INDUSTRY PROFILE

Financial Market
A financial market is a market in which people and entities
can trade financial securities, commodities, and other fungible items of value at
low transaction costs and at prices that reflect supply and demand. Securities include stocks
and bonds, and commodities include precious metals or agricultural goods.

There are both general markets (where many commodities are traded) and specialized
markets (where only one commodity is traded). Markets work by placing many interested
buyers and sellers, including households, firms, and government agencies, in one "place",
thus making it easier for them to find each other. An economy which relies primarily on
interactions between buyers and sellers to allocate resources is known as a market
economy in contrast either to a command economy or to a non-market economy such as a gift
economy.

In finance, financial markets facilitate:

 The raising of capital (in the capital markets)

 The transfer of risk (in the derivatives markets)
 Price discovery
 Global transactions with integration of financial markets
 The transfer of liquidity (in the money markets)
 International trade (in the currency markets)

– And are used to match those who want capital to those who have it.

Typically a borrower issues a receipt to the lender promising to pay back the capital.
These receipts are securities which may be freely bought or sold. In return for lending money
to the borrower, the lender will expect some compensation in the form
of interest or dividends. This return on investment is a necessary part of markets to ensure
that funds are supplied to them.

In economics, typically, the term market means the aggregate of possible buyers and

sellers of a certain good or service and the transactions between them.

The term "market" is sometimes used for what are more strictly exchanges,
organizations that facilitate the trade in financial securities, e.g., a stock exchange or
commodity. This may be a physical location (like the NYSE, BSE, and NSE) or an electronic
system (like NASDAQ). Much trading of stocks takes place on an exchange; still, corporate
actions (merger, spinoff) are outside an exchange, while any two companies or people, for
whatever reason, may agree to sell stock from the one to the other without using an exchange.

Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade on

a stock exchange, and people are building electronic systems for these as well, similar to
stock exchanges. Financial markets can be domestic or they can be international.

Types of financial Markets

The financial markets can be divided into different subtypes:

 Capital markets which consist of:

 Stock markets, which provide financing through the issuance of shares or common
stock, and enable the subsequent trading thereof.
 Bond markets, which provide financing through the issuance of bonds, and enable
the subsequent trading thereof.

 Commodity markets, which facilitate the trading of commodities.

 Money markets, which provide short term debt financing and investment.
 Derivatives markets, which provide instruments for the management of financial risk.
 Futures markets, which provide standardized forward contracts for trading products at
some future date; see also forward market.
 Insurance markets, which facilitate the redistribution of various risks.
 Foreign exchange markets, which facilitate the trading of foreign exchange.

The capital markets may also be divided into primary markets and secondary markets. Newly

formed (issued) securities are bought or sold in primary markets, such as during initial public
offerings. Secondary markets allow investors to buy and sell existing securities. The
transactions in primary markets exist between issuers and investors, while in secondary
market transactions exist among investors.

Liquidity is a crucial aspect of securities that are traded in secondary markets.

Liquidity refers to the ease with which a security can be sold without a loss of value.
Securities with an active secondary market mean that there are many buyers and sellers at a
given point in time. Investors benefit from liquid securities because they can sell their assets
whenever they want; an illiquid security may force the seller to get rid of their asset at a large
discount.

The financial market is broadly divided into 2 types:

1) Capital Market and

2) Money market.

The Capital market is subdivided into

1) Primary market:
A market that issues new securities on an exchange. Companies, governments and
other groups obtain financing through debt or equity based securities. Primary markets are
facilitated by underwriting groups, which consist of investment banks that will set a
beginning price range for a given security and then oversee its sale directly to investors. Also
known as "new issue market" (NIM).
2) Secondary market:
The secondary market, also called aftermarket, is the financial market in which
previously issued financial instruments such as stock, bonds, options, and futures are bought
and sold. Secondary market consists of stock exchanges where the buy orders and sell orders
are matched in the organized manner/ there are at present 25 recognized stock exchanges in
India and are governed by the Securities Contracts (Regulation) Act (SCRA).

