Financial Markets, Stock Markets, Mutual Funds, Debt Market, Equity Market by Team Pepsi

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Financial Markets, Stock Markets, Mutual funds, Debt Market, Equity Market by Team Pepsi
FINANCIAL MARKETS, STOCK Corporate

Presentation
MARKETS, MUTUAL FUNDS, DEBT
MARKET, EQUITY MARKET BY
Advertising, Media houses,
TEAM PEPSI Sales promotion, Digital
marketing, Social media
Team Members: marketing by Team Sony
SHRAYAN SARKAR (COORDINATOR)
ANISHA PODDAR Artificial Intelligence by

Team Ernst & Young
DANISH ALI KHAN
PRAGYA SINGH
SHIVANGI GOEL
Ayodhya by Team
Berkshire Hathaway
FINANCIAL MARKET Banking, Central Banking,

NBFC, Investment
DEFINITION banking, Merchant banking
by Team Coca Cola
Financial markets, from the name itself, are a type of marketplace that provides an
avenue for the sale and purchase of assets such as bonds, stocks, foreign exchange, and
derivatives.
Brexit by Team Morgan
NEED OF FINANCIAL MARKET Stanley
1. Division of knowledge
Financial markets improve the division of knowledge in society by bringing savers and CAA & NRC by Team
investors together who would not otherwise know about each other. Information is not Deloitte
uniform among all individuals. Someone who has low time preference, and has saved
accordingly thus has capital to invest. However, in an international economy, this saver
may be ignorant of many investment opportunities. Chinese Economy by
2. Uncertainty Team Apple
Financial markets help us deal with the uncertainty that is inherent in investable projects
(note that all human action is speculative because the future is uncertain). Ceteris paribus, Credit rating, Microfinance,
individuals prefer less risk than more risk for a given return. Sovereign funds, Private
equity, Audit Industry by
3. Liquidity
Team P&G
Lastly, financial markets provide greater liquidity to individuals who desire it, and in so
doing, allow for investment in projects with a wider variety of time horizons until
completion. Without financial markets, only individuals with extremely low time EU Economy by Team
preferences would be able to make any loans at all. If there is no secondary market in Facebook
which to sell the claim to the loan, the lender is essentially “stuck” into the time horizon of
the investment project.
BACKDROP Later on, the merchants of

Venice were credited with
Global Backdrop trading government securities
th
as earl y as the 13 century.
Early stock and commodity markets Soon after, bankers in the
nearby Italian cities of Pisa,
The first genuine stock markets didn’t arrive until the 1500s. However, there were plenty Verona, Genoa, and Florence
of early examples of markets which were similar to stock markets. also began trading
government securities.
Financial Markets, Stock
Selling stocks in coffee shops
Markets, Mutual funds,
Before investors yelled across trade floors and threw order forms into the air, they
Debt Market, Equity
conducted business in coffee shops. Early stocks were handwritten on sheets of paper, Market by Team Pepsi
and investors traded these stocks with other investors in coffee shops.
In other words, coffee shops were the first real stock markets due to the fact that investors
would visit these markets to buy and sell stocks. Before long, somebody realized that the Global Organisations
entire business world would be more efficient if somebody made a dedicated marketplace (except UN) by Team
where businessmen could trade stocks without having to order a coffee or yell across a Citigroup
crowded café.
The first stock exchange Global warming and

Despite the ban on issuing shares, the London Stock Exchange was officially formed in Climate change by Team
1801. Since companies were not allowed to issue shares until 1825, this was an Barclays
extremely limited exchange. This prevented the London Stock Exchange from preventing
a true global superpower.
That’s why the creation of the New York Stock Exchange (NYSE) in 1817 was such an Human Resources :
important moment in history. Labour laws, Trade unions,
Work profiles, Top
The NYSE has traded stocks since its very first day. Contrary to what some may think, the companies (Recruitment,
NYSE wasn’t the first stock exchange in the United States. The Philadelphia Stock Consultancy, General),
Exchange holds that title. However, the NYSE soon became the most powerful stock Government policies and
exchange in the country due to the lack of any type of domestic competition and its regulations, HRD ministry,
positioning at the center of U.S. trade and economics in New York. Regulatory bodies by Team
Disney
The London Stock Exchange was the main stock market for Europe, while the New York
Stock Exchange was the main exchange for America and the world.
India - Education by Team
Largest stock markets in the world today
Walmart
Here are the top 10 stock markets in the world today ranked by market capitalization:
1. New York Stock Exchange India - Health by Team

Amazon
India - Sports by Team

Microsoft
India’s Foreign trade by

Team Toyota
Officer)
LOCATION- New York City, New York, U.S.

MARKET CAPITAL- $17.9 B (2020-
KEY PEOPLE- Jeffrey Sprecher (Chairman) 01-22)
Betty Liu (Executive Vice Chairman)
Stacey Cunningham (President) 3. Tokyo Stock Exchange
2. NASDAQ LOCATION- Tokyo, Japan
MARKET CAPITAL- US$22.9 trillion (2019) KEY PEOPLE- Taizo Nishimuro,

( Chairman)
Atsushi Saito,
( President &
CEO)
LOCATION- New York City, New York.
MARKET CAPITAL- US$5.67 trillion
· KEY PEOPLE- Adena T. Friedman (President and Chief Executive Officer) (Feb . 2019)
Michael Ptasznik (Executive Vice President and Chief Financial
India’s global standings by
4. London Stock Exchange Group
Team IBM
LOCATION- London, EC4, England
KEY PEOPLE- Don Robert (Chairman)

David Schwimmer (CEO)
Indian Economy -
Agriculture by Team
MARKET CAPITAL- US$ 4.59 trillion (April 2018) General Motors
Indian Economy -
Manufacturing by Team
Ford
Indian Economy – Services

by Team Volkswagen
Information Technology
(Systems) by Team
Panasonic
Insurance, Hedging,
Arbitrage, Derivatives
market, Commodities
market by Team Unilever
Japanese Economy by
Team Google
Kashmir by Team
McKinsey
OBOR & RCEP by Team

PwC
7. Hong Kong Stock Exchange

5. Euronext
LOCATION- Central District, Hong
Kong
LOCATION- La Défense, Greater Paris, France (headquarters)
KEY
Amsterdam, Netherlands (registered office) PEO
PLE-
MARKET CAPITAL- 458,500,000 euro (2014)
Zhan
g
Yujun
(Presi
6. Shanghai Stock Exchange dent)
LOCATION- Shanghai, China MARKET CAPITAL- US$3.9 trillion

HK$29.9
KEY PEOPLE- trillion (2018)
Li Xiaojia, Charles (CEO)
8. Toronto Stock Exchange
Laura Cha (Chairman)
LOCATION- Toronto, Ontario,
MARKET CAPITAL- US$5.01 trillion (May 2019) Canada
KEY PEOPLE- Lou Eccleston (CEO, TMX Group)
Operations by Team Nestle
MARKET CAPITAL- $3.256 trillion (September, 2019)
Retail, Electronic
9. National Stock Exchange
commerce, Marketing
LOCATION- Mumbai, India research, Rural marketing
by Team GE
KEY PEOPLE- Girish Chandra Chaturvedi (Chairman)
Vikram Limaye (MD & CEO)

Social media and Privacy
MARKET CAPITAL- US$2.27 trillion (April 2018) by Team KPMG
10. Bombay Securities Exchange Space travel by Team

HSBC
LOCATION- Mumbai, Maharashtra, India
KEY PEOPLE- Just. Vikramajit Sen (Chairman)
Ashishkumar Chauhan (MD & CEO)

United Nations by Team
J.P. Morgan Chase
US Economy by Team Intel
US-China trade war by

Team Goldman Sachs
MARKET CAPITAL- ₹151,970.87 billion (US$2.1 trillion) (March 2019)
Other rising stock markets outside of the top 10 include the Bombay Stock Exchange
based in Mumbai, India, as well as the BM&F Bovespa stock exchange based in Sao
Paulo, Brazil.
Indian Backdrop
Indian stock market marks to be one of the oldest stock market in Asia. It dates back to
the close of 18th century when the East India Company used to transact loan securities.
In the 1830s, trading on corporate stocks and shares in Bank and Cotton presses took
place in Bombay. Though the trading was broad but the brokers were hardly half dozen
during 1840 and 1850.
An informal group of 22 stockbrokers began trading under a banyan tree opposite the
Town Hall of Bombay from the mid-1850s, each investing a (then) princely amount of
Rupee 1. This banyan tree still stands in the Horniman Circle Park, Mumbai. In 1860, the
exchange flourished with 60 brokers. In fact the 'Share Mania' in India began with the
American Civil War broke and the cotton supply from the US to Europe stopped. Further
the brokers increased to 250. The informal group of stockbrokers organized themselves
as the The Native Share and Stockbrokers Association which, in 1875, was formally
organized as the Bombay Stock Exchange (BSE)
BSE was shifted to an old building near the Town Hall. In 1928, the plot of land on which
the BSE building now stands (at the intersection of Dalal Street, Bombay Samachar Marg
and Hammam Street in downtown Mumbai) was acquired, and a building was constructed
and occupied in 1930.
The following is the list of some of the initial members of the exchange, and who are still
running their respective business:
• D.S. Prabhudas & Company (now known as DSP, and a joint venture partner with Merrill Lynch)
• Jamnadas Morarjee (now known as JM)
• Champaklal Devidas (now called Cifco Finance)
• Brijmohan Laxminarayan
MACRO CLASSIFICATION OF FINANCIAL MARKET

