Www.moneycontrol.com & google Indian Financial System: An Overview.

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Presentation transcript:

& google Indian Financial System: An Overview

& google Contents Financial Markets Stock Exchange

& 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 Suppliers of funds (Mainly households) Flow of financial services Incomes, and financial claims Seekers of funds (Mainly business firms and government) Flow of funds (savings)

& google 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

& google Different Financial Markets FINANCIAL MARKET Money Market Debt Market Hybrid Market Capital Market

& google Money Market Markets for short term Borrowing Lending Primarily used by Banks Typical Financial Instruments Commercial paper Certificate of Deposit (CD) Treasury Bills

& 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

& google Capital Market Long Term Funds Raised by Government Corporates Trading Instruments used Shares Derivatives Units of Mutual Funds

Class Notes 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

& 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

& Financial intermediaries Lower transaction cost Risk management Asymmetric information

& google Benefits of listing Visibility Market Support Investor confidence Increase in demand of goods and services Increase in profitability

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……

& google Sources Class Notes And, !!!

& google Thank You… Shikha Nagar Ravneet Kaur Raman Khattar Prabhjot Singh Pallavi Goel Manav Mahajana Chirag Pankaj Karan Kapoor