Financial Markets

2010 BSE Institute Limited

Financial Market
Primary Market - Primary market is the part of
capital market where issue of new securities
takes place
Secondary Market - A market where investors
purchase securities or assets from other
investors

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What is Stock Exchange

It is a platform where buyers and sellers meet
It provides a place to buy and sell shares
It acts as a bridge between demanders of fund
and suppliers of fund
Canalize savings into investments

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Participants

Govt.
Companies
Institutions
Retail Investors
Mutual Funds

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History of Stock Exchanges

BSE first stock exchange started on 9th July
1875
Known as Native Shares and Stock Broking
Association
Membership fees was Rs. 1
There were 318 members

2010 BSE Institute Limited

History of Stock Market

First stock market started in 9th July 1875.

Native Share and Stock Brokers Association
Now known as BSE
At that time membership fees Rs. 1
There were some 318 members

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Major reforms in capital Market

1991 LPG ( Liberalization, Privatization,
Globalization)
1992 FII (Foreign Institute Investors) were
allowed in India
1993 Private Sector Mutual Funds were
launched
1996 First time SEBI came out with Guidelines
for MF (Mutual Fund) industry

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Financial Markets
Financial Markets are the capital markets that
is stock market
Stock market is known as Barometer of the
Economy
Let us understand this statement
Companies listed on stock market represent
corporate india
When there profit rises or falls

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Stock market Barometer

It is indication that net profit of companies
rises or falls
This means that sales have either gone up or
down
This indicates demand has increased or
decreased in economy
It has direct impact on stock market
Stock market ultimately reflects the sentiment
in the economy

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Financial Markets Classification

Capital Market is market for long term source
of funds
Market having maturity of more than one year
Instruments like
Shares
Preference shares
Debentures
Bonds

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Indian Equities Market

From 1979 to 2009, during last 30 years
SENSEX has provided Internal Rate of Return
of 17.25 %
Equities have outperformed all other asset
classes in the past

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Projection of Sensex

2009
2010
2011
2012
2013
2014
2015

17235
20208
23694
27781
32573
38192
44780

2016
2017
2018
2019
2020

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52505
61562
72182
84693
99232

Types of Capital Flows

Two main types of flow
FII (Foreign Institutional Investors)
FDI (Foreign Direct Investment)

FII flows comes to stock market

FII responsible for new highs and new lows
In 2007, FII invested Rs. 70,000 crores-21206
In 2008, FII sold Rs. 52,000 crores-7697
In 2009, FII invested Rs. 82,000 crores-18000
In 2010, Fii Invested Rs. 1,30,000 crores-22000

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FII data
Currently 1746 FII registered with SEBI
70 % FII are from USA
So we cannot ignore USA
IN 2010 FII have invested record money since
1992.

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FII inflows
In 2009 and 2010 together FII have invested
Rs.2.15 lakh crore
This is 50 % of the total investment made from
1992 to 2010.
Total FII inflow since 1992 Rs.443626 Crores
29% of FII inflow in 2010 since 1992

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FII registered and Sensex Return

2003
2004
2005
2006
2007
2008
2009
2010
2011

517
637
823
993
1219
1594
1706
1747

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63.78 %
9.56%
40.70%
46.82%
45.50%
-52.86%
75.38%
14.65%
-24.65%

FDI flows
FDI has 3 main offerings
It adds new employment opportunities
It brings new technologies
It brings new managerial skills
India attracts around $ 20 billion FDI annually

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Examples of FDI
Insurance ICICI Prudential 74 : 26
Banking 49 %
Print Media 26 %
19 private life insurance company gives
employment to 2 lakhs persons

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Economic Indicators

GDP
Inflation
Interest Rates
Exchange Rates
Fiscal Deficit
IIP data
Purchasers Manager Index
Balance of Payment

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Trading volumes drop 34 %

worst in world (6/1/12 Mint)

Country
US
China
Japan
Uk
Canada
France

Avg Daily trading

(Million shares)
12468
173218
48902
2260
381
160
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%ch in last
3 years
-26.3
45.7
33.2
5.2
-19.3
11.1

Trading volumes drop 34 % worst

in world (6/1/12 Mint)

Country

Avg Daily trading

(Million shares)
Germany
539
Brazil
11317
Australia
2523
Switzerland
57
India
872
South Korea 3537

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%ch in last
3 years
16.8
-20.2
14.5
-17.6
-34.4
-27.2

Stock Markets Regulatory

Framework

Self Regulatory Bodies

SCRA (Securities Contract Regulation
Act)1956 & SCR Rules 1957
Activities supervised by MoF (Ministry of
Finance)
Perception that rights & Interests of Investors
were ignored.