1. CAPITAL MARKET – The part of a financial system concerned with raising capital by dealing in shares, bonds, and other long-term investments.
2. MONEY MARKET – As per RBI “A market for short terms financial assets that are close substitute for money, facilitates the exchange of money.”
3. MISCELLANY
a. Foreign exchange markets

b. Crypto-currency market
MICRO CLASSIFICATION OF FINANCIAL MARKET
1) CAPITAL MARKET
· Primary Market
The primary market is where securities are created. It's in this market
that firms sell (float) new stocks and bonds to the public for the first
time. An initial public offering, or IPO, is an example of a primary
market.
· Secondary Market
For buying equities, the secondary market is commonly referred to as
the "stock market." This includes the New York Stock Exchange
(NYSE), Nasdaq, and all major exchanges around the world.
That is, in the secondary market, investors trade previously issued securities
without the issuing companies' involvement. For example, if you go to buy Amazon
(AMZN) stock, you are dealing only with another investor who owns shares in
Amazon. Amazon is not directly involved with the transaction.
2. MONEY MARKET
Certificate of deposit – Time deposit, commonly offered to consumers by banks,
thrift institutions, and credit unions.
Repurchase agreements – Short-term loans—normally for less than one week and
frequently for one day—arranged by selling securities to an investor with an
agreement to repurchase them at a fixed price on a fixed date.
Commercial paper – Short term instruments promissory notes issued by company
at discount to face value and redeemed at face value.
Eurodollar deposit – Deposits made in U.S. dollars at a bank or bank branch
located outside the United States.
Municipal notes – In the U.S., short-term notes issued by municipalities in
anticipation of tax receipts or other revenues.
Treasury bills – Short-term debt obligations of a national government that are
issued to mature in three to twelve months.
Money funds – Pooled short-maturity, high-quality investments that buy money
market securities on behalf of retail or institutional investors.
Foreign exchange swaps – Exchanging a set of currencies in spot date and the
reversal of the exchange of currencies at a predetermined time in the future.
Short-lived mortgage- and asset-backed securities.
3) MISCELLANY
a) Foreign Exchange Market
The foreign exchange market is unique because of the following characteristics:
Its huge trading volume, representing the largest asset class in the world leading to
high liquidity;
Its geographical dispersion;
Its continuous operation: 24 hours a day except for weekends, i.e., trading from
22:00 GMT on Sunday (Sydney) until 22:00 GMT Friday (New York);
The variety of factors that affect exchange rates;
The low margins of relative profit compared with other markets of fixed income; and
The use of leverage to enhance profit and loss margins and with respect to account
size.
According to the Bank for Internaonal Selements, the preliminary global results from
the 2019 Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives
Markets Activity show that trading in foreign exchange markets averaged $6.6 trillion
per day in April 2019. This is up from $5.1 trillion in April 2016. Measured by value,
foreign exchange swaps were traded more than any other instrument in April 2019,
at $3.2 trillion per day, followed by spot trading at $2 trillion.
The $6.6 trillion break-down is as follows:
$2 trillion in spot transactions

$1 trillion in outright forwards
$3.2 trillion in foreign exchange swaps
$108 billion currency swaps
$294 billion in options and other products
b) Crypto-currency Market
The overall crypto-currency market is projected to reach USD 1.40 billion by

2024, at a CAGR of 6.18% during the forecast period. A crypto-currency is a digital
currency created and stored electronically in blockchain.
TYPES
i. By Offering:
Hardware
Software
ii. By Process:
Mining
Transaction
iii. By Type
Bitcoin
Ethereum
Bitcoin Cash
Ripple
Litecoin
iv. By Application:
Trading
Remittance
Payment
STOCK MARKET
INTRODUCTION
Today India has become a “globalize country”. The process of globalization
has very highly affected. Corporate world of both, India and exotic corporate
world means today’s neoteric business world. The corporate world plays a
decisive role in globalization. The corporate world is now becoming more and
more competitive. Regarding this competition business houses need more
professionalized people for their managerial work. Highly professionalized
people come from business school. Business school offers training for all
business aspects. Theoretical knowledge is not enough. After completing
one’s education a student has to face the practical world and deal with real
challenges. This B.B.A. program provides an opportunity for this type of
practical knowledge.
The rationale behind visiting the company and preparing the Project Report
is to study the INVESTOR INVESTMENT BEHAVIOR IN STOCK MARKET
AND SUGGESTING GOOD INVESTMENT STRATEGY.
Major Stock Exchanges
Stock Short
Region Open C
Exchange Name
New York
United
Stock NYSE 9:30 1
States
Exchange
United
Nasdaq NASDAQ 9:30 1
States
Japan
Exchange JPX Japan 9:00 1
Group
Shanghai
Stock SSE China 9:30 1
Exchange
Hong Kong
Stock HESK Hong Kong 9:30 1
Exchange
European
Euronext 9:00 1
Union
London Stock United

8:00 1
Exchange Kingdom
Shenzhen
Stock SZSE China 9:30 1
Exchange
TMX Group TSX Canada 9:30 1
Bombay Stock
BSE India 9:15 1
Exchange
National Stock NSE India 9:15 1

Exchange
Top Companies of New York Stock Exchange :
1. BERKSHIRE HATHAWAY INC - 545.70 Billion USD
2. ALIBABA GROUP HOLDING LIMITED - 485.98 Billion USD
3. J P MORGAN CHASE & CO - 407.74 Billion USD
4. VISA INC - 387.70 Billion USD
5. JOHNSON & JOHNSON - 345.91 Billion USD
6. WALMART INC - 341.97 Billion USD
7. EXXON MOBIL CORPORATION - 308.91 Billion USD
8. BANK OF AMERICA CORPORATION - 302.77 Billion USD
9. PROCTER & GAMBLE COMPANY - 298.31 Billion USD
10. AT&T INC - 287.96 Billion USD
Top Companies of Nasdaq Stock Exchange :
MICROSOFT
APPLE
AMAZON
ALPHABET
FACEBOOK
CISCO SYSTEMS
INTEL
COMCAST
PEPSICO
ADOBE
Top Companies of Japan Exchange Group Stock Exchange :
TOYOTA MOTOR CORPORATION

NIPPON TELEGRAPH AND TELEPHONE CORPORATION
NTT DOCOMO,INC.
SOFTBANK GROUP CORP.
KEYENCE CORPORATION
SONY CORPORATION
MITSUBISHI UFJ FINANCIAL GROUP INC
KDDI CORPORATION
FAST RETAILING CO.,LTD.
TAKEDA PHARMACEUTICAL COMPANY LIMITED
Top Companies of Shanghai Stock Exchange :
PetroChina
Industrial and Commercial Bank of China
Agricultural Bank of China
Bank of China
China Life
China Petroleum & Chemical
Ping An Insurance
China Merchants Bank
China Shenhua Energy Company
Citic Securities
Top Companies of Honk Kong Stock Exchange :
Microsoft
Tencent Holdings
China Construction Bank
Intel
HSBC
China Mobile
Cisco
AIA Group
Amgen
CNOOC
Top Companies of Euronext Stock Exchange :
PROCTER & GAMBLE COMPANY

ROYAL DUTCH SHELL
LVMH
MERCK & COMPANY INC
L''OREAL
UNILEVER
HSBC HOLDINGS PLC
ANHEUSER-BUSCH INBEV SA
TOTAL S.A.
SANOFI
Top Companies of London Stock Exchange :
ROYAL DUTCH SHELL

HSBC HOLDINGS
BP
ASTRAZENECA
GLAXOSMITHKLINE
DIAGEO
BRITISH AMERICAN TOBACCO
UNILEVER
RIO TINTO
RECKETT BENCKISER GROUP
Top Companies of TMX Stock Exchange :
Royal Bank of Canada

Toronto-Dominion Bank
Enbridge
Canadian National
Bank of Nova Scotia
Brookfield Asset Management
TC Energy
Bank of Montreal
Suncor energy
Shopify
Top Companies of Bombay Stock Exchange :
RELIANCE INDUSTRIES LTD.

TATA CONSULTANCY SERVICES LTD.
HDFC Bank Ltd
HINDUSTAN UNILEVER LTD.
HOUSING DEVELOPMENT FINANCE CORP.LTD.
ICICI BANK LTD.
INFOSYS LTD.
KOTAK MAHINDRA BANK LTD.
ITC LTD.
STATE BANK OF INDIA
Top Companies of National Stock Exchange :
RELIANCE INDUSTRIES LTD.

TATA CONSULTANCY SERVICES
HDFC Bank Ltd
HINDUSTAN UNILEVER LTD.
HOUSING DEVELOPMENT FINANCE CORP.LTD.
ICICI BANK LTD.
INFOSYS LTD.
KOTAK MAHINDRA BANK LTD.
ITC LTD.
STATE BANK OF INDIA
Major Stock Exchanges in India
National Stock Exchange (NSE)
Bombay Stock Exchange (BSE).
National Stock Exchange
With the liberalization of the Indian economy, it was found inevitable to lift the Indian
stock market trading system on par with the international standards. On the basis of the
recommendations of high powered Pherwani Committee.
The National Stock Exchange was incorporated in 1992 by Industrial Development Bank
of India, Industrial Credit and Investment Corporation of India, Industrial Finance
Corporation of India, all Insurance Corporations, selected commercial banks and others.
The National Stock Exchange (NSE) is India's leading stock exchange covering
various cities and towns across the country. NSE was set up by leading institutions to
provide a modern, fully automated screen-based trading system with national reach. The
Exchange has brought about unparalleled transparency, speed & efficiency, safety and
market integrity. It has set up facilities that serve as a model for the securities industry in
terms of systems, practices and
procedures.
Trading at NSE can be classified under two broad categories:
Wholesale debt market

Capital market
Wholesale debt market operations are similar to money market operations -

institutions and corporate bodies enter into high value transactions in financial
instruments such as government securities, treasury bills, public sector unit bonds,
commercial paper, certificate of deposit, etc.
Capital market: A market where debt or equity HYPERLINK

"http://www.investorwords.com/4446/securities.html"securities are traded.
There are two kinds of players in NSE:
Trading members
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.
NSE Nifty
S&P CNX Nifty is a well-diversified 50 stock index accounting for 22 sectors of the
economy. It is used for a variety of purposes such as benchmarking fund portfolios, index
based derivatives and index funds.
Bombay Stock Exchange
The Bombay Stock Exchange is one of the oldest stock exchanges in Asia. It was
established as "The Native Share & Stock Brokers Association" in 1875. It is the
first stock exchange in the country to obtain permanent recognition in 1956 from the
Government of India under the Securities Contracts (Regulation) Act, 1956. The
Exchange's pivotal and pre-eminent role in the development of the Indian capital market
is widely recognized and its index, SENSEX, is tracked worldwide.
SENSEX
The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that
subsequently became the barometer of the Indian stock market.
SENSEX is not only scientifically designed but also based on globally accepted
construction and review methodology. First compiled in 1986, SENSEX is a basket of 30
constituent stocks representing a sample of large, liquid and representative companies.
The base year of SENSEX is 1978-79 and the base value is 100. The index is widely
reported in both domestic and international markets through print as well as electronic
media.
Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the
pulse of the Indian stock market. As the oldest index in the country, it provides the time
series data over a fairly long period of time. Small wonder, the SENSEX has over the
years become one of the most prominent brands in the country.
The SENSEX captured all these events in the most judicial manner. One can identify the
booms and busts of the Indian stock market through SENSEX.
The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of
BSE National Index (Base: 1983-84 = 100). It comprised of 100 stocks listed at five
major stock exchanges.
The values of all BSE indices are updated every 15 seconds during the market hours
and displayed through the BOLT system, BSE website and news wire agencies.
All BSE-indices are reviewed periodically by the “index committee” of the exchange.
OVERVIEW OF THE REGULATORY FRAMEWORK OF THE CAPITAL MARKET IN

