Yak Banking Awareness Inward Uncomplicated Linguistic Communication - Lesson 24

Dear Gr8 Ambitionists, inwards our previous Banking Awareness Lesson 23, nosotros select learnt most Bank Risks & Risk Management. In today's lesson, nosotros shall larn Capital Market. Happy Reading :)

Banking Awareness 2017 : Capital Market

The upper-case missive of the alphabet marketplace position is 1 of the types of Financial Market. So, earlier going to larn most Capital Markets, let's run into what are Financial Markets.

Financial Markets

The fiscal scheme of a reason is a combination of fiscal markets. H5N1 financial market is a marketplace position that brings buyers together with sellers together to merchandise inwards fiscal assets such equally stocks, bonds, commodities, derivatives together with currencies. The purpose of a fiscal marketplace position is to set prices for global trade, heighten capital, together with transfer liquidity together with risk. Although in that location are many components to a fiscal market, 3 of the most commonly used are :

Capital markets,
Commodity markets and
Money markets

Today nosotros shall larn most Capital Market.

Capital Market

Capital markets are markets for buying together with selling equity together with debt instruments. These markets are besides known equally "Securities Market". Capital marketplace position refers to facilities & establishment arrangements through which long-term funds, both debt together with equity are raised together with invested. The upper-case missive of the alphabet marketplace position consists of evolution banks, commercial banks, together with stock exchanges.

Capital marketplace position tin live on divided into 2 types. They are :

Primary Market
Secondary Market

Primary Market :

It is besides known equally the new issues market. It deals amongst the novel securities existence issued for the showtime time. The functions of primary marketplace position is to facilitate the transfer of investable funds savers to entrepreneurs seeking to constitute novel enterprise or to expand existing ones through the resultant of securities for the showtime time.

IPO (Initial Public Offering) : IPO or stock marketplace position launch is a type of populace offering inwards which shares of a companionship are unremarkably sold to institutional investors that inwards term, sell to the full general public, on a securities exchange, for the showtime time. Through this process, a private companionship transforms into a populace company.

Note : 1st modern IPO was issued yesteryear DUTCH EAST INDIA COMPANY inwards March 1602.

FPO (Follow on Public Offer) : FPO is a procedure yesteryear which a companionship (listened on an exchange) issues novel shares to the investors or the existing shareholders, unremarkably to promoters. FPO is used to diversify the equity based, yesteryear the companies.

Secondary Market :

The secondary marketplace position is besides known equally the "Stock marketplace position or Stock exchange". It is a marketplace position for the purchase together with sale of existing securities. It helps existing investors to disinvest together with fresh investors to acquire inwards the market. It besides provides liquidity & marketability to existing securities.

Stock Market :

Stock marketplace position or equity marketplace position is the aggregation of buyers & sellers of stocks (also called shares)

Functions of Stock Market :

Providing liquidity & marketplace position might to existing securities.
Pricing of securities.
Safety of transaction.
Contribution to economical growth.
Providing ambit for speculation.

Stock Exchange :

It is an central or stock marketplace position where stock brokers together with traders tin purchase or sell stocks (also called shares), bonds & other securities.

Note : Bear & Bull terms are used inwards percentage market.

Stock Exchanges inwards Republic of Republic of India :

The major stock exchanges maintained yesteryear SEBI are :

BSE (Bombay Stock Exchange)
NSE (National Stock Exchange)

BSE :

It is an Indian stock central located inwards Mumbai, established inwards 1875. The BSE is considered to live on one of Asia's fastest stock exchanges, amongst a speed of 200 microseconds together with 1 of India's leading central groups & the Oldest Stock central inwards the South Asian region.

More than 5000 companies are listed on BSE.

Important Note : BSE is the world's 11th largest stock market.

NSE :

It is the leading stock central of Republic of Republic of India located inwards Mumbai, established inwards 1992 equally the first demutualized electronic central inwards the country to render a modern, fully automated screenbased electronic trading system.

NSE has a marketplace position capitalization of to a greater extent than than U.S. $ 1.65 trillion.

Important Note : NSE is the world's twelfth largest stock exchange.

BSE Sensex :

The southward & P BSE Sensex (S & P Bombay Stock Exchange Sensitive Index) besides called the BSE thirty or only the SENSEX, is a free-float market-weighted stock marketplace position index of thirty well-established together with financially audio companies listed on Bombay Stock Exchange.

On 25th July 2001 BSE launched DOLLEX-30, a dollar linked version of southward & P BSE SENSEX. The index is calculated based on a costless float capitalization method.

