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Business Club
Indian Financial Markets
BIZ 101 Lecture II
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Contents
• Financial Markets
• Shares and Stocks
• Regulatory Environment in India• SEBI• RBI
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Financial Markets
• A Market is a place where buyers and sellers come together to exchange something
• Financial Markets are where financial Instruments/products are exchanged.
• A Financial Market is known by type of product traded in it
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Different Financial Markets
FINANCIAL MARKET
MoneyMarket
Debt Market
Forex Market
CapitalMarket
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Money Market
• Markets for short term• Borrowing• Lending
• Primarily used by Banks• Typical Financial Instruments
• Bankers Acceptance• Certificate of Deposit (CD)• Treasury Bills• Repo’s
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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
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Foreign Exchange Market
• Foreign Goods• Payments in Foreign Currency• Forex Market
• Participants• Government
• Payments for Imports• Repayment of Loans
• Importers• Exchange Rates – One Currency in terms of
other (Eg. 1 US Dollar = 45 Rupees)• Bid Rate• Offer Rate
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Capital Market
• Long Term Funds• Raised by
• Government • Corporates
• Trading Instruments used• Shares• Derivatives• Units of Mutual Funds
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Financial Markets
• Primary Market• Instruments issued for first time• Used by
• Government/Corporates/PSU’s• IPO
• Initial Public Offering• Secondary Market
• Trading of already issued • Stocks • Bonds
• Stock Exchange
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Investment Basics
• Using savings to get returns in future is known as Investment
• Why should I invest??• I want to earn return on my idle money• A good bank balance before I retire• I intend to own a Mansion and Ferrari
• When should I invest• As soon as possible
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Where to invest???
• Physical Assets• Real Estate ,Gold/jewellery• Requires huge capital
• Financial Assets• Savings Bank Account• Fixed Deposits • Post office• Government Bonds• Provident Funds
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But ..All these are fixed return instruments
Lets learn to take some risks and earn more
Welcome to the Exciting world of Stocks !!
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Stock and Shares
• Stock • Capital raised by corporations• Through issue and distribution of shares
• Share• Signifies ownership in the company• A company might have thousands of
Shareholders• Which company issued shares for the
first time in the world???• The Dutch East India Company in 1602
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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
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A Few Jargons!!!
• Types of Shares• Common/Equity• Preferred
• Face Value • Market Value
• Market Capitalization
• Dividend
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A few more Jargons!!!
• Stock Broker
• Mutual Funds
• Annual Report
• Prospectus
• Liquidity
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Regulatory Environment in India
• Pre 1991• Tight Control of Government
• Post 1991• Liberalization• Opening of the Economy• Need for Supervision
• Regulation• Regulatory Bodies
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Regulatory Environment in India
• RBI – Reserve Bank of India• Established in 1935• Bankers Bank• Regulates Indian Financial Markets
• SEBI –Securities and Exchange Board of India• Incorporated in 1992• Regulation of Securities Market• Protecting the interests of Investors
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So want something more???
Hmm….• Stay tuned to BIZ 101 Lecture Series
• What’s more in Store??• Mutual Funds• Stock Valuation • Derivatives• Supply Chain Management
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Sources
• www.wikipedia.org• www.rbi.org.in• www.sebi.gov.in• www.nseindia.com• www.bseindia.com• www.moneycontrol.com
• And, !!!
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Contact Us
• Atul Bansal – MBA Second [email protected]
• Gaurav Sharma – MBA Second [email protected]
• Pratyush – B Tech Final [email protected]
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Thank you !!