CAPITAL & EQUITY MARKET

NIRANJAN REDDY.E
MANGA SOWJANYA.KODEY
ASHIRITHA
MANISHA
SATPREETH
Capital Market
 A capital market is a market for
(debt or equity), where business
enterprises (companies) and
governments can raise long-term funds.

 It is defined as a market in which money is provided for periods

longer than a year as the raising of short-term funds takes place on
other markets (e.g., the money market). The capital market includes
the stock market (equity securities) and the bond market (debt).
 Financial regulator Securities and Exchange Board of
India (SEBI), oversee the capital markets in their designated
jurisdictions to ensure that investors are protected against fraud,
among other duties.

 Capital markets may be classified as Primary

markets and Secondary markets.

 In primary markets, new stock or bond issues are sold to

investors via a mechanism known as underwriting.

 In the secondary markets, existing securities are sold and bought

among investors or traders, usually on a securities
exchange, over-the-counter, or elsewhere
 Equity Market
 A stock market or equity market  is a public (a loose network of
economic transactions, not a physical facility or discrete) entity
for the trading of company stock (shares) and derivatives at an
agreed price; these are securities listed on a stock exchange as
well as those only traded privately.

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

are the major equity markets in India
 BSE
 The Bombay Stock Exchange (BSE) is
a stock exchange located on Dalal
Street, Mumbai and is the oldest stock
exchange in Asia.

 The equity market capitalization of the

companies listed on the BSE was
US$1.63 trillion as of December 2010,
making it the 4th largest stock exchange
in Asia and the 8th largest in the
world. The BSE has the largest number
of listed companies in the world.
 NSE
 The National Stock Exchange (NSE) is
a stock exchange located at Mumbai, India.

 It is the 9th largest stock exchange in the

world by market capitalization and largest in
India by daily turnover and number of
trades, for both equities and derivative
trading.

 Though a number of other exchanges exist,

NSE and the Bombay Stock Exchange are
the two most significant stock exchanges
in India, and between them are responsible
for the vast majority of share transactions.
 Mutual Fund & Bonds
 A mutual fund is a professionally-managed type of collective
investment scheme that pools money from many investors to
buy stocks, bonds, short-term money market instruments, and/or
other securities.
  A mutual fund has a fund manager that trades (buys and sells)
the fund's investments in accordance with the fund's investment
objective.
 corporate bond
 A corporate bond is
a bond issued by a corporation. It
is a bond that a corporation issues
to raise money in order to expand
its business. The term is usually
applied to longer-term debt
instruments, generally with a
maturity date falling at least a
year after their issue date.
 Allocations and Impacts

 In this year budget the government has focused on easing financing to

infrastructure.

 The allocation to infrastructure has been raised by 23.3% to Rs 2.14 lakh

Crore.

 To give a boost to infrastructure development in railways, ports, housing

And highway development government proposes to allow tax-free bonds
of Rs 300 billion to be issued by various undertakings in 2011-12
 The impact of above policies will result in an increasing appetite
for infrastructure-oriented mutual funds.

 The focus on infrastructure project is likely to result in an

increasing number of corporate bond and equity issuances for
fund raising by infrastructure companies and institutions.
 The FII limit for investment in the Corporate bonds(with
maturity over five years) issued in the infrastructure sector has
been raised by US$20 bn.

 FIIs would also be permitted to invest in unlisted bonds with a

minimum lock in period of 3 years and will be allowed to trade
amongst themselves during the lock in period
 Although an increase in FII limit is a positive factor, the
corporate bond market is expected to remain range bound as the
appetite for investment in infrastructure bonds by FIIs, which till
now was US$5 bn, has not been utilized to its fullest.

 However, over the coming years, we expect the infrastructure

sector to increase its share in the corporate bond market.
 Continuing with its disinvestment agenda, the government has
set a target of raising Rs 40,000 crore through disinvestment of
its stake in PSU, which would be challenging in current market
situation.

 This will decrease the fiscal deficit of the India.

 Allowing Foreign investors to invest in domestic mutual funds is a
key positive for equity markets and is expected to lead to higher
capital flow from foreign investors.

 The impact of this is will widen the investor base of mutual funds
and give non-SEBI registered foreign investors an opportunity to
invest in Indian equity markets.

 The measures will also provide an avenue to boost AUM(Assets

Under Management) of equity mutual funds
 In Fiscal year 2010-11 the domestic fund industry is impacted by
liquidity tightening in the banking system, which resulted in
systemic outflows from the industry.

 The industry’s average assets under management declined by 15%

to Rs 6.78 trillion in December 2010 from Rs 7.96 trillion in the
year-ago period.
 Services provided by life insurance companies in the area of
investment are proposed to be brought into the tax net along the
same lines as ULIPs.

 This may have a negative impact on the bottom line of insurance

companies. The incremental impact can be more on insurance
companies that have a larger share of non-ULIP products
Market Response to the Budget
 The Nifty started the budget day on positive note.

 How ever, the index was very volatile. It witnessed an intra day
high of 5477(+3.3%) and an intra day low of 5309 (+0.1%) and it
closed at 5,333 (+0.6%) for the day
Thank you..