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Analysis of bse nse stocks

1. FINANCIAL MARKETS SYBBI SEMESTER-III Academic Year-20-21

2. MODULES INDIAN FINANCIAL SYSTEM FINANCIAL MARKETS IN INDIA COMMODITY MARKET DERIVATIVES MARKET

3. INDIAN FINANCIAL SYSTEM

4. OVERVIEW AND STRUCTURE OF INDIAN FINANCIAL SYSTEM The financial system enables lenders and borrowers to exchange funds. India has a financial system that is controlled by independent regulators in the sectors of insurance, banking, capital markets and various services sectors . T he financial system of an economy provides the way to collect money from the people who have it and distribute it to those who can use it best . So, the efficient allocation of economic resources is achieved by a financial system that distributes money to those people and for those purposes that will yield the best returns .

5. The financial system is composed of the products and services provided by financial institutions, which includes banks, insurance companies, pension funds, organized exchanges, and the many other companies that serve to facilitate economic transactions . Virtually all economic transactions are effected by one or more of these financial institutions. They create financial instruments, such as stocks and bonds, pay interest on deposits, lend money to creditworthy borrowers, and create and maintain the payment systems of modern economies.

6. OBJECTIVES These financial products and services are based on the following fundamental objectives of any modern financial system : I. To provide a payment system II. To give time value to money III. To offer products and services to reduce financial risk or to compensate risk-taking for desirable objectives IV. To collect and disperse information that allows the most efficient allocation of economic resources V. To create and maintain financial markets that provide prices, which indicates how well investments are performing, determines the subsequent allocation of resources, and to maintain economic stability in the markets

7. FUNCTIONS AND ROLE OF FINANCIAL SYSTEM Pooling of Funds Capital Formation Facilitates Payment Provides Liquidity Short and Long Term Needs Risk Function Better Decisions Finances Government Needs Economic Development

8.   1.Pooling of Funds In a financial system, the Savings of people are transferred from households to business organizations. With these production increases and better goods are manufactured, which increases the standard of living of people. 2.  Capital Formation Business require finance. These are made available through banks, households and different financial institutions. They mobilize savings which leads to Capital Formation. 3. Facilitates Payment The financial system offers convenient modes of payment for goods and services. New methods of payments like credit cards, debit cards, cheques , etc. facilitates quick and easy transactions. 4. Provides Liquidity In financial system, liquidity means the ability to convert into cash. The financial market provides the investors the opportunity to liquidate their investments, which are in instruments like shares, debentures, bonds, etc. Price is determined on the daily basis according to the operations of the market force of demand and supply. 5. Short and Long Term Needs The financial market takes into account the various needs of different individuals and organizations. This facilitates optimum use of finances for productive purposes.

9. 6. Risk Function The financial markets provide protection against life, health and income risks. Risk Management is an essential component of a growing economy. 7. Better Decisions Financial Markets provide information about the market and various financial assets. This helps the investors to compare different investment options and choose the best one. It helps in decision making in choosing portfolio allocations of their wealth. 8. Finances Government Needs Government needs huge amount of money for the development of defense infrastructure. It also requires finance for social welfare activities, public health, education, etc. This is supplied to them by financial markets. 9. Economic Development India is a mixed economy. The Government intervenes in the financial system to influence macro-economic variables like interest rate or inflation. Thus, credits can be made available to corporate at a cheaper rate. This leads to economic development of the nation.

10. STRUCTURE OF FINANCIAL SYSTEM

11. FINANCIAL MARKET

12. MONEY MARKET The money market  refers to trading in short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders . At the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers. In all of these cases, the money market is characterized by a high degree of safety and relatively low rates of return.

13. The money market involves the purchase and sale of large volumes of very short-term debt products, such as overnight reserves or commercial paper. An individual may invest in the money market by purchasing a money market mutual fund, buying a Treasury bill, or opening a money market account at a bank. Money market investments are characterized by safety and liquidity, with money market fund shares

14. The money market is one of the pillars of the global financial system. It involves overnight swaps of vast amounts of money between banks and the government. The majority of money market transactions are wholesale transactions that take place between financial institutions and companies. Institutions that participate in the money market include banks that lend to one another and to large companies and time deposit markets. Some of those wholesale transactions eventually make their way into the hands of consumers as components of money market mutual funds and other investments.

15. CAPITAL MARKET Capital markets are venues where savings and investments are channeled between the suppliers who have capital and those who are in need of capital. The entities that have capital include retail and institutional investors while those who seek capital are businesses, governments, and people. Capital markets are composed of primary and secondary markets. The most common capital markets are the stock market and the bond market.