INDIA
India has a financial system that is regulated by independent regulators in the sectors
of banking, insurance, capital markets and various service sectors. The Indian
Financial system is regulated by two governing agencies under the Ministry of Finance.
They are
Reserve Bank of India
The RBI was set up in 1935 and is the central bank of India. It regulates the
financial and banking system. It formulates monetary policies and prescribes
exchange control norms.
The Securities Exchange Board of India
The Government of India constituted SEBI on April 12, 1988, as a non-statutory

body to promote orderly and healthy development of the securities market and to
provide investor protection.
Department Economic Affairs
The capital markets division of the Department of Economic Affairs regulates capital
markets and securities transactions.
The capital markets division has been entrusted with the responsibility of assisting the
Government in framing suitable policies for the orderly growth and development of the
securities markets with the SEBI, RBI and other agencies. It is also responsible for the
functioning of the Unit Trust of India (UTI) and Securities and Exchange Board of India
(SEBI).
The principal aspects that are dealt with the capital market division are:
Policy matters relating to the securities market
Policy matters relating to the regulation and development and investor protection of
the securities market and the debt market.
Organizational and operational matters relating to SEBI
The Capital Market is governed by:
Securities Contract (Regulation) Act, 1956
Securities Contract (Regulation) Rules, 1957
SEBI Act, 1992
Companies Act 1956
SEBI (Stock Brokers and Sub Brokers) Rules, 1992
Exchange Bye-Laws Rules & Regulations
TRADING WITH STOCK MARKET
This section will introduce us about the process and instruments used to help a customer
or a client to trade with arcadia securities. This process is almost similar to any other
trading firm but there will be some difference in the cost of brokerage commission.
Trading: It is a process by which a customer is given facility to buy and sell share this
buying and selling can only be done through some broker and this is where Arcadia
helps its customer. A customer willing to trade with any brokerage house need to have a
demat account, trading account and saving account with a brokerage firm. Any one
having following document can open all the above mentioned account and can start
trading.
Document Required
3 photographs ( signed across)
Photo Identification Proof - any of the following - Voter ID/Driving

License/Passport.
Address Proof any of the following - Voter ID/Driving License/ Passport/ Bank
statement or pass book sealed and attestation by bank official/ BSNL landline bill.
A crossed Cheque favouring “G.M. Global Finance PVT LTD”. Of the required
amount. The amount for Demat as well as trading will be Rs. 900/-(free Demat
+900 Trading Account) the minimum amount being Rs. 900 a cheque can be given
for a larger amount.
Copy of PAN Card is mandatory.
Registration Kit
CDSL Demat Kit
Bank and address proof declaration.
PAN name discrepancy form.
These documents may not be consumer friendly but it is to avoid illegal transaction and
to prevent black money this ensures that money invested is accounted.
Techniques and Instruments for Trading
The various techniques that are available in the hands of a client are:-
Delivery
Intraday
Future
Forwards
Options
swaps
Basic Requirement for doing Trading
Trading requires Opening a Demat account. Demat refers to a dematerialized account.
You need to open a Demat account if you want to buy or sell stocks. So it is just like a
bank account where actual money is replaced by shares. We need to approach the
Depository Participants (DP, they are like bank branches), to open Demat account.
A depository is a place where the stocks of investors are held in electronic form. The
depository has agents who are called depository participants (DPs).
Think of it like a bank. The head office where all the technology rests and details of all
accounts held is like the depository. And the DPs are the branches that cater to
individuals.
There are only two depositories in India –
The National Securities Depository Ltd (NSDL) and the
Central Depository Services Ltd (CDSL).
Capital Market Participants

Banks
Exchanges
Clearing Corporations
Brokers
Custodians
Depositories
Investors
Merchant Bankers
Types of Investors
Institutional Investors- MFs / FI / FIIs / Banks
Retail Investors
Arbitrageurs / Speculators
Hedgers
Day traders/Jobbers
PARAMETERS OF INVESTMENT
The nature of investment differs from individual to individual and is unique to each one
because it depends on various parameters like future financial goals, the present & the
future income model, capacity to bear the risk, the present requirements and lot more. As
an investor progresses on his/her life stage and as his/her financial goals change, so does
the unique investor profile.
Economic development of a country depends upon its investment. The emerging

economic environment of competitive markets signifying customer’s sovereignty has
profound implications for their savings and investment. Investment means person’s
commitments towards his future.
INVESTMENT
The word "investment" can be defined in many ways according to different theories and
principles. It is a term that can be used in a number of contexts. However, the different
meanings of "investment" are more alike than dissimilar.
Generally, investment is the application of money for earning more money. Investment
also means savings or savings made through delayed consumption.
According to economics, investment is the utilization of resources in order to increase

income or production output in the future.
An amount deposited into a bank or machinery that is purchased in anticipation of earning

income in the long run are both examples of investments. Although there is a general
broad
definition to the term investment, it carries slightly different meanings to different industrial
sectors.
According to economists, investment refers to any physical or tangible asset, for example,
a building or machinery and equipment.
On the other hand, finance professionals define an investment as money utilized for
buying financial assets, for example stocks, bonds, bullion, real properties, and precious
items.
According to finance, the practice of investment refers to the buying of a financial product
or any valued item with an anticipation that positive returns will be received in the future.
The most important feature of financial investments is that they carry high market liquidity.
The method used for evaluating the value of a financial investment is known as valuation.
According to business theories, investment is that activity in which a manufacturer buys a
physical asset, for example, stock or production equipment, in expectation that this will
help the business to prosper in the long run.
Characteristics of an investment decision:
It involves the commitment of funds available with you or that you would be getting
in the future.
The investment leads to acquisition of a plot, house, or shares and debentures.
The physical or financial assets you have acquired are expected to give certain
benefits in the future periods. The benefits may be in the form of regular revenue
over a period of time like interest or dividend or sales or appreciation after some
point of time as normally happens in the case of investment in land or precious
metals.
Essentials of Investment
Essentials of investment refer to why investment, or the need for investment, is required.
The investment strategy is a plan, which is created to guide an investor to choose the
most appropriate investment portfolio that will help him achieve his financial goals within a
particular period of time.
An investment strategy usually involves a set of methods, rules, and regulations, and is
designed according to the exchange or compromise of the investor's risks and returns. A
number of investors like to increase their earnings through high-risk investments, whilst
others prefer investing in assets with minimum risk involved. However, the majority of
investors choose an investment strategy that lies in the middle.
Investment strategies can be broadly categorized into the following types:
Active strategies: One of the principal active strategies is market timing (an investor
is able to move into the market when it is on the low and sell the stocks when the
market is on the high), which is applied for maximizing yields.
Passive strategies: Frequently implemented for reducing transaction costs
PRINCIPLES OF INVESTMENT
Five basic principles serve as the foundation for the investment approach. They are as
follows:
Focus on the long term
There is substantive empirical evidence to suggest that equities provide the maximum
risk adjusted returns over the long term. In an attempt to take full advantage of this
phenomenon, investments would be made with a long term perspective.
Investments confer proportionate ownership
The approach to valuing a company is similar to making an investment in a business.

Therefore, there is a need to have a comprehensive understanding of how the
business operates.
Maintain a margin of safety
The benchmark for determining relative attractiveness of stocks would be the intrinsic
value of the business. The Investment Manager would endeavor to purchase stocks
that represent a discount to this value, in an effort to preserve capital and generate
superior growth.
Maintain a balanced outlook on the market
The investment portfolio would be regularly monitored to understand the impact of

changes in business and economic trend as well as investor sentiment. While short-
term market volatility would affect valuations of the portfolio, this is not expected to
influence the decision to own fundamentally strong companies.
Disciplined approach to selling
The decision to sell a holding would be based on either the anticipated price
appreciation being achieved or being no longer possible due to a change in
fundamental factors affecting the company or the market in which it competes, or due
to the availability of an alternative that, in the view of the Investment Manager, offers
superior returns
INVESTMENT TYPES
A particular investor normally determines the investment types after having formulated
the investment decision, which is termed as capital budgeting in financial lexicon.
According to the financial terminology investment means the following:
A Purchasing Securities in Money or Capital Markets a Buying Monetary or Paper

Financial
Assets in Money or Capital Markets A Investing in Liquid Assets like Gold, Real Estate
and
Collectibles.
Investments are often made through the intermediaries who use money taken from
individuals to invest. Consequently the individuals are regarded as having claims on the
particular intermediary.
It is common practice for the particular intermediaries to have separate legal procedures
of their own. Following are some intermediaries:
Banks
Mutual Funds
Pension Funds
Insurance Companies
Collective Investment Schemes
Investment Clubs
The money you earn is partly spent and the rest saved for meeting future expenses.
Instead of keeping the savings idle you may like to use savings in order to get return on it
in the future. This is called Investment.
Why should one invest?

One needs to invest to:
earn return on your idle resources
generate a specified sum of money for a specific goal in life
make a provision for an uncertain future

