Capital market is for long-term funds like Debt and Equity and has maturity is more than 1 year
Nature of Capital Market
- Duration: Deals in medium and long-term securities
- Major participants: Commercial firms, development banks, financial institutions, foreign investors etc
- Instruments: Equity shares, preference shares, bonds, debentures, etc
- Investment outlay. Value of individual securities is low for eg: 50,200 etc. so the investment outlay not huge
- Liquidity & safety: less liquidity and risky in terms of returns.
- Expected return: the instruments of capital market give higher returns than instruments of the money
Types of Capital Market:
- Public issue through prospectus
- Offer for sale
- Private Placement
- Right issue
- Secondary market (stock exchange) _ It is market for sale and purchase of previously issued or second-hand securities
The stock market index reflects market direction and day to day fluctuation in stock prices, etc. BSE, NSE, and OTCEI are the exchanges in India. Steps in trading procedure on the stock exchange are a selection of broker, opening a demat account, selection of securities, placement of order, execution of order and settlement. The advantages of the electronic trading system are that it ensures transparency, increases the efficiency of information and operation, improves the liquidity of the stock market, etc. The depository is an institution which holds securities, like shares, debentures, bonds, mutual funds, etc. in electronic form. Demat account is dematerialized account for trading in listed securities in electronic form, as required by SEBI. Brokers, jobbers, bull, and bear are the type of operators in the market. Other terms used in stock exchange are sensex, nifty, ex-dividend, cum-dividend, spot delivery, and forward delivery.
SEBI is established to promote the orderly and healthy growth of securities market and to protect investors from malpractices. SEBI performs regulatory functions, development functions, and protective functions.