16. Capital markets refer to the places where savings and investments are moved between suppliers of capital and those who are in need of capital. Capital markets consist of the primary market, where new securities are issued and sold, and the secondary market, where already-issued securities are traded between investors. The most common capital markets are the stock market and the bond market.

17. These venues may include the stock market, the bond market, and the currency and foreign exchange markets. Most markets are concentrated in major financial centers  like NSE BSE, Commodities exchanges Capital markets are composed of the suppliers and users of funds. Suppliers include households and the institutions serving them—pension funds, life insurance companies, charitable foundations, and non-financial companies—that generate cash beyond their needs for investment. 

18. Capital markets are used to sell financial products such as equities and debt securities. Equities are stocks, which are ownership shares in a company. Debt securities, such as bonds , These markets are divided into two different categories: P rimary markets — where new equity stock and bond issues are sold to investors S econdary markets- which trade existing securities. 

19. FUNCTIONS OF FINANCIAL SYSTEM Saving Function Wealth function Liquidity function Transferring resources across time and space Economic development Payment function Risk function

20. AGENCIES PROVIDING OF FINANCIAL SERVIES Banks Insurance Mutual Funds Merchant banking Venture capital Factoring Forfeiting

21. FUND BASED SERVICES LEASING HIRE PURCHASE VENTURE CAPITAL SEED CAPITAL FACTORING FORFAITING CREDIT FINANCANCING HOUSING FINANCE MUTUAL FUND

22. NON-FUND BASED ACTIVITIES(FEES BASED ACTIVITIES) MERCHANT BANKING CREDIT RATING LOAN SYNDICATION PORTFOLIO MANAGEMENT MERGER AND ACQUISITION STOCK BROKING CUSTODIAN SERVICES CAPITAL RESTRUCTURING ISSUE MANAGEMENT

23. CHALLENGES FACED BY FINANCIAL SERVICE INDUSTRY Increasing competition Regulatory compliance Cultural shift Changing business models Rising expectation Customer retention Changing technology Continuous innovation Sensitive customer

24. FINANCIAL INNOVATION Financial innovation is the process of creating new financial products, services, or processes. Financial innovation has come via advances over time in financial instruments and payment systems used in the lending and borrowing of funds. These changes – which include updates in technology, risk transfer, and credit and equity generation – have increased available credit for borrowers and given banks new and less costly ways to raise equity capital.

25. Financial innovation  is the act of creating new financial instruments as well as new financial technologies, institutions, and  markets. Recent financial innovations include hedge funds, private equity,  derivatives , retail-structured products, exchange-traded funds. The shadow banking system has spawned an array of financial innovations including mortgage-backed securities products and collateralized debt obligations (CDOs ).

26. There are 3 categories of innovation: institutional, product, and process. Institutional innovations relate to the creation of new types of financial firms such as specialist credit card firms like Capital One, electronic trading platforms. Product innovation relates to new products such as derivatives, securitization, and foreign currency mortgages . Process innovations relate to new ways of doing financial business, including online banking and telephone banking .

27. TYPES OF FINANCIAL INNOVATION Financial system /Institutional Innovation Process Innovation Product Innovation

28. CHARACTERISTICS OF FINANCIAL SERVICES Intangibility Customer orientation Inseparability Perishability Dynamics

29. CHAPTER 2 FINANCIAL MARKETS AND REGULATORY FRAMWORK Classification of Financial Markets Organized Market Unorganized Market Capital Market Money Market Primary Market Secondary Market

30. MONEY MARKET INSTRUMENTS Promissory Note: A promissory note is one of the earliest type of bills. It is a financial instrument with a written promise by one party, to pay to another party, a definite sum of money by demand or at a specified future date, although it falls in due for payment after 90 days within three days of grace. Bills of exchange or commercial bills The bills of exchange can be compared to the promissory note; besides it is drawn by the creditor and is accepted by the bank of the debater. The bill of exchange can be discounted by the creditor with a bank or a broker. Additionally, there is a foreign bill of exchange which becomes due for payment from the date of acceptance. However, the remaining procedure is the same for the internal bills of exchange.

31. Treasury Bills (T-Bills) The Treasury bills are issued by the Central Government and known to be one of the safest money market instruments available. Besides, they carry zero risk, so the returns are not attractive. Also, they come with different maturity periods like 1 year, 6 months or 3 months and are also circulated by primary and secondary markets. The central government issues them at a lesser price than their face-value. The difference of maturity value of the instrument and the buying price of the bill, which is decided with the help of bidding done via auctions, is basically the interest earned by the buyer. There are three types of treasury bills issued by the Government of India currently that is through auctions which are 91-day, 182-day and 364-day treasury bills.

