A

PROJECT REPORT
ON
CAPITAL MARKET
AT
HDFC BANK LIMITED
Submitted
BY
CHERUKURI SRAVYA
H.T.NO: 1325-17-672-199
Project submitted in partial fulfillment for the award of Degree of
MASTER OF BUSINESS ADMINISTRATION

By
Department of Business Administration
AURORA’S PG COLLEGE
RAMANTHAPUR
(Affiliated to Osmania University)
INTRODUCTION
A capital market is a market for securities (debt or equity), where business
enterprises (companies) and governments can raise long-term funds. It is defined as a market
in which money is provided for periods longer than a year, as the raising of short-term funds
takes place on other markets (e.g., the money market). The capital market includes the stock
market (equity securities) and the bond market (debt). Financial regulators, such as the UK's
Financial Services Authority (FSA) or the U.S. Securities and Exchange Commission (SEC),
oversee the capital markets in their designated jurisdictions to ensure that investors are
protected against fraud, among other duties.

Capital markets may be classified as primary markets and secondary markets. In primary
markets, new stock or bond issues are sold to investors via a mechanism known as
underwriting. In the secondary markets, existing securities are sold and bought among
investors or traders, usually on a securities exchange, over-the-counter, or elsewhere.

The Capital market is a market for financial assets which have a long or
indefinite maturity. Generally, it deals with long term securities which have a maturity period
of above one year. Capital market may be further divided into three types i.e., Industrial
securities market, Government securities market and Long term loans market. Industrial
securities market is further divided into two types i.e., primary market or new issue market
and secondary market or stock exchange. Government securities market is also called as Gilt-
Edged securities market. It is the market where Government securities are traded. Long term
loans market is divided into three types Term loans market, Mortgages market and financial
guarantees market.
Absence of capital market instruments acts as a deterrent to capital formation and
economic growth. Resources would remain idle if finances are not funneled through the
capital market. The capital market instruments serves as an important source for the
productive use of the economy’s savings. It mobilizes the savings of the peoples for further
investment and thus avoids their wastage in unproductive uses. It provides incentives to
saving and facilitates capital formation by offering suitable rates of interest as the price of
capital. It provides an avenue for investors, particularly the household sector to invest in
financial assets which are more productive than physical assets. It facilitates increase in
production and productivity in the economy and thus, enhances the economic welfare of the
society.
NEEDS & IMPORTANCE OF STUDY

Capital market deals with long term funds. These funds are subject to uncertainty and risk. It
supplies long term funds and medium term funds to the corporate sector. It provides the
mechanism for facilitating capital fund transactions. It deals with ordinary shares, debentures
and stocks and securities of the governments. In this market the funds flow will come from
savers. It converts financial assets in to productive physical assets. It provides incentives to
savers in the form of interest or dividend to the investors

OBJECTIVES OF THE STUDY

 To study about the Capital Market Instruments.

 To study about recent development in derivatives marked.
 To study about the recent development of capital market in HDFC bank limited.

.
SCOPE OF THE STUDY

The current study involves a variety of work in economics, accounting and finance in this.
Valuation of stocks and functions of the stock markets, valuation of bonds convertible
debentures and market for debt, issue market and merchant banking, market efficiency,
dividends, bonus and right issues rates of return and regulations.
Tools and techniques:

The SPV, also known as a SPRV or a SPE, is not owned by the issuing insurance company; it
is an off-balance sheet entity specifically created to act as a no admitted reinsurer providing
reinsurance to the issuer. All SPVs are located offshore for this reason. However, a number of
onshore captive domiciles have legislation permitting the establishment of what are called
Special Purpose Financial Captives (SPFC). A SPFC can fulfill the role of the offshore SPV.
Vermont and South Carolina allow SPFCs.
The SPV requires a financial vehicle into which it deposits the investor funds, so a trust is
established for that purpose.

RESEARCH & METHODOLOGY

The data collection methods include both the Primary and Secondary Collection
methods.
Primary Collection Methods:
This method includes the data collected from the personal discussions with
the authorized clerks and members of the Exchange.
Secondary method: The secondary data collection method includes:
 Websites
 Journals
 Text books
 Method Used For Analysis of Study

The methodology used for this purpose is Survey and Questionnaire Method. It is a time
consuming and expensive method and requires more administrative planning and supervision.
It is also subjective to interviewer bias or distortion.
Sample Size: 100 respondents
Sampling Unit: Businessmen, Government Servant, Retired Individuals
 LITERATURE REVIEW

Capital market:

A capital market is a market for securities (debt or equity), where business enterprises
(companies) and governments can raise long-term funds. It is defined as a market in which
money is provided for periods longer than a year, as the raising of short-term funds takes
place on other markets (e.g., the money market). The capital market includes the stock market
(equity securities) and the bond market (debt). Financial regulators, such as the UK's
Financial Services Authority (FSA) or the U.S. Securities and Exchange Commission (SEC),
oversee the capital markets in their designated jurisdictions to ensure that investors are
protected against fraud, among other duties.

Capital markets may be classified as primary markets and secondary markets. In primary
markets, new stock or bond issues are sold to investors via a mechanism known as
underwriting. In the secondary markets, existing securities are sold and bought among
investors or traders, usually on a securities exchange, over-the-counter, or elsewhere.

INDIAN CAPITAL MARKET

The Indian Capital Market is one of the oldest capital markets in Asia which evolved around
200 years ago.
Chronology of the Indian capital markets:

1830s: Trading of corporate shares and stocks in Bank and cotton Presses in Bombay.