VARIOUS OPTIONS AVAILABLE FOR INVESTMENT
One may invest in
Physical assets like real estate, gold/jewellery, commodities etc. or
Financial assets such as fixed deposits with banks, small saving instruments with
post offices, insurance/ provident/
Pension fund etc. or securities market related instruments like shares, bonds,
debentures etc.
INDIAN STOCK MARKET
A stock market refers to a platform wherein buyers and sellers meet to transact the
shares of the publicly listed companies. It is an electronic form of market wherein shares
of the big listed companies like Reliance, Infosys, and Tata Steel are listed for sale and
small (retail) and big (institutional) investors purchase these shares.
Regulators in The Indian Market
In India, there are two main exchanges: The Bombay Stock Exchange (BSE) and the
National Stock Exchange (NSE). There are also regional stock exchanges in other cities
like Kolkata, Chennai, and Bengaluru, but the BSE and NSE are the two most important
markets for transactions. The Securities and Exchange Board of India (SEBI) is the main
regulator of the stock exchanges in India. The SEBI is established with a goal to foster the
growth of stock markets in India, protect the rights of the retail investors, as well as, to set
the legal framework and regulate the activities of the markets and financial intermediaries.
MAJOR STOCK EXCHANGE IN INDIA
1. Bombay Stock Exchange (BSE)
BSE is an Indian stock exchange located at Dalal Street, Mumbai and operates with a
vision of to “Emerge as the premier Indian stock exchange with best-in-class global
practice in technology, products innovation, and customer service.”
It is one of the two principal large stock exchanges of India and was founded by Mr.
Premchand Roychand, famously known as the Cotton King, the Bullion King or the Big
Bull.
He was one of the most influential Indian businessmen of the 19th century and made a
fortune in the stock-broking business.
Established in 1875, BSE is the oldest and first stock exchange of Asia and was formerly
known by the name of –The Native Share & Stock Brokers Association.
But the story of BSE starts back in the 1850s when 22 stockbrokers would gather under
banyan trees in front of Mumbai’s Town Hall. Location of these meetings changed multiple
times to accommodate an increasing number of brokers.
The group eventually moved to Dalal Street in the year 1874.
In the year 1986, Sensex was introduced, as the first equity index to provide a base for
identifying the top 30 trading companies of the exchange, in more than 10 sectors.
Apart from Sensex, other important indices of BSE are BSE 100, BSE 200, BSE 500, BSE
MIDCAP, BSE SMLCAP, BSE PSU, BSE Auto, BSE Pharma, BSE FMCG, BSE Metal, etc.
As of April 2018, BSE has an overall market capitalization of over $4.9 trillion, which
makes it the 10th largest stock exchange marketplace in the world.
It also offers varied services such as market data services, risk management, CDSL
(Central Depository Services Limited) depository services, etc.
2. National Stock Exchange (NSE)
NSE is the youngest stock exchange of India which came into picture in the year 1992
and operates with a vision, “To continue to be a leader, establish a global presence, and
facilitate the financial well-being of people.”
Mr. Vikram Limaye is MD & CEO of NSE.
In 1992, for the very first time in India, NSE introduced the advanced electronic trading
system which removed the paper-based settlement system from trading and offered an
easy trading facility.
One year later, in the year 1993, NSE was set up as a tax paying company, which later on
registered itself as a Stock Exchange under the Securities Contract Regulation Act.
In the year 1995, National Securities Depository Limited (NSDL) was formed to provide
depository services to the investors.
NSDL allows investors and traders to securely hold and transfer their stocks electronically
along with this, it also allows investors to hold and trade in as few as one share or one
bond.
Nifty 50 the popular benchmark index in the Indian stock market, was introduced by NSE
in the same year. Nifty lists out top 50 companies which traded on the NSE stock
exchange market.
3. Calcutta Stock Exchange (CSE)
CSE is a regional stock exchange (RSE) located at the Lyons Range, Kolkata and is the
second oldest stock exchange in South East Asia.
Incorporated in 1908, CSE is the second largest Stock Exchange in India.
In the year 1980, it was granted permanent recognition by the Government of India under
the relevant provisions of the Securities Contracts (Regulation) Act, 1956.
While nearly 20 regional stock exchanges have voluntarily exited in the face of SEBI’s
stringent regulations against RSEs, CSE continues to fight a lone battle.
4. Metropolitan Stock Exchange (MSE)
MSE was recognized by SEBI on 16 September 2008 and is valid till 15 September 2019.
MSE offers a hi-tech platform to trade in the capital market, futures & options, currency
derivatives, and debt market segments of the Indian market.
It was recognized by SEBI on 16th September 2008 and is valid till 15th September 2019.
Shareholders of MSE include Indian public sector banks, private sector banks, investors
and domestic financial institutions which are subjected to CAG Audit.
It has come out with a “Manifesto of Change”, which is a roadmap of what the stock
exchange intends to achieve in terms of driving market development and inclusive growth
over the next 10 years.
5. India International Exchange (India INX)
Opened in January 2017, India INX is India’s first international stock exchange.
It is a wholly owned subsidiary of the Bombay Stock Exchange (BSE) and is located at the
International Financial Services Centre (IFSC), GIFT City in Gujarat.
It is claimed to be the world’s most advanced technological platform with a turn-around

time of 4 microseconds which operates 22 hours a day and six days a week.
Because of these timings, international investors and Non-Resident Indians (NRIs) can
trade from anywhere across the globe at their preferred timings.
Also, India INX launched Global Securities Market, India’s first international primary
market platform that connects global investors with Indian and foreign issuers.
6. NSE IFSC Ltd.
NSE IFSC Limited (NSE International Exchange) incorporated on 29th November 2016, is
a wholly owned subsidiary of the National Stock Exchange (NSE) and is located at the
International Financial Services Centre (IFSC), GIFT City in Gujarat.
NSE IFSC Limited has been launched to grow the financial market as well as expected to
bring capital into India.
It is permitted to offer trading in securities in any currency other than the Indian rupee.
NSE IFSC Limited conducts 16 hours of daily trading, which it intends to gradually expand
in line with market feedback. Currently, there are two trading sessions, the first between 8
am and 5 pm and the second between 5.30 pm and 11.30 pm.
CAPITAL MARKET PRINCIPLES.

Government on primary markets
When a government wants to raise long-term finance it will often sell bonds in the capital
markets. In the 20th and early 21st centuries, many governments would use investment
banks to organize the sale of their bonds. The leading bank would underwrite the bonds,
and would often head up a syndicate of brokers, some of whom might be based in other
investment banks. The syndicate would then sell to various investors. For developing
countries, a multilateral HYPERLINK
"https://en.wikipedia.org/wiki/Multilateral_development_bank"development bank would
sometimes provide an additional layer of underwriting, resulting in risk being shared
between the investment bank(s), the multilateral organization, and the end investors.
However, since 1997 it has been increasingly common for governments of the larger
nations to bypass investment banks by making their bonds directly available for purchase
online. Many governments now sell most of their bonds by computerized auction.
Typically, large volumes are put up for sale in one go; a government may only hold a small
number of auctions each year. Some governments will also sell a continuous stream of
bonds through other channels. The biggest single seller of debt is the U.S. government;
[c]
there are usually several transactions for such sales every second, which corresponds
to the continuous updating of the U.S. real-time debt clock
Company on primary markets
When a company wants to raise money for long-term investment, one of its first decisions
is whether to do so by issuing bonds or shares. If it chooses shares, it avoids increasing
its debt, and in some cases the new shareholders may also provide non-monetary help,
such as expertise or useful contacts. On the other hand, a new issue of shares will dilute
the ownership rights of the existing shareholders, and if they gain a controlling interest,
the new shareholders may even replace senior managers. From an investor's point of
view, shares offer the potential for higher returns and capital gains if the company does
well. Conversely, bonds are safer if the company does poorly, as they are less prone to
severe falls in price, and in the event of bankruptcy, bond owners may be paid something,
while shareholders will receive nothing.
When a company raises finance from the primary market, the process is more likely to
involve face-to-face meetings than other capital market transactions. Whether they
[d]
choose to issue bonds or shares, companies will typically enlist the services of an
investment bank to mediate between themselves and the market. A team from the
investment bank often meets with the company's senior managers to ensure their plans
are sound. The bank then acts as an underwriter, and will arrange for a network of brokers
to sell the bonds or shares to investors. This second stage is usually done mostly through
computerized systems, though brokers will often phone up their favored clients to advise
them of the opportunity. Companies can avoid paying fees to investment banks by using a
direct public offering, though this is not a common practice as it incurs other legal costs
and can take up considerable management time.
Secondary market trading
Most capital market transactions take place on the secondary market. On the primary
market, each security can be sold only once, and the process to create batches of new
shares or bonds is often lengthy due to regulatory requirements. On the secondary
markets, there is no limit to the number of times a security can be traded, and the process
is usually very quick. With the rise of strategies such as high-frequency trading, a single
[e]
security could in theory be traded thousands of times within a single hour. Transactions
on the secondary market do not directly raise finance, but they do make it easier for
companies and governments to raise finance on the primary market, as investors know
that if they want to get their money back quickly, they will usually be easily able to re-sell
their securities. Sometimes, however, secondary capital market transactions can have a
negative effect on the primary borrowers: for example, if a large proportion of investors try
to sell their bonds, this can push up the yields for future issues from the same entity. An
extreme example occurred shortly after Bill Clinton began his first term as President of the
United States; Clinton was forced to abandon some of the spending increases he had
promised in his election campaign due to pressure from the bond markets [source?]. In
the 21st century, several governments have tried to lock in as much as possible of their
borrowing into long-dated bonds, so they are less vulnerable to pressure from the
markets. Following the financial crisis of 2007–08, the introduction of quantitative easing
further reduced the ability of private actors to push up the yields of government bonds, at
least for countries with a central bank able to engage in substantial open market
operations.
A variety of different players are active in the secondary markets. Individual investors
account for a small proportion of trading, though their share has slightly increased; in the
20th century it was mostly only a few wealthy individuals who could afford an account with
a broker, but accounts are now much cheaper and accessible over the internet. There are
now numerous small traders who can buy and sell on the secondary markets using
platforms provided by brokers which are accessible via web browsers. When such an
individual trades on the capital markets, it will often involve a two-stage transaction. First
they place an order with their broker, then the broker executes the trade. If the trade can
be done on an exchange, the process will often be fully automated. If a dealer needs to
manually intervene, this will often mean a larger fee. Traders in investment banks will
often make deals on their bank's behalf, as well as executing trades for their clients.
Investment banks will often have a division (or department) called "capital markets": staff
in this division try to keep aware of the various opportunities in both the primary and
secondary markets, and will advise major clients accordingly. Pension and sovereign
wealth funds tend to have the largest holdings, though they tend to buy only the highest
grade (safest) types of bonds and shares, and some of them do not trade all that
frequently. According to a 2012 Financial Times article, hedge funds are increasingly
making most of the short-term trades in large sections of the capital market (like the UK
and US stock exchanges), which is making it harder for them to maintain their historically
high returns, as they are increasingly finding themselves trading with each other rather
than with less sophisticated investors.
There are several ways to invest in the secondary market without directly buying shares
or bonds. A common method is to invest in mutual funds or exchange-traded funds. It is
also possible to buy and sell derivatives that are based on the secondary market; one of
the most common type of these is contracts for difference – these can provide rapid
profits, but can also cause buyers to lose more money than they originally invested.
Top 10 investment options
1. Direct equity
Investing in stocks may not be everyone's cup of tea as it's a volatile asset class and
there is no guarantee of returns. Further, not only is it difficult to pick the right stock, timing
your entry and exit is also not easy. The only silver lining is that over long periods, equity
has been able to deliver higher than inflation-adjusted returns compared to all other asset
classes.
At the same time, the risk of losing a considerable portion of capital is high unless one
opts for stop-loss method to curtail losses. In stop-loss, one places an advance order to
sell a stock at a specific price. To reduce the risk to certain extent, you could diversify
across sectors and market capitalisations. Currently, the 1-, 3-, 5 year market returns are
around 13 percent, 8 percent and 12.5 percent, respectively. To invest in direct equities,
one needs to open a demat account.
2. Equity mutual funds

Equity mutual funds predominantly invest in equity stocks. As per current Securities and
Exchange Board of India (Sebi) Mutual Fund Regulations, an equity mutual fund scheme
must invest at least 65 percent of its assets in equities and equity-related instruments. An
equity fund can be actively managed or passively managed.
In an actively traded fund, the returns are largely dependent on a fund manager's ability to
generate returns. Index funds and exchange-traded fund (ETFs) are passively managed,
and these track the underlying index. Equity schemes are categorised according to
market-capitalisation or the sectors in which they invest. They are also categorised by
whether they are domestic (investing in stocks of only Indian companies) or international
(investing in stocks of overseas companies.
3. Debt mutual funds

Debt funds are ideal for investors who want steady returns. They are are less volatile and,
hence, less risky compared to equity funds. Debt mutual funds primarily invest in fixed-
interest generating securities like corporate bonds, government securities, treasury bills,
commercial paper and other money market instruments.
4. National Pension System (NPS)