32. Call and Notice Money Call and Notice Money exist in the market. With respect to Call Money, the funds are borrowed and lent for one day, whereas in the Notice Market, they are borrowed and lent up to 14 days, without any collateral security. The commercial banks and cooperative banks borrow and lend funds in this market. However, the all-India financial institutions and mutual funds only participate as lenders of funds. Inter-bank Term Market The inter-bank term market is for the cooperative and commercial banks in India who borrow and lend funds for a period of over 14 days and up to 90 days. This is done without any collateral security at the rates determined by markets.

33. Commercial Papers (CPs) Commercial papers can be compared to an unsecured short-term promissory note which is issued by top rated companies with a purpose of raising capital to meet requirements directly from the market. They usually have a fixed maturity period which can range anywhere from 1 day up to 270 days. They offer higher returns as compared to treasury bills. They are automatically not as secure in comparison. Also, Commercial papers are traded actively in secondary market. Certificate of Deposits ( CD’s ) This functions as a deposit receipt for money which is deposited with a financial organization or bank. The Certificate of Deposit is different from a Fixed Deposit receipt in two ways. i . Certificate of deposits are issued only of the sum of money is huge. ii. Certificate of deposit is freely negotiable. The RBI first announced in 1989 that the Certificate of Investments have become the most preferred choice of organization in terms of investments as they carry low risk which providing high interest rates than the Treasury bills and term deposits. CD’s are also issued at discounted price like the Treasury bills and they range between a span of 7 days up to 1 year. The Certificate of Deposit issued by banks range from 3 months, 6 months and 12 months. Note: CD’s can be issued to individuals (except minors), companies, corporations, funds, non–resident Indians, etc.

34. Repurchase Agreements (Repo) Repo’s are also known as Reverse Repo or as Repo. They are loans of short duration which are agreed by buyers and sellers for the purpose of selling and repurchasing. However, these transactions can be carried out between RBI approved parties. Note: Transactions can only be permitted between securities approved by RBI like the central or state government securities, treasury bills, central or state government securities, and PSU bonds.

35. DISTINGUSH BETWEEN CAPITAL MARKET AND MONEY MARKET

36. REGULATORY FRAMEWORK OF FINANCIAL MARKETS Financial market, financial institutions, financial instruments and financial services all are regulated by regulators like ministry of finance, the company law board, RBI, SEBI, IRDA, Department of Economic Affairs, Department of Company Affairs etc. The two major regulatory and promotional institutions in India are RBI and SEBI RBI- control banks SEBI- Controls Financial Institutions

37. RESERVE BANK OF INDIA The Reserve Bank of India is the central bank of our country The RBI is the apex financial institution of the country's financial system entrusted with the task of control, supervision, promotion, development and planning RBI came into existence on 1 st April, 1935 as per the Reserve Bank of India Act, 1935. but it nationalized by the government after independence

38. RBI is the queen bee of the Indian financial system which influences the commercial banks management in more than one way The RBI influences the management of commercial banks through its various policies, directions and regulations

39. ROLE OF RESERVE BANK OF INDIA RBI plays various roles as per the requirement of economic situation To manage adequate money and credit in the country To maintain the stability of rupee internally and externally Balanced and well managed banking development in the country To develop well organized money market

40. To provide adequate agriculture credit To manage public debt To seek international monetary co-operation Centralization of cash reserves of commercial banks To set up Government banks

41. FUNCTIONS OF RBI Traditional Functions Supervisory functions Promotional Role

42. TRADITIONAL FUNCTIONS/MONETARY FUNCTIONS Currency issue Bankers bank Custodian of foreign exchange reserves Bank of central clearance, settlement and transfer Lender of last resort Controller of credit

43. SUPERVISORY FUNCTIONS Granting license to banks Functions of inspection and enquiry Controls the non banking financial corporations

44. PROMOTIONAL ROLE Promotion of Banking habits Provide Refinance for export promotion Facilities for agriculture Facilitates to small scale industries Provisions of training Collection of data Publication of the reports

45. FINANCIAL INFRASTRUCTURES REGULATED BY RBI Real Time Gross Settlement (RTGS) Securities Settlement System (SSS) Clearing Corporation of India ltd. (CCIL)