STOCK MARKET OVERVIEW:

The only stock exchanges operating in the 19th century were those of Bombay set up
in 1875 and Ahmadabad set up in 1894. These were Efficient Market Hypothesis organized
as voluntary non-profit-making association of brokers to regulate and protect their interests.
Before the control on securities trading became a central subject under the constitution in
1950, it was a state subject and the Bombay securities contracts (control) Act of 1925 used to
regulate trading in securities. Under this Act, The Bombay Stock Exchange was recognized
in 1927 and Ahmadabad in 1937.
 During the war boom, a number of stock exchanges were organized even in Bombay,
Ahmadabad and other centers, but they were not recognized. Soon after it became a central
subject, central legislation was proposed and a committee headed by A.D.Gorwala went into
the bill for securities regulation. On the basis of the committee's recommendations and public
discussion, the securities contracts (regulation) Act became law in 1956.

DEFINITION OF STOCK EXCHANGE:

"Stock exchange means anybody or individuals whether incorporated or not,

constituted for the purpose of assisting, regulating or controlling the business of buying,
selling or dealing in securities." It is an association of member brokers for the purpose of self-
regulation and protecting the interests of its members.

It can operate only, if it is recognized by the Government under the securities

contracts (regulation) Act, 1956. The recognition is granted under section 3 of the Act by the
central government, Ministry of Finance.

NATURE & FUNCTIONS OF STOCK EXCHANGE

There is an extraordinary amount of ignorance and of prejudice born out of ignorance

with regard to nature and functions of Stock Exchange. As economic development proceeds,
the scope for acquisition and ownership of capital by private individuals also grow. Along
with it, the opportunity for Stock Exchange to render the service of stimulating private
savings and challenging such savings into productive investment exists on a vastly great
scale. These are services, which the Stock Exchange alone can render efficiently.

The Stock Exchanges in India have an important role to play in the building of a real
shareholders democracy. To protect the interest of the investing public, the authorities of the
Stock Exchanges have been increasingly subjecting not only its members to a high degree of
discipline, but also those who use its facilities-Joint Stock Companies and other bodies in
whose stocks and shares it deals.

The activities of the Stock Exchange are governed by a recognized code of conduct
apart from statutory regulations. Investors both actual and potential are provided, through the
daily Stock Exchange quotations. The job of the Stock Exchange and its members is to satisfy
the need of market for investments to bring the buyers and sellers of investments together,
and to make the 'Exchange' of Stock between them as simple and fair as possible.
NEED FOR A STOCK EXCHANGE

As the business and industry expanded and economy became more complex in nature,
a need for permanent finance arose. Entrepreneurs require money for long term needs,
whereas investors demand liquidity. The solution to this problem gave way for the origin of
'stock exchange', which is a ready market for investment and liquidity.

As per the Securities Contract Act, 1956, "STOCK EXCHANGE" means anybody of
individuals whether incorporated or not constituted for the purpose of regulating or
controlling the business of buying, selling or dealing in securities".

CAPITAL MARKET REFORMS IN INDIA

India’s equity market has a long history. The Bombay stock exchange, it was
established in 1875. However the pricing and issue volume of corporate financial instruments
used to be controlled by the controller of capital issues (CCI) until 1992. Also the initial
public offering (IPO) requirement used to be loose in the absence of adequate informational,
legal and judicial infrastructure.

In 1992, CCI was abolished and SEBI act empower the security and exchange board of India
(SEBI), established in1998 to become a regulatory body with an explicit mandate of
protecting investors, developing the capital market and regulating the market.

In the same year, SEBI published guidelines on equity issue that enabled issuers to
price their primary issues freely in accordance with the market sentiment. Moreover, the
national stock exchange(NSE), the first nationwide screen based trading stock exchange, was
established in 1994 by govt owned financial institutions the establishment of NSE has
intensified completion not only among the existing the stock exchange but also among broker
through encouraging new entry, thereby lowering transaction cost to a substantial degree.

