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ERPM
Unit 1
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Securities
Includes shares, scrips, stocks, bonds,debentures or other marketable securities ofany incorporated company or other body
corporate or Government
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Investment
Process of employment of funds either toearn income or capital appreciation
Factors Return
Risk
Liquidity
Hedge against inflation
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Investment process
Investment policy
Analysis market, industry, company
Valuation risk, return, real worth, marketprice
Portfolio construction
Portfolio evaluation appraisal, revision
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Alternatives
Variable income securities
Fixed income securities
Preference shares
Debentures
Bonds
Gilt edged securities
IVP/KVP Money market securities
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Financial market
Organised
UnorganisedCapital market Money market
Industrial securities Commercial papers Money lenders
Government securities Certificate of deposit Indigenous bankers
Long term loan Treasury bills
Call money
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Capital market
For financial assets with long or indefinitematurity
LT securities
Maturity period >1 year
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Capital market structure
Marketable securities
Government
PSU bonds
Mutual fund Corporate
Non-marketablesecurities
Bank deposits
Deposits with companies Loans and advances
Post office certificate anddeposits
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Corporate securities
New issue market original players
Promoters / directors
Associates / friends
Collaborators
Employees
FIs
FFIs NRIs
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Corporate securities
Intermediaries
Brokers
Jobbers
Dealers
Badla financiers
Arbitrageurs
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Corporate securities
New issue market for issue
Merchant Bankers
Brokers
Sub-brokers
Underwriters
Ad agency
Collecting bankers
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Industrial securities
Equity / ordinary shares
Preference shares
Debentures / bonds
Primary market
Public issue, rights issue, private placement
Secondary market
Secondary sale, quoted in Stock Exchanges
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Government securities
Gilt edged securities
Denomination normally Rs.100
Half-yearly interest payment
Tax exemption
Commercial banks hold this for SLR
Sold through RBI Treasury bills are sold through auctions
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Long-term loans market
Term loans ICICI, IFCI
Mortgages market
Equitable only document Legal title is transferred
Financial guarantees market Finance against guarantee of a reputed person
Deferred payment for import / export
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Capital market
Capital formation
Economic growth
Productive use of economys savings
Incentives for saving Avenue for financial assets
Facilitates increase in production
Gives direction to flow of funds
Source for technological up gradation Serves as a link between those who save and invest
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Money market
Short-term financial assets < 1 year
Treasury bills
ST borrowing by Government
Commercial papers
Unsecured promisory note issued by companies
Certificate of deposit
Marketable receipts of funds banks 10+5lakhs
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Money market
Call money market
Very short period 1 to 14 days repayable atthe option of both the parties
Short term loan market WC needs
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Financial Intermediation
Banks and non-bank intermediaries channelthe funds
Mobilises funds capital formation
Reduce information cost
Reduce transaction cost
Raise long-term loans
Liquidity
Pools risk
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Intermediaries
FI agriculture / industrial growth
UTI
IFCI, IDBI, SIDBI, NABARD, EIM Bank
Mutual funds savings
VC entrepreneurs
Credit rating agencies
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Weakness in the system
Co-ordination
Monopoly
Dominance of development banks
Inactive and erratic capital market
Imprudent financial practice
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Capital market institutions
SEBI
RoC
RBI
SE
Licensing authorities
Pollution Control Authorities
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SCRA, 1956
Sec 28A
Call for periodical returns from SE
Prescribe documents to be maintained
Call upon the SE or any member to furnishexplanation or information
Approve byelaws of SE
Licensing of dealers in securities Compel a public company to list its shares
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SCRA
Sec 29 A (1992)
Amendment of rules
Furnishing of annual reports of SE
Directions to SE
Suspending governing body of SE
Prohibit contracts in certain cases
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SCRA
Sec 29A (1994) Submission of application for recognition of
SE
Grant of recognition of SE
Withdrawal of recognition of SE
Make / amend the rules / articles of a SEregarding voting rights
Regulation of spot delivery contracts Hear appeals of companies against non-
listing
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Market Indicators
Stock Exchange Indices
BSE
NSE
International markets indicators
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Stock indices
Calculation
Price-weighted
Equal Weighted
Value weighted
Eg: Nifty reflects price movements of 50 stocks
Sensex- 30 stocks
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Assignment : 2
Date of Submission : 02-08-2011
Find out the different stock market indices indifferent countries and method of calculation.
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Discuss
Relation between
Stock market
Bullion market
Exchange rate
Oil market