46. SECURITIES EXCHANGE BOARD OF INDIA(SEBI) SEBI is the nodal agency to control the capital market and other related issues in India It is administrative body established in 1988 and was given statutory recognition in January 1992 under the SEBI Act, 1992which came into force on January 30,1992 SEBI has been has been active role in the Indian capital market to attain the objectives enshrined in the SEBI Act,1992

47. OBJECTIVES OF SEBI To provide a degree of protection to the investors and safeguard their rights and to ensure that there is a steady flow of funds in the market To promote fair market dealings by the issuer of securities and ensure a market where they can raise funds at a relatively low cost To regulate and develop a code of conduct for the financial intermediaries and to make them competitive and professional To provide for the matters connecting with or incidental to the above

48. COMPOSITION OF SEBI: The Board of Securities & Exchange Board of India (SEBI) is comprised of 9 members, excluding the Chairman. It is managed by its members, in the following manner: A Chairman is nominated by the Union Government. 2 members of SEBI, are officers from the Union Ministry of Finance. 1 member of SEBI, is from the Reserve Bank of India. There are 3 whole-time members, who are nominated by the Government of India. There are 2 Part-time members, who are also nominated by the Government of India .

49. THE FUNCTIONS OF SEBI: The regulatory jurisdiction of SEBI extends over corporates(in the issuance of capital and transfer of securities), in addition to all the intermediaries and individuals associated with the securities market. SEBI performs the following functions to meet its objectives. These functions involve protective measures, Developmental activity and regulatory functions. Registering and stock exchanges, merchant banks, mutual funds, underwriers , registrars to the issues, Brokers, Sub-brokers, transfer agents,etc . Levying various fees and other charges(as 1% of the issue amount of every company issuing shares kept by it as a caution money in the concerned stock exchange where the company is enlisted). Promoting the knowledge in investor education. It conducts audit and Inspections of stock exchanges and their various intermediaries .

50. It in involved in performing other concerned functions as may be prescribed to it from time to time. It Regulates the business in stock exchanges and other securities markets in the economy.It prohibits Insider Trading by keeping a check when insiders of a company buy securities of that company . It takes strict action against insider trading.An Insider is any individual who is connected with the company like its directors or promoters, etc. These ‘insiders’ possess sensitive information which has potential to affect the prices of the securities in the market. However, you would point out that such information is not available to common people, while the insiders can take advantage of this information to make profit. This is known as Insider Trading. It is involved in registering and regulating the working of players in stock exchanges like stock brokers, sub-brokers, market makers, etc. It Promotes as well as regulates the self-regulatory organizations also .

51. SEBI prohibits the fraudulent and unfair trade practices in the securities market. SEBI is also interested in calling for information, undertaking inspections, conducting audits and inquiries of the stock exchanges, intermediaries, self – regulatory organizations, mutual funds and other persons associated with the securities market in the country. It keeps a check on Price-rigging by fraud investors. Price rigging is basically manipulation of the prices of securities for inflating or deflating the market price of securities. Such practices are harmful for the performance of market at large.

52. INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY Insurance Regulatory and Development Authority is an autonomous apex statutory body which regulates and develops the insurance industry in India It was constituted by a parliament of India act called Insurance Regulatory and Development Authority Act,1999 and duly passed by the government of India The agency operates its headquarters at Hyderabad, Telangana where it shifted from Delhi in 2001 Promote and ensure orderly growth of the insurance business and re-insurance business IRDA issue the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration and protect the interest of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contract of insurance It regulates investment of funds by insurance companies regulating maintenance of margin of solvency.

53. FUNCTIONS OF IRDA Section 14 of IRDA Act,1999  lays down the duties and functions of IRDA: It issues the registration certificates to insurance companies and regulates them. It protects the interest of policy holders. It provides license to insurance intermediaries such as agents and brokers after specifying the required qualifications and set norms/code of conduct for them. It promotes and regulates the professional organisations related with insurance business to promote efficiency in insurance sector. It regulates and supervise the premium rates and terms of insurance covers. It specifies the conditions and manners, according to which the insurance companies and other intermediaries have to make their financial reports. It regulates the investment of policyholder's funds by insurance companies. It also ensures the maintenance of solvency margin (company's ability to pay out claims) by insurance companies.

54. PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY Pension fund regulatory is a pension related authority which was established in the year 23 rd August 2003.by the Indian Government It is authorized by the Finance Ministry and it helps in promoting income security of old age by regulating and also developing pension funds This group can also help in protecting the interest rate of the subscribers, associated with the schemes of pension money along with the related matters PFRDA is also responsible for the appointment of different intermediate agencies like pension fund managers, NPS bank and more

55. CHAPTER 3 INTERMEDIARIES V/S NON INTERMEDIARIES INTRODUCTION AND DEFINATION OF INTERMEDIARIES ROLE OF INTERMEDIARIES IN FINANCIAL MARKET FINANCIAL INTERMEDIARIES IN CAPITAL MARKET THE FUNCTIONS OF INTERMEDIARIES FINANCIAL INTERMEDIARIES BANKING INTERMEDIARIES NON-BANKING INTERMEDIARIES

56. INTRODUCTION INTERMEDIARIES IN CAPITAL MARKET Merchant Banker Registrar to an issue Banker Underwriter Brokers

57. FUNCTIONS OF INTERMEDIATION Providing safekeeping accounting, and payments mechanisms for resources Providing liquidity Diversifying risk Collecting and processing information

58. FINANCIAL INTERMEDIARIES BANKING RBI Commercial Bank Co-operative banks Foreign banks RRB NON BANKING Insurance Mutual Funds Factoring Depository

59. Reserve Bank of India The RBI is the central bank of our country. The Reserve B ank of India is the apex financial institution of the country’s financial system RBI came into existence on 1 st April 1935 as per the Reserve Bank of India Act, 1935. but the bank was nationalized by the government after Independence It becomes public sector bank from 1 st January 1949. RBI influences the management of management of commercial banks through its various policies, directions and regulations The fundamental object of the RBI is to discharge purely central banking functions in the Indian Money Market

60. COMMERCIAL BANK Commercial banks are those banks which accomplish all kinds of banking functions such as accepting deposits, advancing loans, credit creation, and agency function Commercial banks mainly engaged in deposit and lending activities to private and corporate clients in wholesale and retail banking FEATURES OF COMMERCIAL BANK It operates for profit It accepts deposits from the general public and extends loans to the households, firms, and government Withdrawal by means of an instrument, whether a cheque or otherwise Large part of deposits are demand deposits withdrawable and transferable Need to maintain the reserves with RBI

61. CO-OPERATIVE BANKS Co-operative banks are a part of the set of institutions, which are engaged in financing rural and agriculture development Cooperative banks were assigned the important role of delivering of fruits of economic planning at viewed grass root level Cooperative banking  is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world. Cooperative banking, as discussed here, includes retail banking carried out by credit unions, mutual savings banks,  building societies and cooperatives, as well as commercial banking services provided by mutual organizations (such as cooperative federations) to cooperative businesses.

62. FOREIGN BANK A foreign bank branch is a type of foreign bank that is obligated to follow the regulations of both the home and host countries. Banks often open a foreign branch to provide more services to their multinational corporate clients. Foreign bank branches tend to be more effective in countries with high taxes and nations where it is easy for international firms to enter the market. Foreign bank branches may face special difficulties during an economic or political crisis.

63. RRB Regional Rural Banks (RRBs)  are Indian Scheduled Commercial Banks (Government Banks) operating at regional level in different States of India. They have been created with a view of serving primarily the rural areas of India with basic banking and financial services. However , RRBs may have branches set up for urban operations and their area of operation may include urban areas too. The area of operation of RRBs is limited to the area as notified by Government of India covering one or more districts in the State. RRBs also perform a variety of different functions. RRBs perform various functions in following heads: Providing banking facilities to rural and semi-urban areas. Carrying out government operations like disbursement of wages of  workers , distribution of pensions etc. Providing Para-Banking facilities like locker facilities, debit and credit cards, mobile banking, internet banking , UPI etc. Small financial banks.

64. NON BANKING INTERMEDIARIES INSURANCE Insurance is a way of reducing your potential financial loss or hardship It can help cover the cost of unexpected events such as theft, illness or property damage It can also provide with financial payment upon death Several insurance provide comprehensive coverage with affordable premiums Premiums are periodical payment and different insurance offer miscellaneous premium options The periodical insurance premiums are planned according to the total insurance amount Insurance is used as an effective tool of risk management

65. FEATURES OF INSURANCE Pooling of losses Payment of fortuitous losses Risk transfer Indemnification Co-operative device Value of risk Payment of contingency

66. NEED AND PURPOSE OF INSURANCE INDIVIDUAL Insurance provide security and safety Insurance afford peace of mind Insurance eliminates dependency Life insurance encourages saving Life insurance fulfills the needs of a person Family need Old age needs Special need Need for education Marriage Insurance needs for settlement

