Investment Management

A Detailed study of Primary Market

Guided by,
Subramaniam Sir.
Presentation by,
Ashu Salecha.
INTRODUCTION TO PRIMARY MARKET

The Primary Market for securities is

the New Issues Market which brings together
the “supply and Demand” or “Sources and
Uses” for new capital funds.
 Structure of Primary Market.

Financial Institution Security Market

Government Security market

Corporate security Market
Difference between Government securities
market and Corporate Securities Market.
Basis of difference
Stability of Return.
Speculation.
Nature of Market.
Value of a transaction.
Role of RBI/SEBI.
Risk.
 Role of Primary Market

Resource Mobilization
Promotion of Industrial growth.
Ready and continuous market
Raising long –term funds.
Provision of variety of services.
Proper channelisation of funds.
 Functions of Primary Market

In operation terms new issue market performs its

functions by providing service:
Origination.
Underwriting.
Distribution.
 Capital market Instrument

The capital Market instrument is divided into

following categories:-

Capital market Instrument

Ownership Securities Creditor ship Securities

Equity shares Preference share Debenture

 Equity share

Equity share also known as Ordinary share

or common share represent the owner’s
capital in the company.
Features
 Maturity.
 Right to income.
 Voting Rights.
 Limited Liability
 Advantages of Equity share
Permanent source of income.
Real owners .

Disadvantages of Equity share

Irredeemable.
Over participation in Management.
 Preference Share
These shares enjoy
preference as to payment of capital at the
time of liquidation .

Types
Cumulative preference share.
Redeemable Preference share.
Irredeemable Preference share.
Participating Preference Share.
Non-Participating Preference Share.
Features of Preference shares
Maturity.
Claim on income.
Control.

Advantages
Company’s point of view.
Shareholder’s point of view.
 Creditor ship Securities
Also known as ‘debt capital’ represent debenture and bond.

Debenture
A document under the company’s seal which provides for the
payment of a principal sum and interest thereon.

Types
Simple debenture. Redeemable Debenture.

Registered debenture. Irredeemable Debenture

Features of Debenture or Bond

Maturity.
Claims on Income.
Claims on assets.
Control.
Call feature.
 Difference between a Share and a Debenture

Share Debenture
Dividend Interest
Owners Creditors.
Irredeemable Redeemable
Dividend depends upon profit Fixed rate of interest
Owned capital Acknowledgement of
a debt.
 Growth of Capital Market in India

Increasing awareness.
Growth of Mutual Funds.
Setting up of SEBI.
Credit rating Agencies.
Industrial finance Institution.
Financial services.
 Thanks
for your good co-operation