The National Pension System (NPS) is a long term retirement - focused investment
product managed by the Pension Fund Regulatory and Development Authority (PFRDA).
The minimum annual (April-March) contribution for an NPS Tier-1 account to remain
active has been reduced from Rs 6,000 to Rs 1,000. It is a mix of equity, fixed deposits,
corporate bonds, liquid funds and government funds, among others.
5. Public Provident Fund (PPF)

The Public Provident Fund (PPF) is one product a lot of people turn to. Since the PPF has
a long tenure of 15 years, the impact of compounding of tax-free interest is huge,
especially in the later years. Further, since the interest earned and the principal invested
is backed by sovereign guarantee, it makes it a safe investment.
6. Bank fixed deposit (FD)

A bank fixed deposit (FD) is a safe choice for investing in India. Under the deposit
insurance and credit guarantee corporation (DICGC) rules, each depositor in a bank is
insured up to a maximum of Rs 1 lakh for both principal and interest amount. As per the
need, one may opt for monthly, quarterly, half-yearly, yearly or cumulative interest option
in them. The interest rate earned is added to one's income and is taxed as per one's
income slab
7. Senior Citizens' Saving Scheme (SCSS)

Probably the first choice of most retirees, the Senior Citizens' Saving Scheme (SCSS) is a
must-have in their investment portfolios. As the name suggests, only senior citizens or
early retirees can invest in this scheme. SCSS can be availed from a post office or a bank
by anyone above 60. SCSS has a five-year tenure, which can be further extended by
three years once the scheme matures.
8. RBI Taxable Bonds

The government has replaced the erstwhile 8 percent Savings (Taxable) Bonds 2003 with
the 7.75 per cent Savings (Taxable) Bonds. These bonds come with a tenure of 7 years.
The bonds may be issued in demat form and credited to the Bond Ledger Account (BLA)
of the investor and a Certificate of Holding is given to the investor as proof of investment.
9. Real Estate
The house that you live in is for self-consumption and should never be considered as an
investment. If you do not intend to live in it, the second property you buy can be your
investment.
The location of the property is the single most important factor that will determine the
value of your property and also the rental that it can earn. Investments in real estate
deliver returns in two ways - capital appreciation and rentals. However, unlike other asset
classes, real estate is highly illiquid. The other big risk is with getting the necessary
regulatory approvals, which has largely been addressed after coming of the real estate
regulator. Read more about real estate
10. Gold
Possessing gold in the form of jewellery has its own concerns like safety and high cost.
Then there's the 'making charges', which typically range between 6-14 per cent of the cost
of gold (and may go as high as 25 percent in case of special designs). For those who
would want to buy gold coins, there's still an option. One can also buy ingeniously minted
coins. An alternate way of owning paper gold in a more cost-effective manner is through
gold ETFs. Such investment (buying and selling) happens on a stock exchange (NSE or
BSE) with gold as the underlying asset. Investing in Sovereign Gold Bonds is another
option to own paper-gold. Read more about sovereign gold bonds.
CURRENT AFFAIRS
1. Mining stocks mixed; Deccan Gold Mines jumps 6%
Mining stocks were trading on a mixed note in Wednesday's afternoon session.

Deccan Gold Mines (up 5.82 per cent) , KIOCLNSE 2.47 % (up 4.52 per cent) , Kachchh
Minerals (up 4.46 per cent) , MOIL (up 3.49 per cent) , Inani Marbles (up 3.45 per cent) ,
Glittek Granites (up 3.17 per cent) , Aro Granite Industries (up 2.48 per cent) , Sandur
Manganese & Iron Ores (up 2.25 per cent) , Ashapura Minechem (up 1.32 per cent) and
Coal India (up 0.85 per cent) were among the top gainers.
Madhav Marbles and Granites (down 5.88 per cent) , Shirpur Gold Refinery (down 4.98
per cent) , Pacific Industries (down 3.89 per cent) , SVC Resources (down 1.96 per cent) ,
ASI Inds (down 1.91 per cent) , TERRASCOPE VENTURES (down 1.87 per cent) ,
Pokarna (down 1.75 per cent) and NMDC Ltd (down 1.05 per cent) were among the top
losers.
2. Bajaj Finance logs best ever quarterly profit.
Consolidated quarterly profit of the company was their highest ever at Rs 1,614 crore.
With this record-shattering performance, the company’s profit in the first nine months at
Rs 4,316 crore has already crossed the Rs 3,995 crore profit recorded last fiscal.
3. Corona virus impact: As markets bleed, a few stocks rally 4-5 times.
As equity markets struggle globally following the outbreak of coronavirus, shares of select
healthcare and safety product makers from Japan, South Korea and India have been
creating a lot of buzz.
Japanese firm Kawamoto Corporation, which supplies medical products including masks,
is on top, with over five-fold jump in January alone. The scrip jumped 479 per cent to JPY
2,591 on January 29 from JPY 447 on December 30 last year on the Tokyo Stock
Exchange. Another Japanese firm Azearth, which is engaged in protective clothing, has
rallied 139 per cent during this period.
The coronavirus outbreak, which started in the central city of Wuhan late last year, has
killed 132 people, and has infected nearly 6,000 in China alone.
As fear of contracting the virus and pollution make mask-wearing the new normal,
business is booming for the manufacturers in Asia. Demand for face masks and hand
sanitizing liquid has soared, as local residents and visitors to and from China stock up on
such products as a reassuring precaution.
Back home, shares of Bharat Immunological & Biological Corporation have rallied nearly
50 per cent to Rs 11.24 on January 28 from Rs 7.54 on January 23.
4. Stock market update: 36 stocks hit 52-week lows on NSE
Around 36 stocks fell to touch their 52-week lows on NSE in Tuesday's session. Among
the stocks that touched their 52-week lows were A2Z Infra Engineering, Agro Phos India,
Cox & Kings, GTL Infrastructure NSE 12.50 %, ITC, The Jammu & Kashmir Bank, Karur
Vysya Bank, Reliance Capital and Sintex Plastics Technology. Domestic benchmark index
NSE Nifty was trading 13.55 points up at 12,132.55, while the BSE Sensex was trading
71.40 points up at 41,226.52.
5. Change in focus on Indian equities.
Indian equities shifted their focus back to December quarter earnings and placed stock-
specific bets amid expectations of market-friendly proposals in the upcoming Union
Budget for FY 2020-21. While the indices held their gains for most part of the day, volatility
was seen in the last hour of the trading session, ahead of the expiry of the January series
of Futures & Options (F&O) contracts due tomorrow.
The frontline S&P BSE Sensex snapped two-day losing streak to settle 231.80 points, or
0.57 per cent, higher at 41,198.66 level. Only eight of the 30 shares listed on the
exchange settled the day in the negative territory. Bajaj Finance, up over 5 per cent post
its Q3 results, was the top gainer on the Sensex, while Tata Consultancy Services (TCS),
down 1 per cent, was the top laggard.
Understanding the Indian Debt Market

The Debt Market is the market where fixed income securities of various types and
features are issued and traded. Debt Markets are therefore, markets for fixed income
securities issued by Central and State Governments, Municipal Corporations, Govt.
bodies and commercial entities like Financial Institutions, Banks, Public Sector Units,
Public Ltd. companies and also structured finance instruments.
Fixed Income securities offer a predictable stream of payments by way of interest and
repayment of principal at the maturity of the instrument. The debt securities are issued by
the eligible entities against the moneys borrowed by them from the investors in these
instruments. Therefore, most debt securities carry a fixed charge on the assets of the
entity and generally enjoy a reasonable degree of safety by way of the security of the
fixed and/or movable assets of the company. The investors benefit by investing in fixed
income securities as they preserve and increase their invested capital and also ensure the
receipt of regular interest income.
The investors can even neutralize the default risk on their investments by investing in
Govt. securities, which are normally referred to as risk-free investments due to the
sovereign guarantee on these instruments. The prices of Debt securities display a lower
average volatility as compared to the prices of other financial securities and ensure the
greater safety of accompanying investments. Debt securities enable wide-based and
efficient portfolio diversification and thus assist in portfolio risk-mitigation.
Types of bond market:
There are different types of bond market in India
Corporate Bond Market: Corporate bonds are debt securities issued by private and
public corporations. Companies issue corporate bonds to raise money for a variety
of purposes, such as building a new plant, purchasing equipment, or growing the
business. When one buys a corporate bond, one lends money to the "issuer," the
company that issued the bond. In exchange, the company promises to return the
money, also known as "principal," on a specified maturity date. Until that date, the
company usually pays you a stated rate of interest, generally semi-annually. While a
corporate bond gives an IOU from the company, it does not have an ownership
interest in the issuing company, unlike when one purchases the company's equity
stock.
Municipal Bond Market: municipal bond is a debt security issued by a state,

municipality or county to finance its capital expenditures, including the construction
of highways, bridges or schools. They can be thought of as loans that investors
make to local governments. Municipal bonds are exempt from federal taxes and
most state and local taxes, making them especially attractive to people in high
income tax brackets. In 2018, the municipal bond market constituted about $3.8
trillion in assets. Municipal bonds, also known as "muni bonds" or "munis," are a
type of municipal security, a category which also includes notes, warrants,
certificates of participation and other similar obligations.
Government and Agency Bond Market: Earlier, the G-sec market was
predominantly available only to big investors like banks, insurance companies and
mutual funds. For small investors, it was a difficult process to invest in bonds. Also
since the big players would deal with larger volumes, the small investors could not
compete with them during the process of auctioning. The non-competitive bidding
process announced by the RBI made it possible for the small investors and
individuals to buy government bonds using the NSE goBID app with the minimum
value of the bond being Rs.10,000. The investors will get the bonds at the weighted
average rate and they need not worry about the auction.
Funding Bond Market: A bond fund, also referred to as a debt fund, invests
primarily in bonds (government, corporate, municipal, convertible) and other debt
instruments, like mortgage-backed securities (MBS), with the primary goal of
generating monthly income for investors. Bond funds provide instant diversification
for investors for a low required minimum investment. Due to the inverse relationship
between interest rates and bond prices, a long-term bond has greater interest rate
risk than a short-term bond.
Mortgage Backed and Collateral Debt Obligation Bond Market: A collateralized

debt obligation (CDO) is a complex structured finance product that is backed by a
pool of loans and other assets and sold to institutional investors. A CDO is a
particular type of derivative because, as its name implies, its value is derived from
another underlying asset. These assets become the collateral if the loan defaults.
Advantages of investing in Government Securities
There are a lot of advantages of investing in Government Securities. Some of them are:
1. Greater safety and lower volatility as compared to other financial instruments.