67. BUSINESS Uncertainty of business losses is reduced Business efficiency is increased with insurance Enhancement of credit Business continuation Welfare of employee SOCIETY Wealth of the society is protected Economic growth of the country Reduction in inflation

68. MUTUAL FUND Mutual fund is a collective investment vehicle It is a pool of investors money invested according to pre-specified investment objectives. The benefit from the investment of pooled money accrue to those that contribute to the pool There is thus mutuality in the contribution and the benefit A mutual fund is an investment vehicle that permits several investors to pool their resources in order to purchase stocks, bonds, and other securities

69. TYPES OF MUTUAL FUNDS BY SRTUCTURE Open ended funds Close ended funds Interval funds BY INVESTMENT OBJECTIVES Growth funds Income funds Balanced funds Money M arket M utual Fund OTHER SCHEMES Tax savings Special Funds Index funds Sectoral funds Exchange Traded funds Gold Exchange funds

70. FACTORING 80% 20%

71. TYPES OF FACTORING Disclosed factoring Undisclosed Factoring Recourse Factoring Non-Recourse Factoring

72. PARTIES INVOLVED IN FACTORING BUYER (CUSTOMER) SELLER (CLIENT) FACTOR (BANK/ FINANCIAL INSTITUTION)

73. DEPOSITORY NSDL (NATIONAL SECURITIES DEPOSITORY LIMITED) CDSL ( CENTRAL DEPOSTIORY SERVICES LIMITED)

74. NATIONAL HOUSING BANK Set up in July 9, 1988 under the National Housing Bank Act, 1987. Wholly owned by RBI Head office in Delhi The vision of NHB is “ Promoting inclusive expansion with stability in Housing finance maeket ”

75. LEASING BENEFITS/ADVANTAGES Convenience in case of short term need No risk of technological obsolesce Efficient Maintenance services Low administrative and transaction cost Debt-Equity ratio remains unchanged Benefit of tax shield

76. DISADVANTAGES OF LEASING No Benefit of Residual value High cost leasing No benefit of ownership Not flexible Chances of disputes

77. TYPES OF LEASING Operating lease/ Service lease Financial lease Ordinary lease Leveraged lease Domestic and International lease

78. HIRE PURCHASE Hirer ( User) make cash down payment seller ( Hiree ) of say, 20-25% of the cost of the asset The balance of the cost price of the asset with interest thereon is payable in equated monthly installments Sometimes, in place of cash down payment a fixed deposit is required to be made with seller and the entire amount of the cost is recovered through EMIs

79. Each installment comprises of the cost of asset and interest – Flat interest rate, Effective interest rate The hirer is entitled t terminate the hire purchase contract by giving due notice to the seller ( Hiree ) After payment of last installment hirer becomes the owner and if he fails to make all installments hiree can take the possession of the asset

80. VENTURE CAPITAL Venture capital is a form of “ risk capital” The capital that is invested in a project, business where there is a considerable element of risk relating to the future creation of profit and cashflow

81. STAGES OF VENTURE CAPITAL FINANCING INVESTMENT PROCESS PRELIMINARY SCREENING NEGOTIATING INVESTMENT APPROVALS AND INVESTMENT COMPLETED

82. UNIT II FINANCIAL MARKETS IN INDIA CHAPTER 4 INDIAN MONEY MARKET

83. CHARACTERISTICS OF MONEY MARKET It is a market for short term instruments and that are close substitutes to money It is fundamentally an over the phone market It is a wholesale market for short term debt instruments It eases effective implementation of monetary policy of RBI Transactions are completed without the help of brokers It creates link between the RBI and commercial banks The players in the money market are RBI, commercial banks, and companies

84. DISTINGUSH BETWEEN CAPITAL MARKET AND MONEY MARKET

85. IMPORTANCE OF MONEY MARKET It is basically an over the phone market It is a wholesale market for short term debt instruments It is not a single market but collection of markets for several instruments It facilitates effective implementation of monetary policy of a central bank of a country Transactions are made without brokers

86. It establishes the link between RBI and commercial banks The players in the money market are RBI, Commercial banks, and companies There is lack of integration between various sub markets as well as various institutions and agencies There is lack coordination between co-operative banks and commercial banks

87. MONEY MARKET INSTRUMENTS Promissory Note: A promissory note is one of the earliest type of bills. It is a financial instrument with a written promise by one party, to pay to another party, a definite sum of money by demand or at a specified future date, although it falls in due for payment after 90 days within three days of grace. Bills of exchange or commercial bills The bills of exchange can be compared to the promissory note; besides it is drawn by the creditor and is accepted by the bank of the debater. The bill of exchange can be discounted by the creditor with a bank or a broker. Additionally, there is a foreign bill of exchange which becomes due for payment from the date of acceptance. However, the remaining procedure is the same for the internal bills of exchange.