Since 1992 India has experienced to two major stock market booms, this indication
that the capital markets have succeeded in differentiating high quality firms from low quality
ones, thereby making it cheaper for the former to rises fund from the market. Given the
frequent cases of mall practice and price riggings, however the government still needs to
make continuous efforts to improve the capital market.
 The capital market reform framework consist mainly of the following participants
stock exchanges, clearing corporations, market intermediaries such as stock broker portfolio
managers and mutual funds and institutions and retail investors capital market in system of
framework which facilitates savings and investments. The capital market provides channels
for the allocation of saving to investment through the capital markets companies can raise
resources from the investors and investors can invest their saving in industrials, commercial
activities to earn return Indian stock markets are one of the oldest stock market in the world.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

Securities and Exchange Board of India (SEBI) setup as an autonomous regulatory

authority by the Government of India in 1988 "to protect the interests of investors in
securities and to promote the development of, and to regulate the securities market and for
matters connected therewith or incidental thereto". It is empowered by two acts namely the
SEBI Act, 1992 and the securities contract (regulation) Act, 1956 to perform the function of
protecting investor's rights and regulating the capital markers.

Securities and Exchange Board of India (SEBI) regulatory reach has been extended to
more areas and there is a considerable change in the capital market. SEBI's annual report for
1997-98 has stated that throughout its six-year existence as a statutory body, it has sought to
balance the twin objectives of investor protection and market development. It has formulated
new rules and crafted regulations to foster development. Monitoring. and surveillance was
put in place in the Stock Exchanges in 1996-97 and strengthened in 1997-98.

SEBI was set up as an autonomous regulatory authority by the government of India in

1988 "to protect the interests of investors in securities and to promote the development of,
and to regulate the securities market and for matters connected therewith or incidental
thereto". It is empowered by two acts namely the SEBI Act, 1992 and the securities contract
(regulation) Act, 1956 to perform the function of protecting investor's rights and regulating
the capital markets.

OBJECTIVES OF SEBI

The promulgation of the SEBI ordinance in the parliament gave statutory status to,
SEBI in 1992. According to the preamble of the SEBI, the three main objectives are:-

 To protect the interests of the investors in securities

  To promote the development of securities market.
 To regulate the securities market.

FUNCTIONS OF SEBI

 Regulating the business in Stock Exchange and any other securities market.
 Registering and regulating the working of Stock Brokers, Sub-Brokers, Share
Transfer Agents, Bankers to the issue, Trustees to trust deeds, Registrars to an issue,
Merchant Bankers, Underwriters,
 Portfolio Managers, Investment Advisers and such other Intermediaries who may be
associated with securities market in any manner.
 Registering and regulating the working of collective investment schemes including
Mutual Funds.
 Promoting and regulating self-regulatory organizations.
 Prohibiting fraudulent and unfair trade practices in the securities market.
 Promoting investor's education and training of intermediaries in securities market.
Prohibiting Insiders Trading in securities.
 Regulating substantial acquisition of shares and take-over of companies
NATIONAL STOCK EXCHANGE

The NSE was incorporated in November 1992 with an equity

capital of Rs.25crs. The International Securities Consultancy (IS C) of Hong Kong helped in
setting up NSE. ISC prepared the detailed business plans and installation of hardware and
software systems. The promotions for NSE were Financial Institutions, Insurances
Companies, Banks and SEBI Capital Market Ltd., Infrastructure Leasing and Financial
Services Ltd. and Stock Holding Corporation Ltd. It has been set up to strengthen the move
towards professionalization of the capital market as well as provide nationwide securities
trading facilities to investors.

NSE is not an exchange in the traditional sense where brokers own and manage the
exchange. A two tier administrative setup involving a company board and a governing board
of the exchange is envisaged. NSE is a national market for shares of Public Sector Units
Bonds, Debentures and Government securities, since infrastructure and trading facilities are
provided.
 The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges. It recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide access to
investors from all across the country on an equal footing. Based on the recommendations,
NSE was promoted by leading Financial Institutions at the behest of the Government of India
and was incorporated in November 1992 as a tax-paying company unlike other stock
exchanges in the country.
On its recognition as a stock exchange under the Securities Contracts (Regulation)
Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment commenced operations in
November 1994 and operations in Derivatives segment commenced in June 2000.
August 2008 saw introduction of Currency derivatives in India with the launch of
Currency Futures in USD INR by NSE. Interest Rate Futures was introduced for the first time
in India by NSE on 31st August 2009, exactly after one year of the launch of Currency
Futures.
With this, now both the retail and institutional investors can participate in equities,
equity derivatives, currency and interest rate derivatives, giving them wide range of products
to take care of their evolving needs.

