Indian Money Market & Capital Market

Presented by 31- Nikhil Aggarwal 32- Abhishek Naik 33- Paritosh Mangal 34- Ashwini Pisharody 35- Aniket Potdar

Indian Financial System

Regulators

Financial Instruments

Financial markets

Financial Intermediaries

Forex market

Capital market

Money market

Credit market

Primary market Money market instruments Capital market instruments

Secondary market

Indian Financial System

transfer of money between savers and borrowers It channels household savings to the corporate sector Allows asset - liability transformation It helps in risk transformation by diversification Promotes the well being and standard of living of the people of a country Mobilize the savings & Promotes investment

Money Market
Money market is the collective name given to the
various firms and institutions that deal in the various grades of the near money.

Objective
Providing an equilibrium mechanism for ironing out short-term surplus and deficits. Providing a focal point for central bank intervention for the influencing liquidity in the economy. Providing access to users of shortterm money to meet their requirements at a reasonable price.

Structure of Indian money market

Organized money market

Unorganized money market

Unorganized
Moneylenders, Indigenous bankers, Chit funds; Traders & funds Brokers & dealers

Money Market Instruments

Call Money Commercial Bill Treasury Bill Certificate of Deposits (CDs) Commercial Papers (CPs) Short Term Loan cash credit & overdrafts

A small note
The money market in developed and developing countries differ markedly from each other in many senses. Indian money market is not an exception for this. Though it is not a developed money market, it is a leading money market among the developing countries

Drawbacks
Absence of Integration Multiple rate of interest Insufficient Funds or Resources Shortage of Investment Instruments Shortage of Commercial Bill Lack of Organized Banking System Less number of Dealers

Reforms
Deregulation of the Interest Rate Money Market Mutual Fund Establishment of the DFI Liquidity Adjustment Facility Electronic Transactions Establishment of the CCIL Development of New Market Instruments

Capital Market

A market in which individuals and institutions

trade financial securities.

Indian Capital Market Government securities Industrial securities market Primary market Secondary market

DFIs

Financial intermediaries Merchant banks

IFCI

ICICI

Mutual funds
Leasing companies Venture capital companies

SFCs

IDBI

IIBI

Other financial organizations

UTI

Classification
Govt. Securities Market Industrial Securities market a) Primary Market b) Secondary Market Development Financial Institutions(DFIs)

Financial Intermediaries

Risk in Capital market

Stock Market: Stock prices keep fluctuating All price movements are random There is a specific trend in the stock market prices over a period of time. Psychological factors shape the stock market prices. Subject to speculation. Volatile

Bond Market: Interest rate changes. There is an inverse relationship existing between the interest rate and the price of the bond.

Reforms
Establishment of SEBI Establishment of Creditors Rating Agencies Increasing of Merchant Banking Activities Candid Performance of Indian Economy Rising Electronic Transactions Growing Mutual Fund Industry Growing Stock Exchanges Growth of Derivative Transactions Insurance Sector Reforms Commodity Trading

Money Market

Capital Market

Short Term
Long term

Working capital
Fixed capital

T- bill, CP etc.
Debentures, shares, etc.

No help of brokers
Need for brokers

Transactions over a phone

Transactions in a formal place

Reference
http://indiabudget.nic.in/es96-97/4%20Capital%20and%20Money%20Markets.pdf http://en.wikipedia.org/wiki/Capital_market http://www.scribd.com/doc/31726071/Indian-Money-market-and-Capital-Market http://business.mapsofindia.com/india-market/money.html http://kalyan-city.blogspot.com/2010/09/indian-money-market-featuresdrawbacks.html http://en.wikipedia.org/wiki/Money_market_in_India http://kalyan-city.blogspot.com/2010/09/structure-and-components-of-indian.html http://kalyan-city.blogspot.com/2010/09/organizational-structure-of-indian.html http://vipinmks.com/wordpress/wp-content/uploads/2011/04/IFS.pdf http://www.investopedia.com/terms/c/capitalmarkets.asp#ixzz2JBt8Bx9W

Thank you