88. Treasury Bills (T-Bills) The Treasury bills are issued by the Central Government and known to be one of the safest money market instruments available. Besides, they carry zero risk, so the returns are not attractive. Also, they come with different maturity periods like 1 year, 6 months or 3 months and are also circulated by primary and secondary markets. The central government issues them at a lesser price than their face-value. The difference of maturity value of the instrument and the buying price of the bill, which is decided with the help of bidding done via auctions, is basically the interest earned by the buyer. There are three types of treasury bills issued by the Government of India currently that is through auctions which are 91-day, 182-day and 364-day treasury bills.

89. Call and Notice Money Call and Notice Money exist in the market. With respect to Call Money, the funds are borrowed and lent for one day, whereas in the Notice Market, they are borrowed and lent up to 14 days, without any collateral security. The commercial banks and cooperative banks borrow and lend funds in this market. However, the all-India financial institutions and mutual funds only participate as lenders of funds. Inter-bank Term Market The inter-bank term market is for the cooperative and commercial banks in India who borrow and lend funds for a period of over 14 days and up to 90 days. This is done without any collateral security at the rates determined by markets.

90. Commercial Papers (CPs) Commercial papers can be compared to an unsecured short-term promissory note which is issued by top rated companies with a purpose of raising capital to meet requirements directly from the market. They usually have a fixed maturity period which can range anywhere from 1 day up to 270 days. They offer higher returns as compared to treasury bills. They are automatically not as secure in comparison. Also, Commercial papers are traded actively in secondary market. Certificate of Deposits ( CD’s ) This functions as a deposit receipt for money which is deposited with a financial organization or bank. The Certificate of Deposit is different from a Fixed Deposit receipt in two ways. i . Certificate of deposits are issued only of the sum of money is huge. ii. Certificate of deposit is freely negotiable. The RBI first announced in 1989 that the Certificate of Investments have become the most preferred choice of organization in terms of investments as they carry low risk which providing high interest rates than the Treasury bills and term deposits. CD’s are also issued at discounted price like the Treasury bills and they range between a span of 7 days up to 1 year. The Certificate of Deposit issued by banks range from 3 months, 6 months and 12 months. Note: CD’s can be issued to individuals (except minors), companies, corporations, funds, non–resident Indians, etc.

91. Repurchase Agreements (Repo) Repo’s are also known as Reverse Repo or as Repo. They are loans of short duration which are agreed by buyers and sellers for the purpose of selling and repurchasing. However, these transactions can be carried out between RBI approved parties. Note: Transactions can only be permitted between securities approved by RBI like the central or state government securities, treasury bills, central or state government securities, and PSU bonds.

92. CHAPTER 5 INDIAN CAPITAL MARKET

93. CAPITAL MARKET Capital markets are venues where savings and investments are channeled between the suppliers who have capital and those who are in need of capital. The entities that have capital include retail and institutional investors while those who seek capital are businesses, governments, and people. Capital markets are composed of primary and secondary markets. The most common capital markets are the stock market and the bond market.

94. Capital markets refer to the places where savings and investments are moved between suppliers of capital and those who are in need of capital. Capital markets consist of the primary market, where new securities are issued and sold, and the secondary market, where already-issued securities are traded between investors. The most common capital markets are the stock market and the bond market.

95. These venues may include the stock market, the bond market, and the currency and foreign exchange markets. Most markets are concentrated in major financial centers  like NSE BSE, Commodities exchanges Capital markets are composed of the suppliers and users of funds. Suppliers include households and the institutions serving them—pension funds, life insurance companies, charitable foundations, and non-financial companies—that generate cash beyond their needs for investment. 

96. Capital markets are used to sell financial products such as equities and debt securities. Equities are stocks, which are ownership shares in a company. Debt securities, such as bonds , These markets are divided into two different categories: P rimary markets — where new equity stock and bond issues are sold to investors S econdary markets- which trade existing securities. 