2. Variations possible in the structure of instruments like Index linked Bonds, STRIPS
3. Higher leverage available in case of borrowings against Government Securities
4. No TDS on interest payments
5. Tax exemption for interest earned on Government Securities up to Rs.3000/- over and above the limit of Rs.12000/- under Section 80L (as amended in the latest
Budget).
6. Greater diversification opportunities
7. Adequate trading opportunities with continuing volatility expected in interest rates over the world.
Regulatory Bodies
The following are the main regulatory bodies for the debt capital markets:
1. Ministry of Corporate Affairs: The Ministry of Corporate Affairs is an Indian government ministry. It is primarily concerned with administration of the Companies
Act 2013, the Companies Act 1956, the Limited Liability Partnership Act, 2008 & other allied Acts and rules & regulations framed there-under mainly for regulating the functioning of the
corporate sector in accordance with law. It is responsible mainly for regulation of Indian enterprises in Industrial and Services sector.
2. Reserve Bank of India (RBI): The Reserve Bank of India (RBI) is India's central bank, which controls the issue and supply of the Indian rupee. RBI is the regulator
of entire Banking in India. RBI plays an important part in the Development Strategy of the Government of India. RBI regulates commercial banks and non-banking finance companies
working in India. It serves as the leader of the banking system and the money market. It regulates money supply and credit in the country. The RBI carries out India's monetary policy
and exercises supervision and control over banks and non-banking finance companies in India. RBI was set up in 1935 under the Reserve Bank of India Act,1934.
3. The Securities and Exchange Board of India (SEBI): The Securities and Exchange Board of India (SEBI) is the Regulator for the Securities market in India
owned by Government of India. It was established in 1988 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992. Securities and exchange Board of India (SEBI)
was first established in 1988 as a non-statutory body for regulating the securities market. It became an autonomous body on 12 April 1992 and was accorded statutory powers with the
passing of the SEBI Act 1992 by the Indian Parliament. Soon SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India.
Legislative framework
The principal statutes, rules and regulations that govern the issuance and listing of NCDs
include:
1. Companies Act, 2013 (Companies Act) and the rules under that Act, including the Companies (Prospectus and Allotment of Securities) Rules, 2014 (Allotment
Rules) and the Companies (Share Capital and Debentures) Rules, 2014.
For the purposes of this rule, the expression ‘Preferential Offer’ means an issue of shares
or other securities, by a company to any select person or group of persons on a
preferential basis and does not include shares or other securities offered through a public
issue, rights issue, employee stock option scheme, employee stock purchase scheme or
an issue of sweat equity shares or bonus shares or depository receipts issued in a country
outside India or foreign securities.
2. Debt Listing Regulations.
3. SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2016.
4. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Disclosure Regulations).
5. SEBI (Debenture Trustees) Regulations, 1993.
6. SEBI (FPI) Regulations, 2014.
7. Issuance of Non-Convertible Debentures (Reserve Bank) Directions, 2010 issued by the Reserve Bank of India (RBI).
8. Non-banking financial companies (NBFCs) NCD Directions (for NCDs issued by NBFCs on a private placement basis).
9. Deposits Rules.
MAJOR PLAYERS
1. State governments and Central government: The largest segment of the Indian Debt market consists of the Government of India securities where the daily
trading volume is in excess of Rs.2000 crore, with instrument tenors ranging from short dated Treasury Bills to long dated securities extending up to 30 years.
The Central and the State Government need money to manage their short term and long
term finances and fund budgetary deficits. Being the largest issuers in the Indian Debt
markets, they raise money by issuing bonds and T-bill of different maturities.
2. Non-government entities: This includes the RBI, Financial Institutions, Insurance Companies, Mutual Funds, Primary Dealers, Corporate entities.
RBI: As a banker to the government, the RBI has a key task of managing the
borrowing program of the Government of India. It has the Money market and the G-
Secs market under its purview. Apart from its regulatory role it also performs several
other important functions such as controlling inflation (by managing policy / interest
rates in the country), ensuring adequate credit at reasonable costs to various
sectors of the economy, managing the foreign exchange reserves of the country and
ensuring a stable currency environment.
SEBI: he SEBI acts as the regulator for the corporate debt market and the bond
market wherein the entities raise money from the public through public issue. The
regulation comprises of manner in which the money is raised and tries to ensure a
fair play for the retail investor.
Primary Dealers (PDs): Primary Dealers (PDs) are market intermediaries
appointed by RBI who underwrite and make market in government securities by
providing two-way quotes, and have access to the call and repo markets for funds.
Banks: Banks are the largest investors in the debt markets, particularly the
government securities market due to SLR requirements. They are also the main
participants in the call money and overnight markets. They issue CDs and bonds in
the debt markets and also arrange the CP issues of corporates.
The other participants in the Indian debt markets are:
Financial Institutions
Mutual Funds
Provident & Pension Funds
Insurance Companies
Corporates
INSTRUMENTS
There are a variety of instruments offered in the debt market like:
1. Debentures: A long-term security yielding a fixed rate of interest issued by a company and secured against assets. A debenture is a type of debt instrument
unsecured by collateral. Since debentures have no collateral backing, debentures must rely on the creditworthiness and reputation of the issuer for support. Both corporations and
governments frequently issue debentures to raise capital or funds. There are various types of debentures. The commonly used ones are redeemable, irredeemable/perpetual,
convertible, non-convertible, fully secured and partly secured.
a. Redeemable Debentures: It carries a specific date of redemption on the certificate. The company is legally bound to repay the principal amount to the
debenture holders on that date.
b. Irredeemable Debentures: also known as perpetual debentures do not carry any date of redemption. This means that there is no specific time of
redemption of these debentures. They are redeemed either on the liquidation of the company or as per the terms of the issue when the company chooses to pay them off to reduce their
liability by issues a due notice to the debenture holders beforehand.
c. Convertible Redeemable: Convertible debenture holders have an option of converting their holdings into equity shares. The rate of conversion and the
period after which the conversion will take effect are declared in the terms and conditions of the agreement of debentures at the time of issue.
i. Fully Convertible: Fully convertible debentures are completely converted into equity whereas the partly convertible debentures have two
parts. The convertible part is converted into equity as per the agreed rate of exchange based on an agreement.
ii. Partly Convertible: Here, the convertible part is converted into equity as per the agreed rate of exchange based on an agreement. The non-
convertible part becomes as good as redeemable debenture which is repaid after the expiry of the agreed period.
d. Non-Convertible Redeemable: These are simple debentures with no such option of getting converted into equity. Their state will always remain of debt
and will not become equity at any point in time.
e. Fully Secured Debentures: A secured debenture is secured by the charge on some asset or set of assets which is known as secured or mortgage
debenture.
f. Unsecured debenture: When it is issued solely on the credibility of the issuer is known as the naked or unsecured debenture.
2. MIBOR linked bonds: MIBOR (Mumbai Inter Bank Offered Rate) bonds are closely modelled on the LIBOR (London Inter Bank Offered Rate) bonds. Currently,
Reuters and the National Stock Exchange (NSE), are the two calculating agents for the benchmark. The NSE MIBOR benchmark is the more popular of the two and is based on rates
polled by NSE from a representative panel of 31 banks/institutions/primary dealers.
3. Commercial Papers (CPs): These are short term unsecured promissory notes, generally issued by corporate entities. Commercial papers are an unsecured
promissory note issued at a discount with a fixed maturity of 1-270 days. The rate of discount is decided by the issuer and is not regulated. It carries higher interest repayment rates than
bonds. It is basically money market securities issued by large banks and corporation to get money to meet short term debt obligations and are backed by corporation’s promise to pay
face value on the maturity date of the commercial note. It is of fixed maturity. Firms with excellent credit rating from a recognized rating agency will be able to sell their commercial paper
at a reasonable price.
4. Certificate of Deposits (CDs): These are issued by banks. A CD is a record evidencing the placement of a deposit with the CD issuer for a stated period of and at
a given rate of interest. The CD therefore recognizes the obligation of the issuer to pay the principal (face value of the CD) plus interest to CD holder at maturity. Originally, CDs were all
issued on security paper and were high value bearer instruments that had to be collected by messenger from the issuer. However, it is now usual to issue CDs in electronic (book entry)
from, and to use an international clearing system (e.g., Euro clear) to arrange the electronic book transfer and custody of the securities.
5. Treasury Bills: These are issued by Reserve Bank of India (RBI). A Treasury bill (T-Bill) is a short-term debt obligation with a maturity of one year or less. Treasury
bills are usually sold in denominations of $1,000. However, some can reach a maximum denomination of $5 million in non-competitive bids. These securities are widely regarded as low-
risk and secure investments. The Treasury Department sells T-Bills during auctions using a competitive and non-competitive bidding process. Non-competitive bids—also known as non-
competitive tenders—have a price based on the average of all the competitive bids received. T-Bills tend to have a high tangible net worth.
6. Medium- to long-term bonds: These are issued by corporate entities/financial institutions. They can feature fixed or floating rates. Medium and Long-term bonds
have relatively, a greater duration than short-term bonds. Because of this, a given interest rate change will have a greater effect on long-term bonds than on short-term bonds. This
concept of duration can be difficult to conceptualize but just think of it as the length of time that your bond will be affected by an interest rate change. For example, suppose interest rates
rise today by 0.25%. A bond with only one coupon payment left until maturity will be underpaying the investor by 0.25% for only one coupon payment. On the other hand, a bond with 20
coupon payments left will be underpaying the investor for a much longer period. This difference in remaining payments will cause a greater drop in a long-term bond's price than it will in
a short-term bond's price when interest rates rise.
7. Call money market: This represents overnight and term money between banks and institutions. Call money, also known as "money at call," is a short-term financial
loan that is payable immediately, and in full, when the lender demands it. Unlike a term loan, which has a set maturity and payment schedule, call money does not have to follow a fixed
schedule, nor does the lender have to provide any advanced notice of repayment.
8. Repo transactions: These represent temporary sale with an agreement to buy back the securities at a future date at a specified price. Repo is short for repurchase
agreement, a transaction used to finance ownership of bonds and other debt securities. In a standard repo transaction, a dealer finances its ownership of a bond by borrowing money
from a customer on an overnight basis and posting the bond as collateral.
9. Collateralized Borrowing And Lending Obligation (CBLO): CBLOs were developed by the Clearing Corporation of India (CCIL) and Reserve Bank of India (RBI).
It is a money market instrument that represents an obligation between a borrower and a lender as to the terms and conditions of the loan. The details of the CBLO include an obligation
for the borrower to repay the debt at a specified future date and an expectation of the lender to receive the money on that future date, and they have a charge on the security that is held
by the CCIL. CBLOs are used by those who are heavily restricted or have been phased out of the interbank call money market.
The other instruments that are prevalent in the debt market are Debentures, Secured
premium notes, Deep Discount Bonds, PSU Bonds / Tax-Free Bonds, Floating Rate
Bonds, State Government Securities, STRIPS and Interest Rate Derivative products.
Types of risks associated
1. Credit risk: While corporate papers carry credit risk due to changing business conditions, government securities are perceived to have zero credit risk. Credit Risk
is the risk that the issuer will not pay the coupon income and/ or the maturity amount on the specified dates. Credit Ratings have been established by rating agencies to reflect their
opinion of an issuer’s ability and willingness to do so. It is the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations. Traditionally, it refers
to the risk that a lender may not receive the owed principal and interest, which results in an interruption of cash flows and increased costs for collection. Excess cash flows may be
written to provide additional cover for credit risk.
2. Interest rate risk: Interest rate risk is present in all debt securities and depends on a variety of macroeconomic factors. Interest Rate Risk is the risk that interest
rates may rise, causing a fall in value of traded debt instruments. It is the reason behind the danger that the value of a bond or other fixed-income investment will suffer as the result of a
change in interest rates. Investors can reduce interest rate risk by buying bonds that mature at different dates. They also may allay the risk by hedging fixed-income investments with
interest rate swaps and other instruments.
3. Settlement risk: The risk that one party will fail to deliver the terms of a contract with another party at the time of settlement is called settlement risk. All debt
securities are settled within the specified duration, excepting special cases like death of the holder, etc, in which case it may be delayed till all the required formalities are completed. It is
also often called delivery risk, which is the risk that one party will fail to deliver the terms of a contract with another party at the time of settlement. It can also be the risk associated with
default, along with any timing differences in a settlement between the two parties. Default risk can also be associated with principal risk.
4. Liquidity risk: The risk arising from the lack of possibility to either buy or sell a security quickly as per one’s requirement is called liquidity risk. Debt securities have
minimum liquidity risk and can be easily bought and sold after due listing. Liquidity is the ability of a firm, company, or even an individual to pay its debts without suffering catastrophic
losses. Conversely, liquidity risk stems from the lack of marketability of an investment that can't be bought or sold quickly enough to prevent or minimize a loss. It's typically reflected in
unusually wide bid-ask spreads or large price movements.
Current affairs
1. RBI and Government:
Benchmark sovereign bonds gained in India after the central bank said it will buy long-end
debt for a second week, stepping up the pace of its unconventional policy to lower
borrowing costs. The 10-year yield slid 7 basis points to 6.51 per cent, taking the week’s
drop to nine basis points.
The Reserve Bank of India is embracing a Federal Reserve-style Operation Twist, where
it buys long-end debt while selling short-end bonds after five rate cuts this year failed to lift
economic growth. It will conduct a second operation on Monday, following on its first such
move earlier this week. The unprecedented move has put a stop to the relentless
steepening in India’s yield curve, as investors dumped long-end debt on concern the
government will add to record bond sales. The spread between the two-year and 10-year
debt is down to 72 basis points from 93 basis points before the first purchase under the
plan was announced.
The RBI will buy 100 billion rupees ($1.4 billion) of 2029 bonds at the Dec. 30 auction,
while selling a total 100 billion rupees of notes maturing in 2020. The operation will flatten
the yield curve further, reducing the term premium that had widened amid market
concerns over India’s fiscal slippage.
2. India vs World
Globally, fixed-income exchange-traded funds (ETFs) are a trillion-dollar asset class and
an essential part of retail investors’ portfolios. Robust bond markets are integral for
stimulating resource mobilization and allocation to critical economic activities. However,
retail participation is low in India’s bond market due to opacity around pricing, wide bid-
offer spread and general inaccessibility.
Corporate bonds help issuers raise funds more efficiently while providing investors
another avenue. However, the instrument is under-penetrated in India. Currently, the
corporate bond outstanding to the country’s GDP ratio is 17%, which is one of the lowest
in the world. In advanced economies, the ratio is much higher. For instance, it’s 123% in
the US, 34% in Singapore and 74% in South Korea. Further, retail investors account for
only 3% of the total corporate bond outstanding issuance in India. India currently has six
fixed-income ETFs (including government securities and overnight funds) but none on
corporate bonds, except the recently launched Bharat Bond ETFs. Together, these have
meagre assets under management (AUM) of about ₹2,500 crore.
There are multiple causes for the anomaly. On the supply side, corporate issuers prefer
raising capital from banks over issuance of bonds, primarily due to the lower cost of
borrowing, less disclosure, and compliance and operational ease. On the investor front,
the high percentage of over-the-counter (OTC) deals, private placements, large ticket
sizes, difficulty in sourcing information, low volumes and illiquidity discourage large-scale
retail participation in the bond markets. Further, the median cost of investing in bond funds
in India comes at up to 100 basis points. Indian retail investors have been parking their
savings in traditional fixed-income products such as fixed deposits (FDs), Public Provident
Fund (PPF) and post office deposits, among others.
3. Bharat bond ETFs can make a difference
Bond ETFs can help overcome the challenges facing retail participation in India’s bond
markets and leverage a huge opportunity in the process. The introduction of corporate
bond ETFs through the launch of Bharat Bond ETF could be a game changer in India’s
fixed-income investment milieu. The Bharat Bond ETF will be a target maturity exchange-
traded bond fund predominantly investing in the constituents of Nifty Bharat Bond Index.
Target maturity ETF means that it will have a fixed maturity period and at the time of
maturity, investors will get back their investment proceeds along with returns.
As a target maturity bond ETF, the Bharat Bond ETF seeks to address most of the issues
deterring India’s retail investors from investing in the corporate bond markets. It offers
higher safety by investing in higher-rated bonds, transparency, liquidity (no lock-in),
reasonable predictability of returns and tax efficiency. The structure has the potential to
reshape the country’s inherent preference for fixed-income products. But driving
awareness is a critical factor to make this happen.
4. Global economy faces $19tn corporate debt time-bomb
Low interest rates are encouraging companies to take on a level of debt that risks are
becoming a $19tn time-bomb in the event of another global recession, the International
Monetary Fund have said. In its half-yearly update on the state of the world’s financial
markets, the IMF said that almost 40% of the corporate debt in eight leading countries –
the US, China, Japan, Germany, Britain, France, Italy and Spain – would be impossible to
service if there was a downturn half as serious as that of a decade ago. The IMF noted
that the stimulus provided by central banks in both developed and developing countries
had the side-effect of encouraging firms to borrow more, even though many would have
trouble paying it back. IMF haunted by fears that history might be about to repeat itself.
5. RBI raises VRR limit for FPIs to Rs 1.50 lakh crore
The Reserve Bank of India on Thursday revised the investment limit under the Voluntary
Retention Route (VRR) for investments by foreign portfolio investors (FPIs) to Rs
1,50,000 crore from Rs 75,000 crore earlier, and the revised scheme will be open for
allotment from Friday.
RBI had introduced VRR in March 2019, to enable FPIs to invest in debt markets in India.
Broadly, investments through the route will be free of the macro-prudential and other
regulatory norms applicable to FPI investments in debt markets, provided FPIs voluntarily
commit to retain a required minimum percentage of their investments in India for a period.
Participation through this route is entirely voluntary. An amount of Rs 75, 000 crore was
offered for investment in two tranches so far. As on December 31, around Rs 54,300 crore
has already been invested under the scheme. The investment limit available for fresh
allotment will accordingly be Rs 90,630 crore (net of extant allotments and adjustments);
and will be allotted under the VRR–Combined category. The minimum retention period
shall be three years. Investment limits shall be available ‘on tap’ and allotted on ‘first
come, first served’ basis, and the ‘tap’ shall be kept open till the limit is fully allotted, RBI
said in a release. FPIs may apply for investment limits online to Clearing Corporation of
India (CCIL) through their respective custodians, it added. CCIL will separately notify the
operational details of application process and allotment.
Impact in the world economy