Mission
NSE's mission is setting the agenda for change in the securities markets in India. The NSE
was set-up with the main objectives of:
 Establishing a nation-wide trading facility for equities, debt instruments and hybrids,
 Ensuring equal access to investors all over the country through an appropriate
communication network,
 Providing a fair, efficient and transparent securities market to investors using
electronic trading systems,
 Enabling shorter settlement cycles and book entry settlements systems, and
 Meeting the current international standards of securities markets.

There are two kinds of players in NSE:

(a) Trading members and

(b) Participants.

Recognized members of NSE are called trading members who trade on behalf of
themselves and their clients. Participants include trading members and large players like
banks who take direct settlement responsibility.

Trading at NSE takes place through a fully automated screen-based trading

mechanism which adopts the principle of an order-driven market. Trading members can stay
at their offices and execute the trading, since they are linked through a communication
network. The prices at which the buyer and seller are willing to transact will appear on the
screen. When the prices match the transaction will be completed and a confirmation slip will
be printed at the office of the trading member.

NSE has several advantages over the traditional trading exchanges. They are as follows:

 NSE brings an integrated stock market trading network across the nation.

 Investors can trade at the same price from anywhere in the country since inter-market
operations are streamlined coupled with the countrywide access to the securities.

 Delays in communication, late payments and the malpractice’s prevailing in the

traditional trading mechanism can be done away with greater operational efficiency
and informational transparency in the stock market operations, with the support of
total computerized network.

Unless stock markets provide professionalized service, small investors and foreign
investors will not be interested in capital market operations. And capital market being one of
the major sources of long-term finance for industrial projects, India cannot afford to damage
the capital market path. In this regard NSE gains vital importance in the Indian capital market
system.

The standards set by NSE in terms of market practices and technology have become
industry benchmarks and are being emulated by other market participants. NSE is more than
a mere market facilitator. It's that force which is guiding the industry towards new horizons
and greater opportunities.
BOMBAY STOCK EXCHANGE

This Stock Exchange, Mumbai, popularly known as "BOMBAY STOCK

EXCHANGE (BSE)" was established in 1875 as ''The Native Share and Stock Brokers
Association", as a voluntary non-profit making association. It has evolved over the years into
its present status as the premiere Stock Exchange in the country. It may be noted that the
Stock Exchange is the oldest one in Asia, even older than the Tokyo Stock Exchange, which
was founded in 1878.

The exchange, while providing an efficient and transparent market for trading in
securities, upholds the interests of the investors and ensures redressed of their grievances,
whether against the companies or its own member brokers. It also strives to educate and
enlighten the investors by making available necessary informative inputs and conducting
investor education programmes. A governing board comprising of 9 elected directors, 2 SEBI
nominees, 7 public representatives and an executive director is the apex body, which decides
the policies and regulates the affairs of the exchange.

The Executive director as the chief executive officer is responsible for the day to day
administration of the exchange. Bombay Stock Exchange is the oldest stock exchange in Asia
with a rich heritage of over 133 years of existence. What is now popularly known as BSE was
established as "The Native Share & Stock Brokers' Association" in 1875.

