Introduction to

Securities Market
 Overview
• Introduction
• Securities Market
• Money Markets
• Products Traded in the Indian Securities
Market
 Introduction

O The financial market enables efficient transfer and

allocation of financial resources for production in the
economy.
O Users of funds includes business, Government and
households whose seek them to run their activities.
O These users also act as providers of surplus funds.
O Intermediaries such as banks, financial institutions,
mutual funds and insurance companies channelize
the available surplus funds from lenders to the users.
Financial Markets in India
 Securities Market

Primary Market Secondary Market

The primary market is used by issuers for raising fresh capital from the investors by
making initial public offers or rights issues or offers for sale of equity or debt; on the
other hand the secondary market provides liquidity to these instruments, through
trading and settlement on the stock exchanges. The resources in the primary market
can be raised either through the private placement route or through the public issue
route by way of Initial Public Offer (IPO) or Follow on Public Offer (FPO). It is a
public issue, if anybody and everybody can subscribe for it, whereas, if the issue is
made to select group of people then it is termed as private placement. The secondary
market on the other hand operates through two mediums, namely, the Over-The-
Counter (OTC) market and the Exchange Traded Market.
There are several major players in the primary market. These include
the merchant bankers, mutual funds, financial institutions, Foreign
Portfolio Investors (FPIs), individual investors; the issuers including
companies, bodies corporate, lawyers, bankers to the issue, brokers,
and depository participants. The stock exchanges are involved to the
extent of providing platform for primary issuance and listing of the
securities.
In the secondary market, there are the stock exchanges, clearing
corporations, stock brokers (who are members of the stock
exchanges), the mutual funds/asset management companies (AMCs),
financial institutions, Foreign Portfolio Investors (FPIs), investment
companies, individual investors, depository participants and banks.
The Registrars and Transfer Agents, Custodians and Depositories are
capital market intermediaries which provide important infrastructure
services to both the primary and secondary markets
 Money Markets
Money market is a market for financial assets that are
close substitutes for money. Such financial instruments
are also known as cash equivalents. It is a market for
short term funds and instruments having a maturity
period of one or less than one year. Money market
provides short term debt financing and investment. The
money market deals primarily in short-term debt
securities and investments, such as bankers’
acceptances, negotiable certificates of deposit ,
commercial papers, repos, Call money and treasury
bills (T-bills).
Products Traded in the Indian
Securities Market
1. Equity markets and its products
2. Derivative market and its products
3. Debt Market and its products.
Equity Market and its products
O Equity Share
O Debentures
O Government Securities
O Warrants
O Mutual Funds
O Exchange Traded Funds
O Indian Depository Receipts
 Derivative Market and Its
Products
Derivative is a product whose value is derived
from the value of an underlying asset or group of
assets—a benchmark. The derivative itself is a
contract between two or more parties. Assets for
derivatives are:
o Futures
o Options
o Swaps
o Forwards
Debt Market and Its Products
Debt market mainly consists of government
securities, money market instruments, bonds and
debentures, which provide financing through the
issuance of bonds, and enable the subsequent
trading thereof. These instruments can be traded in
OTC, Electronic Trading Platform or Exchange
traded markets. In India, the debt market is
broadly divided into two parts: government
securities market and the corporate bond market.
 Other Class Assets
O Real Estate Investment Trusts (REIT) are trusts registered with SEBI that invest in
commercial real estate assets. REIT assets” means real estate assets and any other
assets held by the REIT, on a freehold or leasehold basis, whether directly or through
a holding company and/or a special purpose vehicle. A REIT shall make an initial
offer of its units by way of public issue only.
O Infrastructure Investment Trusts (InvIT) are trusts registered with SEBI that invest
in the infrastructure sector. The InvIT can raise funds through public issue and/or
through private placement. The initial offer shall of at least Rs. 250 crores and the
value of the proposed assets of the InvIT shall minimum be of Rs. 500 crores. Other
specific conditions are detailed in SEBI (Infrastructure Investment Trusts)
Regulations, 2014. If the InvIT raises funds by public issue it shall be by way of
initial public offer.
O Sovereign Gold Bond Scheme (SGB) was launched in 2015 to provide an alternative
way for investors to take exposure to gold as an investment. SGBs are government
securities denominated in grams of gold. The bonds are issued in denomination of one
gram of gold and in denominations thereof. The tenor of the bond is 8 years.
International Financial Services
Centres(IFSC)
Financial Centre’s that cater to customers outside their own jurisdiction
are referred to as international (IFSCs) or offshore Financial Centers
(OFCs). All these Centres are ‘international’ in the sense that they deal
with the flow of finance and financial products/services across borders.
An IFSC is thus a jurisdiction that provides world class financial
services to non-residents and residents, to the extent permissible under
the current regulations, in a currency other than the domestic currency
(Indian rupee) of the location where the IFSC is located.
IFSC at GIFT, Gandhinagar is a deemed foreign territory dealing in
foreign currency. The entities in IFSC are recognized as non-resident
entity under the FEMA regulations of Reserve Bank of India and get
benefits which include exemptions from security transaction tax (STT),
commodity transaction tax, dividend distribution tax, capital gains
waiver and no income tax.