Economic trends are one of the key drivers of the bond market’s performance, but the
economy affects different types of bonds in various ways depending on each bond's
exposure to interest rate risk. Interest rate risk essentially means that bond owners will
have their returns affected to varying degrees based on the amount of fluctuation
experienced in interest rates. The amount of risk added to a bond through interest rate
changes depends on how much time until the bond matures, and the bond's coupon rate,
or annual interest payment.
How Economic Growth Impacts U.S. Treasuries?
Interest Rates:
Bonds issued by the U.S. Treasury are typically the ones most directly impacted by
the economy. The best way to understand the relationship between the economy
and bonds is to think about interest rates as being the cost of money. When the
economy is strong, the demand for money is higher, since greater spending activity
means that there is more of a need for cash to finance projects. Higher demand, in
turn, drives up costs, and in this case, interest rates.
Useful in combating inflation:
In addition, stronger economic growth makes inflation more likely, at least in theory.
In this type of environment, the U.S. Federal Reserve (“the Fed”) is likely to boost
interest rates to slow down the economy a bit to fight inflation. When short-term
interest rates are expected to go up, longer-term interest rates typically follow. The
result for Treasuries is that stronger growth typically results in higher yields, along
with lower prices since prices and yields move in opposite directions.
Controlling economic growth:
On the other hand, slower economic growth reduces the demand for money, since
individuals and businesses are less likely to take out loans to finance projects and
purchases. Lower demand for loans means prices, and in this case, interest rates,
fall as well. In this scenario, weaker growth means the Fed is more likely to reduce
short-term interest rates to encourage people to borrow and spend, which supports
the economy. As a result, longer-term Treasury yields typically move the opposite
direction and fall when economic growth is expected to weaken.
Growth Trends and Other Bond Market Segments

All areas of the bond market ultimately take their cue from Treasuries, since, correctly or
otherwise, U.S. government bonds are seen as being the safest investment in the world
and therefore set the baseline for the rest of the market. Certain types of bonds, other
than Treasuries, tend to benefit from stronger growth, rather than being hurt by it.
Typically, these segments include high yield bonds, emerging markets bonds, and lower-
rated corporate bonds.
Why is this?
First, the yields on these bonds are high enough that modest moves in Treasury
yields have less of an impact on their performance. For example, if the 10-year
Treasury is yielding 2%, mortgage-backed security with a yield of 2.5% (a 0.5
percentage-point gap) is affected to a greater extent than a below-investment-grade
corporate bond yielding 8.5% (a 6.5 percentage-point gap).
Second, the bonds of corporations and emerging markets trade based on their credit
ratings, which are driven by their underlying financial strength. The better these
companies' balance sheets, cash balances, and underlying business trends, the
less likely they are to default on their bonds (i.e., miss a payment of principal or
interest). The lower the likelihood or risk of a bond default, the lower the yield
investors can demand as compensation for them taking on the risk of investing in
that particular security.
As a result, while stronger economic growth can be a negative for Treasuries, it is

much more likely to be a positive factor for higher-yielding bonds where the issuer’s
creditworthiness is a primary concern for investors. This difference helps make a
case for why investors should diversify rather than concentrate their holdings in any
one segment of the bond market.
MUTUAL FUNDS
A mutual fund is a professionally managed investment fund that pools money from many
investors to purchase securities. These investors may be retail or institutional in nature.
Mutual funds have advantages and disadvantages compared to direct investing in