BSE is the first stock exchange in the country which obtained permanent recognition
(in 1956) from the Government of India under the Securities Contracts (Regulation) Act
(SCRA) 1956. BSE's pivotal and pre-eminent role in the development of the Indian capital
market is widely recognized.
It migrated from the open out-cry system to an online screen-based order driven
trading system in 1995. Earlier an Association Of Persons (AOP), BSE is now a corporatized
and demutualised entity incorporated under the provisions of the Companies Act, 1956,
pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the
Securities and Exchange Board of India (SEBI). With demutualization, BSE has two of
world's prominent exchanges, Deutsche Börse and Singapore Exchange, as its strategic
partners.
Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector
by providing it with cost and time efficient access to resources. There is perhaps no major
corporate in India which has not sourced BSE's services in raising resources from the capital
market. Today, BSE is the world's number 1 exchange in terms of the number of listed
companies and the world's 5th in handling of transactions through its electronic trading
system. The companies listed on BSE command a total market capitalization of USD Trillion
1.06 as of July, 2009.  BSE reaches to over 400 cities and town nation-wide and has around
4,937 listed companies, with over 7745 scrips being traded as on 31st July 09.
The BSE Index, SENSEX, is India's first and most popular stock market benchmark
index. Sensex is tracked worldwide. It constitutes 30 stocks representing 12 major sectors.
The SENSEX is constructed on a 'free-float' methodology, and is sensitive to market
movements and market realities. Apart from the SENSEX, BSE offers 23 indices, including
13 sectoral indices. It has entered into an index cooperation agreement with Deutsche Börse
and Singapore Stock Exchange.
The exchange traded funds (ETF) on SENSEX, called "SPIcE" and Kotak SENSEX
ETF are listed on BSE. They bring to the investors a trading tool that can be easily used for
the purposes of investment, trading, hedging and arbitrage. These ETFs allow small investors
to take a long-term view of the market.
 BSE provides an efficient and transparent market for trading in equity, debt
instruments and derivatives. It has always been at par with the international standards. The
systems and processes are designed to safeguard market integrity and enhance transparency
in operations. BSE is the first exchange in India and the second in the world to obtain an ISO
9001:2000 certifications. It is also the first exchange in the country and second in the world
to receive Information Security Management System Standard BS 7799-2-2002 certification
for its BSE On-line Trading System (BOLT).BSE continues to innovate. In 2006, it became
the first national level stock exchange to launch its website in Gujarati and Hindi and now
Marathi to reach out to a larger number of investors. It has successfully launched a reporting
platform for corporate bonds in India christened the ICDM or Indian Corporate Debt Market
and a unique ticker-cum-screen aptly named 'BSE Broadcast' which enables information
dissemination to the common man on the street. In 2006, BSE launched the Directors
Database and ICERS (Indian Corporate Electronic Reporting System) to facilitate
information flow and increase transparency in the Indian capital market. 
 COMPANY PROFILE

Tata capital limited

Tata Capital Limited is a subsidiary of Tata Sons Limited. The Company is registered with the Reserve
Bank of India as a Systemically Important Non Deposit Accepting Core Investment Company and offers
through itself and its subsidiaries fund and fee-based financial services to its customers.
 
Tata Capital Financial Services Limited ("TCFSL") is a subsidiary of Tata Capital Limited. The Company is
registered with the Reserve Bank of India as a Systemically Important Non Deposit Accepting Non
Banking Financial Company (NBFC) and offers fund and fee-based financial services to its customers,
under the Tata Capital brand.
 
 
A trusted and customer-centric, one-stop financial services provider, TCFSL caters to the diverse needs
of retail, corporate and institutional customers, across various areas of business namely the Commercial
Finance, Infrastructure Finance, Wealth Management, Consumer Loans and distribution and marketing of
Tata Cards.
 
 
TCFSL has over 100 branches spanning all critical markets in India.

Vision and Mission

Offerings

Offerings

 
Tata Capital's range of offerings caters to the diverse financial requirements of its retail, corporate and
institutional customers, directly or indirectly, through its subsidiaries.
 

The Commercial Finance* business helps small, medium and large corporates grow
Commercial their business. Our range of offerings includes Term Loans, Working Capital Loans,
Finance Channel Finance, Equipment Finance, Lease Rental Discounting, Bill Discounting,
Letter of Credit and Bank Guarantee**.

Investment Tata Securities Limited (TSL), a wholly-owned subsidiary of Tata Capital Limited
Banking holds a Category | Merchant Banking license from the Securities and Exchange
Board of India (SEBI ) to carry out merchant banking business. Our Investment
banking business provides a broad range of services, including equity capital
 markets transaction execution, underwriting, mergers and acquisitions advisory,
structured finance advisory, private equity advisory and infrastructure advisory.