1850s: Sharp increase in the capital market brokers owing to the rapid development of
commercial enterprise.
1860-61: Outbreak of the American Civil War and ' Share Mania ' in India.

1894: Formation of the Ahmadabad Shares and Stock Brokers Association.

1908: Formation of the Calcutta Stock Exchange Association.

 The securities markets
Primary and secondary market

The primary market is that part of the capital markets that deals with the issuance of new
securities. Companies, governments or public sector institutions can obtain funding through
the sale of a new stock or bond issue. This is typically done through a syndicate of securities
dealers. The process of selling new issues to investors is called underwriting. In the case of a
new stock issue, this sale is an initial public offering (IPO). Dealers earn a commission that is
built into the price of the security offering, though it can be found in the prospectus.

Features of primary markets are:

1. This is the market for new long term equity capital. The primary market is the market where
the securities are sold for the first time. Therefore it is also called the new issue market
(NIM).
2. In a primary issue, the securities are issued by the company directly to investors.
3. The company receives the money and issues new security certificates to the investors.
4. Primary issues are used by companies for the purpose of setting up new business or for
expanding or modernizing the existing business.
5. The primary market performs the crucial function of facilitating capital formation in the
economy.
6. The new issue market does not include certain other sources of new long term external
finance, such as loans from financial institutions. Borrowers in the new issue market may be
raising capital for converting private capital into public capital; this is known as "going
public."
7. The financial assets sold can only be redeemed by the original holder.

Methods of issuing securities in the primary market are:

 Initial public offering;

 Rights issue (for existing companies);
 Preferential issue.

The secondary market, also known as the aftermarket, is the financial market where
previously issued securities and financial instruments such as stock, bonds, options, and
futuresare bought and sold.. The term "secondary market" is also used to refer to the market
for any used goods or assets, or an alternative use for an existing product or asset where the
customer base is the second market (for example, corn has been traditionally used primarily
for food production and feedstock, but a "second" or "third" market has developed for use in
ethanol production). Another commonly referred to usage of secondary market term is to
refer to loans which are sold by a mortgage bank to investors such as Fannie Mae and Freddie
Mac.

With primary issuances of securities or financial instruments, or the primary market,

investors purchase these securities directly from issuers such as corporations issuing shares in
an IPO or private placement, or directly from the federal government in the case of treasuries.
After the initial issuance, investors can purchase from other investors in the secondary
market.

The secondary market for a variety of assets can vary from loans to stocks, from fragmented
to centralized, and from illiquid to very liquid. The major stock exchanges are the most
visible example of liquid secondary markets - in this case, for stocks of publicly traded
companies. Exchanges such as the New York Stock Exchange, Nasdaq and the American
Stock Exchange provide a centralized, liquid secondary market for the investors who own
stocks that trade on those exchanges. Most bonds and structured products trade “over the
counter,” or by phoning the bond desk of one’s broker-dealer. Loans sometimes trade online
using a Loan Exchange.
Mishra (2015) has analyzed the trading statistics of different stock exchanges available in
India. To study the concept she examined the Indian capital market and its trend in globalised
economy along with the challenges of Indian capital market. Through her study she
concluded that, as capital market is a crux of any economy, hence it is very crucial to enhance
the market for the betterment of an economy. Moreover she also suggested that one should
invest in stock market because of the availability of diversified portfolio at low cost with
transparent trading in stock exchanges. And lastly, she concluded her study by saying that
SEBI has worked a lot for the better trading in capital market but at slow rate in comparison
to global competitive markets.

Richa and Goel (2014) discussed about the trends in Indian capital market and issues &
challenges of capital market which are faced by an investor. They found that there are many
challenges related specially to bond market. Hence they concluded that there is a need of
more innovations and reforms in capital market. They also said that there is a ‘positive n
correlation between finance and economic growth of a country’. Lots of activities have to be
completed to develop equity market but there is more need to develop bond market. Hence,
some new reforms are required to remove bottlenecks, new policies are required to strengthen
the bond market in India.

Singh and Kaur (2011) “examined the growth and performance of turnover in Capital
Market Segment at NSE for the period of 1994-95 to 2009-10. Through this study they
analyzed that capital market of NSE has been growing continuously and this was examined
by seeing the turnover of the capital market segment. They have also compared trading of
NSE with the other stock exchanges in India and found that NSE contributes maximum in
trading of securities. This is because NSE has completely mechanized trading system.”

Pasha Shaik (2012) examined that capital market and how it has been improved with the
establishment of SEBI. Their study says that as capital market is a vast market therefore,
SEBI should monitor capital market rather than to over regulate it. Now, SEBI should not
regulate day-to-day operations rather it should be more visionary. SEBI can take Indian
capital market to international markets in the next round of reforms. They also suggested
SEBI to have a balance between cost of regulation and market development.
 BIBLIOGRAPHY

References:
1. Mishra, V. K. (2015). Globalization and the Indian capital market. Paripex-Indian

Journal of Research.

2. Goel, R. G. (2014). Indian Capital Market: An overview. International Journal of

emerging research in management and technology ,

3. Paramati, S. R. (2011). An emperical analysis of stock market performance and economic

growth. International Research Journal of Finance & Economics .

4. Pasha Shaik Abdul Majeeb, R. V. (2012). A study on role of SEBI in Indian capital market:

An empirical analysis. International Journal of Multidisciplinary Research ,

Websites reffered
1. www.hdfcbank.com
2. Sebi.com
3. Nseindia.com
4. Yahoo.com