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SEBI
SEBI (Securities& Exchange Board of India)
act passed in April 4,1992.
Functions
To protect the interest of investors
To promote the development of & regulate
the securities market.

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Role of SEBI
Regulate the Business in SEs
Register & Regulate intermediaries, collective
investment schemes (incl. MFs)
Promote & regulate SROs
Prohibit unfair & fraudulent trade practices
Promote investor education & Training
Prohibit Insider trading

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Measures initiated by SEBI

Capital Adequacy norms for Brokers

Intra day trading limits
Gross Exposure limits
Margins
Surveillance systems at SEs
Circuit Filters
Inspection of Stock Exchanges

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..contd

Client Broker relationship

KYC (Know Your Client)
Registration of Sub brokers & brokers
Increasing trading hours
Introduction of Derivatives Trading
Rolling Settlements
Dematerialization

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Other Regulatory Bodies

Indian Financial system governed by various
regulatory bodies
RBI ( Reserve Bank of India)
AMFI (The Association of Mutual Funds in India)
IRDA (Insurance Regulatory & Development Authority)
PFRDA (Pension Fund Regulatory and Development Authority )
FMC (The Forward Markets Commission)
FSDC (Financial Stability and Development Council )

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RBI
Reserve Bank of India
Apex body for regulation of Banking Sector
GTL merged with OBC by RBI for protection of
depositors
CAR (Capital Adequacy Ratio) of 9 %
compulsory

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AMFI
AMFI Association of Mutual Funds of India
Advisory body for mutual funds
Represents MF industry before the
Government

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IRDA
IRDA Insurance Regulatory Development
Authority
Controls the Insurance sector
ULIP (Unit Linked Insurance Plan) issue taken
up by IRDA

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FDSC
FSDC Financial Stability Development
Council
Chairman is Finance Minister Himself
It solves the Inter-Regulatory Tussle between
the various bodies
Recently SEBI and IRDA had tussel

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Career Opportunities

Religare
India Infoline
Angel Broking
Karvy Consultants
India bulls
Reliance Money
Axis Bank
SBI Cap
HDFC Securities
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Career Profiles

Fundamental Analyst what to buy and sell

Technical Analyst - when to buy and sell
Derivatives Analyst futures and options
Options Strategist bugdet, corporate result
Dealer
Institutional Trading Head
Private Equity analyst
Mutual fund analyst
Risk management executive
2010 BSE Institute Limited

About BSE Institute Ltd.

The BSE Institute Ltd. (BIL) is a wholly owned subsidiary of the

Bombay Stock Exchange (BSE) Ltd.

Bombay Stock Exchange is the worlds biggest stock exchange in

terms of listed companies and BIL inherits from BSE the knowledge
and insights into the capital markets industry, garnered over the past
135 years

BIL has the distinct advantage of being at the centre of action the
financial hub of India, one of the worlds most rapid emerging markets.

Our commitment to being at the forefront of the current and evolving

practice of business has led to programs that reflect the realities of
the marketplace
2010 BSE Institute Limited

About BSE Institute Ltd.

Our course design and development is firmly grounded in knowledge

of business processes; both in entrepreneurial companies and
established firms unconstrained by the boundaries of academic
disciplines

Our faculty follows a long tradition of practice-oriented research and

teaching that has a profound and far-reaching impact on business and
management education. They help our learners build innovation in
business practice, progressive thinking and the opportunity to influence
as well as use these concepts

2010 BSE Institute Limited

BSE Institute Ltd.

Launches

Global Financial Markets

Professional (GFMP)
2010 BSE Institute Limited

What is GFMP ?
Global Financial Markets Professional (GFMP) Program is a unique
comprehensive course on financial markets that will prepare you for
aggressive competition and fast paced decision making.
Key highlights for the students:
Do the program concurrently with your graduation
Be job ready by the time you complete your graduation
Get exposed to the industry environment before getting an actual job
Be mentored by an industry professional during the 6 months of industry
practice
The program allows semester breaks to study for your graduation exams
Get updated information about the markets as the 4th semester is
dynamic semester which will cover emerging trends; followed by a project
An advantage of being absorbed by the corporate are working with, during
your the industry practice (A Mentored - On job learning)
2010 BSE Institute Limited

Why GFMP ?
The GFMP program targets to:
Groom you for the 113,497 prospective jobs that will be created in the
financial services sector of the Indian economy, by the year 2015*!!
Prepare you for the industry with the best, very attractive and generous
compensation structure*!!
Bridge the existing manpower shortage in the financial services sector by
guiding you towards it!!
Build your confidence to face your potential employers, who prefer
experience over formal education in a candidate, through our intense Industry
Practice!!
Equip you to juggle with multiple responsibilities within your job role!!