individual securities. The primary advantages of mutual funds are that they provide
economies of scale, a higher level of diversification, they provide liquidity, and they are
managed by professional investors. On the negative side, investors in a mutual fund must
pay various fees and expenses.
Primary structures of mutual funds include open-end funds, unit investment trusts, and
closed-end funds. Exchange-traded funds (ETFs) are open-end funds or unit investment
trusts that trade on an exchange. Some close- ended funds also resemble exchange
traded funds as they are traded on stock exchanges to improve their liquidity. Mutual
funds are also classified by their principal investments as money market funds, bond or
fixed income funds, stock or equity funds, hybrid funds or other. Funds may also be
categorized as index funds, which are passively managed funds that match the
performance of an index, or actively managed funds. Hedge funds are not mutual funds;
hedge funds cannot be sold to the general public as they require huge investments. They
are more risky than mutual funds and are subject to different government regulations.
Types of mutual funds
Mutual funds are broadly classified into three categories based on their investment traits
and risks involved. Understand all mutual fund types and analyse them to check if your
requirements would be served by investing in a particular type of mutual fund. Following
are the types of mutual funds:
1. Equity Funds
Equity funds primarily invest in shares of different companies. Your equity funds
investment would make a profit when the share prices surge, while they suffer a loss
when the share prices fall. Investing in equity funds is apt for those who stay invested for
an extended period and are comfortable with moderate to high risk.
2. Debt funds
Debt funds primarily invest in fixed income government securities such as treasury bills
and bonds, or reputed corporate deposits. Investing in debt funds is less risky than equity
funds. Debt Funds are apt for those who are risk-averse and looking for a short-term
investment.
3. Balanced or Hybrid funds
As the name suggests, balanced or hybrid funds invest in both equity and debt
instruments to balance the risk and maintain a specific rate of return. The fund manager
decides the ratio to reap the best of both debt and equity instruments.
Benefit of mutual funds
Expert Money Management
Mutual fund companies have fund managers to choose the company shares, sectors, and
debt papers in which the pooled mutual fund investment would be invested. This decision
would be made by keeping the investors’ interest in mind.
SIP Option
If you don’t have a lump sum to invest, then you can invest in a Systematic Investment
Plan (SIP). The best thing about investing in mutual funds with is that you can invest as
low as Rs 500 an installment.
Tax Efficiency
Investing in ELSS offers a twin benefit of tax deductions and wealth accumulation.
Investments in ELSS are eligible for tax deductions under Section 80C of the Income Tax
Act, 1961. You can deduct a maximum of Rs 1,50,000 a year. ELSS offers the highest
returns among all Section 80C instruments.
Liquidity
Investing in Mutual Funds offer liquidity. You are allowed to redeem your investment at
any time. There is no requirement of justifying your decision or searching for a buyer. You
just have to place a request with your fund house and they will credit the money into your
bank account within 3-7 working days.
Mutual Funds Latest development
SEBI’s proposed amendments to PMS regulations

Millennials are turning towards mutual funds in financial year 2019
Liquid funds to hold 20% in assets, mandated by SEBI
Mutual Funds’ exposure to Nifty touches decade high
What SEBI’s amendments mean for debt mutual funds investors
SEBI adopts waterfall approach, evaluates debt security and money market
TOP 10 MUTUAL FUNDS OF WORLD
Sr. no Name Stock exchange
Vanguard 500 Idx;Adm NASDAQ

1
2 SPDR S&P 500 ETF NYSE
3 Vanguard TSM Idx;Adm NASDAQ
4 Fidelity 500 Index Fund NASDAQ
5 iShares:Core S&P 500 NYSE
6 Vanguard TSM Idx;Inst+ NASDAQ
7 Fidelity Govt Cash Rsrvs NASDAQ
8 Vanguard Tot I S;Inv NASDAQ
9 Vanguard TSM Idx;Inst NASDAQ
10 Vanguard Fed MM;Inv NASDAQ
TOP 10 MUTUAL FUND OF INDIA
Sr.
Name
no
Axis Bluechip Fund - D (G)

1
2 BNP Paribas Large Cap Fund - D (G)
3Axis Bluechip Fund (G)
4UTI Value Opportunities Fund - D (G)
5UTI Value Opportunities Fund (G)
6Nippon Value Fund - Direct (G)
7Edelweiss Bank & PSU Debt-Reg (G)
8BNP Paribas Long Term Equity-DP (G)
9JM Tax Gain Fund -Direct (G)
10DSP Tax Saver Fund - Direct (G)
Investors looking for investment avenues must be aware of certain rules and regulations
that govern the Indian mutual fund sector – SEBI guidelines for mutual funds.
In India, the SEBI MF Regulations of 1996 govern the workings of mutual funds. These
guidelines treat mutual funds like Public Trusts that fall under the Indian Trust Act of 1982.
For handling mutual funds and to ensure accountability on the trustees, the guidelines
specify a three-tier set up comprising of the fund managers, the investors, and the
representatives
The structure of mutual funds as per SEBI guidelines
The SEBI guidelines define the Guarantor as one who, in his capacity as an individual or
in partnership with a different entity or entities, launches a mutual fund. The role of the
guarantor is to make revenue by putting together a mutual fund and handing it to the fund
manager.
A sponsor sets up the mutual funds as per the guidelines of the Indian Trust Act, 1882, for
Public Trust. They are responsible for listing with the SEBI, having provisions for resource
management and ensuring the functioning of the fund takes place as per the SEBI
guidelines.
The Trustee or Trust is established through a trust deed that is implemented by the
sponsors of the funds and is accountable to all the investors of the mutual fund. The
trustee company is regulated by the Indian Companies Act 1956, while the firm and the
board members are overseen by the Indian Trust Act, 1882. The Investment management
of the trust is done through an Asset Management Company which is to be listed as per
the regulations of Companies Act of 1956.
Role of SEBI in Mutual Fund Regulations
As far as Mutual funds are concerned, SEBI makes the policies for mutual funds and also
regulates the industry. It lays guidelines for the mutual funds to safeguard the investors’
interest.
Mutual funds are very distinct in terms of their investment strategy and asset allocation
activities. This requires bringing about uniformity in the functioning of the mutual funds
that may be similar in schemes. This will assist the investors in taking investment
decisions more clearly.
To facilitate this standardization and bringing about uniformity in the similar schemes, the
mutual funds have been categorized accordingly as follows:
a. Equity Schemes
b. Debt Schemes
c. Hybrid Schemes
d. Solution Oriented Schemes
e. Other Schemes
The categorization and rationalization of mutual funds into these five broad categories
ensures that the mutual fund houses are only able to have one scheme in each sub-
category, with some exceptions. The categorization helps in simplifying the selection of
funds and works in the best interest of the investors by allowing them to evaluate their risk
options prior to making informed decisions about investing in the right scheme. Following
this consolidation of schemes, the investors can take a more informed decision without
much hassle or confusion. In order to fulfill this purpose, SEBI has come up with some
guidelines to help the retail investors in their mutual funds’ investment decisions.
Key Highlights of SEBI guidelines for Mutual Funds
a. Categorization of schemes into five groups – Equity, Debt, Hybrid,

Solution Oriented, Others
b. To ensure uniformity, large, mid and small cap has been defined clearly
c. There is a lock-in period specified for solution-oriented schemes
d. Permission of only one scheme in each category, except for Index

Funds/ Exchange Traded Funds (ETF), Sectoral/Thematic Funds and
Funds of Funds.
THE ROAD AHEAD
Financial markets will look very different in 2020 than they do today. Many have
gloomily predicted shrinking capital markets landscape, overregulation and the
form of traditionally powerful financial centers such as London and New York.
However, the vision for 2020 is different - one of a new equilibrium. This new
equilibrium consists of government intervention receding(as memories of the
financial and sovereign debt crisis fade), traditional financial access of power
further solidifying their position at the top, the world peaking stability and
predictability in the context of riskier and more uncertain geo-political situation. This
change will come from economic and governmental policy, from innovation and
operational restructuring, technology and ompanies harnessing powerful data and
from continued growth from the shadow banking system.
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Home / Notice Board / GD-PI 2019/20 / Corporate Presentation /

FINANCIAL MARKETS, STOCK Corporate

ANISHA PODDAR Artificial Intelligence by

FINANCIAL MARKET Banking, Central Banking,

BACKDROP Later on, the merchants of

The first stock exchange Global warming and

1. New York Stock Exchange India - Health by Team

India - Sports by Team

India’s Foreign trade by

LOCATION- New York City, New York, U.S.

Betty Liu (Executive Vice Chairman)

Stacey Cunningham (President) 3. Tokyo Stock Exchange

2. NASDAQ LOCATION- Tokyo, Japan

MARKET CAPITAL- US$22.9 trillion (2019) KEY PEOPLE- Taizo Nishimuro,

KEY PEOPLE- Don Robert (Chairman)

Indian Economy – Services

OBOR & RCEP by Team

7. Hong Kong Stock Exchange

LOCATION- Shanghai, China MARKET CAPITAL- US$3.9 trillion

Vikram Limaye (MD & CEO)

10. Bombay Securities Exchange Space travel by Team

KEY PEOPLE- Just. Vikramajit Sen (Chairman)

Ashishkumar Chauhan (MD & CEO)

US Economy by Team Intel

US-China trade war by

MARKET CAPITAL- ₹151,970.87 billion (US$2.1 trillion) (March 2019)

• Jamnadas Morarjee (now known as JM)

• Champaklal Devidas (now called Cifco Finance)

MACRO CLASSIFICATION OF FINANCIAL MARKET

a. Foreign exchange markets

MICRO CLASSIFICATION OF FINANCIAL MARKET

a) Foreign Exchange Market

The foreign exchange market is unique because of the following characteristics:

The $6.6 trillion break-down is as follows:

$2 trillion in spot transactions

The overall crypto-currency market is projected to reach USD 1.40 billion by

Major Stock Exchanges

London Stock United

TMX Group TSX Canada 9:30 1

National Stock NSE India 9:15 1

Top Companies of New York Stock Exchange :

1. BERKSHIRE HATHAWAY INC - 545.70 Billion USD

2. ALIBABA GROUP HOLDING LIMITED - 485.98 Billion USD

3. J P MORGAN CHASE & CO - 407.74 Billion USD

4. VISA INC - 387.70 Billion USD

5. JOHNSON & JOHNSON - 345.91 Billion USD

6. WALMART INC - 341.97 Billion USD

7. EXXON MOBIL CORPORATION - 308.91 Billion USD

8. BANK OF AMERICA CORPORATION - 302.77 Billion USD

9. PROCTER & GAMBLE COMPANY - 298.31 Billion USD

10. AT&T INC - 287.96 Billion USD

Top Companies of Nasdaq Stock Exchange :

Top Companies of Japan Exchange Group Stock Exchange :

TOYOTA MOTOR CORPORATION

Top Companies of Honk Kong Stock Exchange :

Top Companies of Euronext Stock Exchange :

PROCTER & GAMBLE COMPANY

Top Companies of London Stock Exchange :

ROYAL DUTCH SHELL

Top Companies of TMX Stock Exchange :

Royal Bank of Canada

Top Companies of Bombay Stock Exchange :