CNX Nifty :

The CNS Nifty besides called the NIFTY l or only the Nifty. is National Stock Exchange of India's benchmark stock marketplace position index for Indian equity market. This was launched on 21st Apr 1996. Nifty is owned together with managed yesteryear Republic of Republic of India Index Services together with products (IISL), which is a wholly owned subsidiary of hte NSE strategic investment corp ltd. IISL had a marketing together with licensing understanding amongst touchstone & poors for co-branding equity indices until 2013.

The 'CNX' inwards the mention stands for 'CRISIL NSE INDEX'.

The CNS Nifty Index is a costless float marketplace position capitalization weighted Index. It is developed yesteryear Ajay Shah & Susan Thomas.

Capital Market Instruments inwards India

Shares

Shares are a unit of measurement of ownership inwards an organisation or corporation. It is a component of the company's capital. Those individuals who are getting shares from whatever companionship are called shareholders. There are 2 types of shares. They are :

Equity Shares
Preference Shares

Company render net turn a profit to their shareholders.

Bonds

In finance, a bond is an musical instrument of indebtedness of the bond issuer to the holders. It is debt security, nether which the issuer owes the holders a debt & depending on the terms of the bond, is obliged to pay them involvement (the coupon) together with to repay the principal at a later on date, termed the maturity date.

Interest is unremarkably payable at fixed intervals (annual, semi-annual, sometimes monthly). Very oft the bond is negotiable i.e., the ownership of the musical instrument tin live on transferred inwards the secondary market.

Important Notes :

The holder of the bond is the lender (creditor)
The issuer of the bond is the borrower (debtor)

The coupon is the interest

US Treasuries : These are the safest bonds of all because the involvement & principal payments are guaranteed yesteryear U.S. govt.

Interest is exempt from province together with local taxes, but non from federal tax.

Note : First e'er bond issued yesteryear a national govt was issued yesteryear Bank of England inwards 1694.

Debenture

In corporate finance, a debenture is a medium to long term debt musical instrument used yesteryear large companies to borrow coin at a fixed charge per unit of measurement of involvement from public.

There are 2 types of debentures :

Convertible debentures
Non - Convertible debentures

Convertible Debentures :

Which are convertible bonds or bonds that can live on converted into equity shares of the issuing companionship after a predetermined catamenia of time.

Non - Convertible Debentures :

Which are only regular debentures cannot live on converted into equity shares of the liable company.

Fixed Deposit

It is that form of banking concern a/c, where the amount of deposits is fixed for specified catamenia of time. The principal purpose of describe organisation human relationship holders to opened upwards this a/c, is to earn involvement coin from their actual money, which to given yesteryear the banks during a specified catamenia of time.

FDI (Foreign Direct Investment)

In FDI a business enterprise of 1 county invests inwards around other country.

FDI is the amount of equity capital, reinvestment of earnings, other long-term capital, together with short-term upper-case missive of the alphabet equally shown inwards the residue of payments.

FDI is distinguished from portfolio unusual investment, a passive investment inwards the securities of around other reason such equally populace stocks together with bonds, yesteryear the chemical element of "Control".

FII (Foreign Institutional Investors)

Institutional Investors is a term for entities which puddle coin to purchase securities, existent belongings & other investment assets or originate loans. Institutional Investors include banks, insurance companies, pensions, hedge funds, investment advisors, endowment together with mutual funds.

When considered from a strictly local standpoint, institutional investors are sometimes called FIIs.

In countries similar India, statutory agencies similar the SEBI select prescribed norms to register FIIs & besides to regulate such investments flowing inwards through FIIs. In 2008, FIIs represented the largest establishment investment category amongst equally estimated U.S. $ 751.14 billion.

P-Notes (Participatory Notes)

P-Notes are non used inside the country. They are used exterior Republic of Republic of India for making investments inwards shares listed inwards the Indian stock market. That is why they are besides called offshore derivative instruments.

Participatory notes commonly known equally P-notes or PNs are instruments issued yesteryear registered unusual institutional investors (FII) to overseas investors, who wishing to invest inwards the Indian Stock Market without registering themselves amongst the marketplace position regulator, the SEBI.

Important Note : SEBI permitted FII to register & participate inwards the Indian stock marketplace position inwards 1992.

PNs are besides known equally Overseas Derivative Instruments, Euity linked notes, capped render notes, Participating Return notes etc.

That's all for forthwith friends. In our adjacent Banking Awareness lesson, nosotros shall larn most Money Market. Happy Reading :)