activities only with Broker carries out trading activities with
Trading brokers. the jobber on behalf of his investors or
clients.
3. Restrictions Jobber cannot directly buy or sell securities in Broker acts as a link or middlemen between
on Dealings the stock exchange. He cannot deal directly with the jobber and investors. He never
investors. purchases or sells securities on his own
name. He only deals on behalf of its
investors.
4. Agent Jobber is a special mercantile agent or Broker is a general mercantile agent.
speculator.
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5. Form of A jobber gets consideration in the form of A broker gets consideration in the form of
Consideration profits. The positive difference between sales commission or brokerage. The rate of
and purchase of securities. brokerage decided by stock exchange rules
and SEBI’s guidelines.
Jobber does not hold any license regarding Broker must hold license from the SEBI
6. License
business. regarding broker-ships.
7. Position He is a speculator in the stock exchange. He is a member of the stock exchange.
Jobber have the following types: Brokers have the following types:
1. Bulls 1. Professional Clearing Member (PCM)
2. Bear 2. Trading Cum Clearing Member (TCM)
8. Types
3. Stag and Self Clearing Member
3. Trading Member (TM)
4. Limited Trading Member (LTM)

Points Bulls Bear

A speculator who expects the price of particular A speculator who sells the securities at
share to rise in the future and speculate with higher prices and repurchase back at low
1. Meaning
the hope of selling them at the higher prices to price. He hoping that market will fall in
earn profit. future.
2. View/ Bull’s views are optimistic (positive). Bear views are pessimistic (negative).
Approach
Bull purchase securities at low price and sell Bear sell securities at higher price and
3. Consideration securities at higher price. This is the profit- repurchase at lower price. This is the profit
earning system. earning system.
4. Alternative Bull is also known as ‘TEJIWALLA’. Bear is also known as ‘MANDIWALLA’.
Name
5. Future Bull anticipates that the prices of the securities Bear anticipates that the price of securities
Anticipation will increase in future. will fall in future.
Generally bull market trend is found in The bear market trend generally found in
6. Stock
developing nation’s stock exchange. developed nations or undeveloped nation’s
Exchange
stock exchange.
When the stock market is dominated by bulls, When the stock market is dominated by
7. Economy
the economy grows. bears, the economy declines.
8. Market In bulls market, there are strong market Bears market where one can find weak
Indicator indicators. market indicators.
The investor’s response towards the bulls In the bears market, the response of
market is positive as the market goes up; more investors is negative because due to the
9. Investor
and more people will be attracted towards the continuous fall, investors are afraid of
Response
stock market and invest their money in the investing money in the stock market.
hope of getting good returns.
The trading of stock is high in bulls market. In bears market, the stock trading is
10. Stock Trading
comparatively low.