Download Indian Financial Markets - Learning Financial Management

Indian Financial System:
An Overview
www.moneycontrol.com & google
Contents
• Financial Markets
• Stock Exchange
www.moneycontrol.com & google
Financial Markets
• A Market is a place where buyers and sellers come together to
exchange financial instruments
• Is a network of financial institutions, market regulations where
financial transactions are done
• A Financial Market is known by type of product traded in it
Flow of funds (savings)
Seekers of funds
(Mainly business firms
Flow of financial services
and government)
Incomes , and financial
claims
www.moneycontrol.com & google
Suppliers of funds
(Mainly households)
Financial Markets
• Primary Market
• Instruments issued for first time
• Used by
• Government/Corporate/PSU’s
• IPO
• Initial Public Offering
• Secondary Market
• Trading of already issued
• Stocks
• Bonds
• Stock Exchange
www.moneycontrol.com & google
Different Financial Markets
FINANCIAL MARKET
Money
Market
Debt
Market
Hybrid
Market
www.moneycontrol.com & google
Capital
Market
Money Market
• Markets for short term
• Borrowing
• Lending
• Primarily used by Banks
• Typical Financial Instruments
• Commercial paper
• Certificate of Deposit (CD)
• Treasury Bills
www.moneycontrol.com & google
Debt Market
• Debt
• Contract
• One Party lends to another Party
• Predetermined
• Interest Rates and Term
• Participants
• Banks
• Financial Institutions
• Mutual Funds
• Insurance Companies etc.
• Instruments
• Government Securities (G-Secs)
• Public Sector Units Bonds
• Corporate Securities
www.moneycontrol.com & google
Capital Market
• Long Term Funds
• Raised by
• Government
• Corporates
• Trading Instruments used
• Shares
• Derivatives
• Units of Mutual Funds
www.moneycontrol.com & google
Risk-Return Trade Off
• Liquidity risk- Ability to pay short term
obligation. If ability < desire, there exists
liquidity risk.
• Credit risk-Risk of default of borrowers of
loan. Lower the solvency of organization,
higher is the credit risk.
• Inflation Risk- It is the risk of fall in
purchasing power due to increase in price.
• Interest Rate Risk- is the risk of loss in bond
value due to change in interest rate
Class Notes
Stock Exchange
• Place where the shares are traded
• BSE
• NSE
• BSE – Bombay Stock Exchange
• Oldest Stock Exchange in Asia
• Sensex – Sensitive Index
• Index of 30 Actively traded Companies
• NSE – National Stock Exchange
• Incorporated in 1992
• Nifty
• Index of 50 Actively traded Companies
www.nseindia.com &
www.bseindia.com
Financial intermediaries
• Lower transaction cost
• Risk management
• Asymmetric information
www.nseindia.com &
www.bseindia.com
Benefits of listing
• Visibility
• Market Support
• Investor confidence
• Increase in demand of goods and
services
• Increase in profitability
www.moneycontrol.com & google
Reflexes from the class
 Investment decisions are to be implemented in the
financial markets which are a part of the financial
system. All activities of sale and purchase of
investments take place in financial markets
 All investors have to regularly interact with these
markets.They must understand the structure of the
financial market
- What these market are?
- What are their features and
characteristics?
- What are market participants?
- What type of instruments are available?
etc……
Sources
• www.nseindia.com
• www.bseindia.com
• www.moneycontrol.com
• Class Notes
• And,
!!!
www.moneycontrol.com & google
Thank You…
Shikha Nagar
Ravneet Kaur
Raman Khattar
Prabhjot Singh
Pallavi Goel
Manav Mahajana
Chirag Pankaj
Karan Kapoor
www.moneycontrol.com & google