2010 BSE Institute Limited

Why GFMP ?
The GFMP program targets to:
Gear you up to handle situations that require quick thinking, instant
decision making, specified response time and constant result production!!
Provide you with the advantage of concurrently pursuing the program
along with your graduation!!
Give you the advantage of being job ready by the time you complete your
graduation!!
Develop your analytical skills and abilities!!
Enhance your knowledge by learning the latest financial analysis methods
and technology!!

2010 BSE Institute Limited

About the GFMP program

Eligibility:
Under-graduates - complete a
substantial part of the program
alongside your college education.
Fresh graduates - who want to
build their career in financial
services
Professionals - (MBA,
Engineers, M.Com, CA, CS,
ICWA, Lawyers etc.) who are
interested in career advancement
through training and education.

Program Duration:
4 semesters of classroom (each
semester of 6 months) - lectures 3
days in a week for 2 hours each
1 semester of Industry Practice
Program Mode:
Interactive lectures
Case study discussions
Hands on sessions
Interactive simulation labs
Working on near real-time data
6 months of Industry Practice
(Internship - On the job learning)

Examination: There
will be an examination at the end of each semester
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Program structure (Modular)

Semester I

Semester II

1.
2.
3.
4.
5.
6.
7.

1.
2.
3.
4.
5.
6.
7.
8.

Introduction to Financial Markets

Economics for Financial Markets
Statistical Concepts for Financial Markets
Financial Accounting
Demat and Depositories
Trading and Settlement Processes
ERP for Stock Markets

Financial Reporting and Analysis

Introduction to Corporate Finance
Overview of Financial Instruments
Equity Markets
The Foreign Exchange Markets
Debt Markets
Fundamental Analysis
Technical Analysis

Semester III

Semester IV

1.
2.
3.
4.
5.
6.

1.
2.
3.
4.
5.
6.

Bond Arithmetic
Using Derivatives
Introduction to Risk Management
Fundamentals of Credit Risk Analysis
Financial Modelling
Securities Law
Plus

Portfolio Management
Market Instruments and Processes
Private Equity and Venture Capital
Mergers and Acquisitions
Emerging Trends
Project Work

Semester V
Training on Behavioral
Skills
Industry Practice-Internship
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Job Profiles at end of semesters

SEM 1 Dealer, Back office executive in
demat, accounts, economist in broking house
SEM 2 Fundamental Research, Technical
Research, Corporate Finance Department,
Analyst in Forex market

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Job Profiles at end of semesters

SEM 3 Derivatives strategist, Bond market
dealer, Risk management in broker, Credit risk
in banks, Analyst for future cash flow in
modeling, Legal department of securities firm
SEM 4 Portfolio manager, Fund manager,
Merchant banking, Private equity analyst.

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CAREER OPPORTUNITIES
This program will prepare you for the following jobs at the end of each semester:
Semester I

Semester II

Associate Level: Professional Trader, Customer

Service Manager & Banking Specialist, Banking
Center Supervisor, Teller, Investment Banking
Associate, Database Analyst

Specialist Level: Investment Analyst, Research

Analyst, Investment Banker, Sr. Manager
Retail Banking, Sr. Associate-Advisory, Credit
Manager & Specialist, Accounting Managers,
Sr. Database Analyst, Sr. Support Analyst

Semester III

Semester IV

Expert Level: Investment Analyst, Risk

Manager, Investment Advisor, Financial Advisor,
Loan Officer, Wealth Manager, Audit
Consultant, Technical Analyst

Professional Level: Investment Analyst,

Portfolio Manager, Investment Banker,
Business Analyst, Sr. Risk Manager-Financial
Services, Data Governance Manager, Credit
Risk Manager, Sr. Finance Manager

Semester V (Industry Practice - Internship)

Compliance Manager-Risk, Risk & Insurance Manager, Financial Manager, Corporate
Banking, Credit Manager, Treasurer, Financial Analyst, Business Analyst, Sr. Manager-Risk
& Regulation, Operational Risk Manager-Capital Markets,
Sr. Credit Risk Manager
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About BSE Institute Ltd.

Our programs develop the students in the following three areas:

Knowledge &
understanding of financial
market products

Develop analytical
skills

The market
environment and
professional behavior

2010 BSE Institute Limited

Thank You
2010 BSE Institute Limited