Tata Capital acts as Investment Manager to Private Equity Funds which identify and
Private Equity invest into target companies with significant growth potential, nurture them and
exit profitable.

The Infrastructure Finance* business caters to the specialized needs of the

Infrastructure infrastructure sector. Our range of offerings includes Equipment Finance, Project
Finance Finance, Equipment Rentals, Working Capital Loans, Bill Discounting/ Factoring,
Refinance, Top Up Loans and Loan Syndication.

Tata Securities Limited, a wholly owned subsidiary of Tata Capital Limited, offers,
Securities both institutional and retail customers, quality products and services like equity
trading and research.

Tata Capital Wealth Management offers a range of Investment Advisory services

Wealth and markets third party investment products like Portfolio Management Services,
Management Private Equity and Venture Capital Funds, Structured Products, Mutual Funds, Fixed
Deposits and Bonds.

Our wide range of Consumer loans* such as Home Loans^, Auto Loans, Personal
Consumer
Loans, Business Loans, Education Loans, Loans against Property, Loans against
Loans
Shares.

The Tata Card# combines the convenience of a powerful credit card with a
rewarding membership to the Empower program. The credit card allows customers
Tata Cards to earn points and membership to the Empower program, India's first multi-brand
loyalty program, offering them the advantage of redeeming these points across
several loyalty partners.

TC Travel and Services Limited, a wholly - owned subsidiary of Tata Capital

Travel Related Limited, offers a wide range of services that includes airline ticketing, Visa &
Services passport facilitation, booking hotel accommodation, Cars-hire and surface
transport.

Tata Capital Forex Limited, a wholly-owned subsidiary of Tata Capital Limited offers
Foreign travel related foreign exchange products such as travelers cheques, foreign
Exchange currency notes, foreign currency denominated pre-paid travel cards, arrangement
for inward money transfer service and other associated travel related products.

Tata Capital Cleantech Limited (TCCL) is a joint venture between Tata Capital
Limited and International Finance Corporation (IFC), a member of the World Bank
Group. TCCL is a focused initiative to assist, via financing and advisory services,
Cleantech
companies that promote clean technology. TCCL will focus on the key areas such as
Finance
Energy Efficiency, Renewable energy generation projects, such as wind power,
small hydro power, solar power, bio-mass and waste treatment, Water
management projects and Projects that aid carbon footprint reduction

The alliance of Tata Capital and Century Tokyo Leasing Corporation (TC-Lease)
Leasing
brings you comprehensive & innovative solution-oriented financing services by
Services
leveraging the combination of leasing, financing knowledge and domain expertise.
 Introduction of Tata securities limited

Tata Securities Limited (TSL), is a wholly owned subsidiary of Tata Capital Limited. Tata
Securities holds membership on the Bombay Stock Exchange (BSE) and the National Stock
Exchange (NSE). TSL offers, both institutional and retail clients, quality products and services
like Equity Trading, IPOs and Mutual Funds.
Tata Securities also provides corporate advisory for M & A transactions, equity and debt
capital market services to companies and institutions, under its Category I Merchant
Banking License issued by SEBI.

Board of directors
 

Praveen P Kadle
Managing Director  & CEO

Govind Sankaranarayanan
Chief Financial Officer & Chief Operating Officer - Corporate Affairs

Pradeep C Bandivadekar
Chief Operating Officer - Corporate Finance Division
Vaithianathan Ramachandran
Managing Director, Tata Capital Housing Finance Limited

Amar Sinhji
Head - Human Resources

Competitors

 Reliance securities
 Religare securities limited
 Karvy securities
 Fortune
 Way to wealth
 Anand Rathi
 JRG
 Motilal oswal Securities Limited
 Angel broking
 India bulls Securities Limited.
 India info line limited

OBJECTIVES

 To compare Equity and Mutual Fund Scheme in respect of risk and return.
 Analyzing the performance of Equity Shares and Mutual Fund Scheme in their
benchmark.
 Finding Volatility of shares by using beta.
 Provide information about pros and cons on investing in Equity and Mutual fund.