SUBJECT :- FINANCIAL MARKET

TOPIC NAME :- INDIAN STOCK MARKET &

FOREIGN EXCHANGE MARKET

ROLL NO. NAME

166151 YOGESH SHARAD SAWANT

166152 AMOL ANNA SHINDE
166153 DARSHAN BHASKAR SHINDE
166154 YOGESH DATTU SHINDE
166155 SAGAR SURESH SHIVSHARAN
166156 VIDYA AMBADAS UBALE
166157 HARSHADA SAHEBA UGALMUGLE
166158 NIKITA ASHOK UTTEKAR
166159 MANISHA NATHURAM KADAM
166160 KOMAL BALU SHIRWALE
 INDIAN STOCK MARKET
• INTRODUCTION

• The market where existing securities are traded is

referred to as the secondary market or stock market.
The securities of government are traded in the stock
market as a separate component, called guild
edged market. Another component of the stock
market deals with trading is shares and debentures
of limited companies.
CONTROL OVER SECONDARY MARKET
At present, control is exercised through the following three important
processes.

(1)Recognition of Stock Exchanges:- Stock exchanges are the important

ingredient of the capital market. They are the citadel of capital and fortress
of finance. Thus according to Husband and Dockeray “securities or stock
exchanges are privately organized markets which are used to facilities
trading in securities. As per the securities Contacts Regulation Act, 1956 a
stock exchange has been defined as follows. “In brief, stock exchanges
constitute a market where securities issued by the central and state
government, public bodies and joint stock companies are traded.
(2) Listing of Securities:- Listing of securities means that the securities
are admitted for trading on a recognized stock exchange. It is the green
signal given to selected securities to get the trading privileges of the stock
exchange concerned. Securities become eligible for trading only through
listing. The SEBI insists on listing for granting permission to a new issue by a
public limited company. Again, financial institutions do insist on listing for
underwriting new issues. Thus, listing becomes an unavoidable one today.

(3) Registration of Brokers:- A stock broker must possess the following

qualification to register as a broker:
a)He must be an Indian citizen with 21 years of age.
b)He should neither be a bankrupt nor compounded with creditors.
c) He should not have been convicted for any offence, fraud etc.
d)He should not have engaged in any other business other than that of
a broker in securities.
e) He should not be defaulter of any stock exchange.
f) He should have completed 12 std examinations.
FUNCTIONS OF STOCK EXCHANGE

1. Safety of funds :- Stock exchanges ensure safety of funds invested

because they have to function under strict rules and regulations and bye-
laws are meant to ensure safety of investible funds.
2. Supply of long term funds :- The securities traded in the stock market are
negotiable and transferable in character and as such they can be transferred
with minimum of formalities from one hand to another.
3. Flow of capital to profitable ventures :- The profitable and popularity of
companies are reflected in stock pries. The price quoted indicate the relative
profitability and performance of companies.
4. Motivation for improved performance :- The performance of a
company is reflected on the prices quoted in the stock market. These prices
are more visible in the eyes pf the public.
5. Promotion of investment :- Stock exchanges mobilize the saving of the
public and promote investment through capital formation. But for these stock
exchanges, surplus funds available with individual and institutions would not
have gone for productive and remunerative venture.
6. Reflection of business cycle :- The changing business conditions in the
economy are immediately reflected on the stock exchanges. Booms and
depressions can be identified through the dealing on the stock exchanges
and suitable monetary and fiscal policies can be taken by the government.
7. Marketing of new issues :- If the new issues are listed, they are readily
acceptable to the public, since listing presuppose their evaluation by
concerned stock exchange authorities. Costs of underwriting such issues
would be less.
FEATURES OF SECONDARY MARKET

1. In secondary market share are traded between two investors.

2. In secondary market there is no issuing of the fresh securities but trading of
the already issued securities.
3. In secondary market both buying and selling can take place.
4. It has a special and fixed place know as stock exchange. However, it must
be noted it is not essential that all the buying and selling of securities will be
done only through stock exchange.
5. The prices of securities in secondary market are determined by demand and
supply.
6. Only investors do the trading among themselves in secondary market.
7. The trading of securities does not take place first. A security can be traded in
the secondary market only if issued in the primary market.
8. Secondary market creates liquidity, hence, indirectly promotes capital
formation.
9. It creates liquidity in securities. Liquidity means immediate conversion of
securities into cash. This job is performed by the secondary market.
 FOREIGN EXCHANGE MARKET
INTRODUCTION

According to Dr. Paul Einzing “Foreign exchange is the system or process of

converting one national currency into account, and of transferring money
from one country to another”.
The market where foreign exchange transitions take place is called a
foreign exchange market. It does not refer to a market place in the physical
sense of the term. In fact, it consists of a number of dealers, banks and
brokers engaged in the business of buying and selling foreign exchange. It
also includes the central bank of each country and the treasury authorities
who enter into this market as controlling authorities. Those engaged in the
foreign exchange business are controlled by the foreign exchange
maintenance.
FUCTIONS OF FOREIGN EXCHANGE MARKET

The most important functions of this market are :-

1. To most important necessary arrangements to transfer purchasing power

from one country to another.
2. To provide adequate credit facilities for the promotion of foreign trade.
3. To cover foreign exchange risks by providing hedging facilities.

In India, the foreign exchange business has a three tired structure consisting of
:-

1. Trading between banks and their commercial customers.

2. Trading between banks through authorized brokers.
3. Trading with banks abroad.
CHARACTERISTICS OF FOREIGN EXCHANGE MARKET
1. Electronics market :- It is a market where trading in foreign currencies
takes lace through the electronics linked network banks, foreign exchange
brokers and dealers whose function is to bring together buyers and sellers of
foreign exchange.
2. Geographical Dispersal :- A redeeming feature of the foreign exchange
market is that it is not to be found in one place. The market is vastly dispersed
throughout the leading financial centers of the world such as London, New
York, Paris, Zurich, Amsterdam, Tokyo, Hong Kong, Toronto and other cities.
3. Transfer of purchasing power :- Foreign exchange market aims at
permitting the transfer of purchasing power denominated in one currency to
another whereby one currency to another whereby one currency is traded for
another currency.
4. Intermediary :- Foreign exchange markets provide a convenient way of
converting the currencies earned into currencies wanted of their respective
countries. For this purpose, the market acts as an intermediary between
buyers and sellers of foreign exchange.
5. Volume :- A special features of the FEM is that out of the total trading
transactions that take place in the FEM, around 95% takes the form of cross
border purchase and sales of assets, that is, international capital flows. Only
around 5% relates to the export and import activities.
6. Provision of credit :- A foreign exchange market provider’s credit through
specialized instruments such a banker’s acceptance and letters of credit. The
credit thus provided is of much help to the traders and businessmen in the
international market.
7. Minimizing Risks :- The FEM helps the importer and exporter in the foreign
trade to minimize their risks of trade. This is being done through the provision
of ‘Hedging’ facility. This enables traders to transact business in the
international market with a view to earning a normal business profit without
exposure to an expected change in anticipated profit. This is because
exchange rates suddenly change.