97. FACTORS RESPONSIBLE FOR THE GROWTH OF CAPITAL MARKET Growth of Multinational Growth of financial institutions Merchant banking services General awareness Growing population Legislative measures Growth of Underwriting service Public confidence

98. ROLE OF CAPITAL MARKET Mobilization of savings Capital formation Economic development Integrates different parts of the financial system Promotion of stock market Foreign capital Economic welfare Innovation

99. CAPITAL MARKET INSRTUMENTS EQUITY SHARE DEBT ( LOAN INSTRUMENTS) C orporate debt B ond Government debt 3. MUTUAL FUND

100. DISTINGUSH BETWEEN EQUITY MARKET AND DEBT MARKET MEANING INSTRUMENTS VOTING RIGHTS FUTURE CLAIM ASSOCIATION OF RISK RETURNS NATURE OF HOLDING

101. CHAPTER 6 INDIAN STOCK MARKET

102. FEATURES OF STOCK MARKET I t is an organized market It could be incorporated or non-incorporated It is an open market for the buying and selling of securities Only listing securities can be allocated on a stock exchange It works under established rules and regulations

103. FUNCTIONS OF STOCK EXCHANGES Liquidity Continues market for securities Mobilization of saving Capital formation Economic development Safeguard of the investors

104. BENEFITS OF STOCK EXCHANGE TO THE INVESTOR TO THE COMPANIES BENEFIT TO COMMUNITY AND NATION

105. LISTING OF SECURITIES BENEFIT TO THE COMPANY Continues market Goodwill Liquidity Companies can easily raise capital BENEFIT TO THE INVESTORS It provides safety and security

106. PLAYERS IN STOCK MARKET BEARS BULLS STAGS

107. MEMBERS IN A STOCK EXCHANGE Jobber Commission broker Tarawaniwalas - Are like jobbers Sub broker Arbitrageurs Authorized clerks

108. MAJOR STOCK EXCHANGES IN INDIA BOMBAY STOCK EXCHANGE NATIONAL STOCK EXCHANGE

109. FUNDAMENTAL ANALYSIS Economic analysis Industry analysis Company analysis Net profit margin Book value per share Current ratio Debt ratio Inventory turnover Stock price valuation

110. TECHNICAL ANALYSIS OPEN HIGH LOW CLOSE VOLUME OPEN INTEREST BID ASK

111. METHODS OF TECHNICAL ANALYSIS LINE CHART BAR CHART CANLESTICK CHART VOLUME BAR CHART RESISTENCE AND SUPPORT

112. CHAPTER 7 INDIAN EQUITY MARKET PRIMARY MARKET PLAYERS IN PRIMARY MARKET MERHCNANT BANKER REGISTRAR TO THE ISSUE BANKER BROKER UNDERWRITER

113. METHODS OF RAISING FUND IN PRIMARY MARKET PUBLIC ISSUE OFFER FOR SALE PRIVATE PLACEMENT RIGHT ISSUE TENDER METHOD BONUS SHARES

114. PROSPECTUS RED HERRING PROSPECTUS ABRIDGED PROSPECTUS SWEAT EQUITY SWEAT EQUITY MEANS SUCH EQUITY SHARES ISSUED TO ITS DIRECTORS OR EMPLOYEES AT A DISCOUNT OR FOR CONSIDERATION ESOP (EMPLOYEE STOCK OWNERSHIP PLAN) RIGHT ISSUE

115. CHAPTER 8 INDIAN DEBT MARKET ADVANTAGES OF DEBT INSTRUMENT Fixed and periodic receipt like interest Capital is preserved These instruments are more secured Investment in government bonds is more risk free Lower volatility Diversity of instruments like index bonds

116. TYPES MONEY MARKET INSTRUMENTS Treasury bills Certificate of deposits Commercial paper Government securities Cash Management Bills Dated Government securities State Development loans Special securities Corporate Bonds

117. INTEREST RATE BOND FIXED RATE BOND FLOATING RATE BOND ZERO COUPON BOND CAPITAL INDEXED BOND BOND WITH CALL/PUT OPTION

118. UNIT3 CHAPTER 9 COMMODITY MARKET REGULATORY FRMEWORKOF FRAMEWORK OF COMMODITIES MARKET CENTRAL GOVERNMENT FORWARD MARKET COMMISSION EXCHANGES

119. MAIN PLAYERS OF COMMODITIES MARKETS SPECULATORS HEDGERS ARBITRAGERS

120. COMMODITY EXCHANGES IN INDIA MULTI COMMODITIES EXCHANGE NATIONAL COMODITIES AND DERIVATIVES EXCHANGE NATIONAL MULTI COMMODITY EXCHANGE INDIAN COMMODITY EXCHANGE