National Institute of Securities Markets
Designed for individuals seeking in-depth knowledge of securities markets, institutions, and emerging investment opportunities, this online certificate course in Investment Management Level I covers a comprehensive range of topics. Gain insights into current market trends, investment instruments, and strategies to make informed decisions in the financial world. Explore the dynamic landscape of investment management through a structured curriculum developed by Dr. [Author's last name]. Enhance your understanding of the securities market and position yourself for success in the financial industry.
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Presentation Transcript
National Institute of Securities Markets Overview of Securities Markets, Institutions and Instruments - Current and Emerging Investment opportunities. Online Certificate Course in Investment Management Level I By Dr. V.R. Narasimhan Dean, NISM
Presentation Summary securities markets eco system securities markets processes Intermediaries in securities markets Understanding investment opportunities Spetember 02, 2020 LLM Orientation Program 2
Introduction Financial Market channel savings into value creating activity. Domestic household savings; corporate savings; fiscal outlays. With increasing globalisation, cross border savings also flow. Financial markets : Securities Markets and Non-securities markets (government and banking sector). This session is related to securities markets. Securities markets deal with transferable instruments under SEBI jurisdiction. Equity, Preference, Debt, Units. Derivative instruments like futures, options in equity, interest rates, foreign exchange, commodity, etc. Synthetic instruments like securitised instruments. 3 Spetember 02, 2020 LLM Orientation Program
Participants in securities markets Investors - Household, Domestic, Foreign Portfolio Investors Issuers - Issuers of debt, equity and synthetic securities. Market Infrastructural Institutions. Intermediaries. Associations of Intermediaries. Regulator. Judicial system Spetember 02, 2020 LLM Orientation Program 4
CAPITAL MARKET STRUCTURE SAT SEBI INVESTORS Household Domestic institutions ------------- FOREIGN PORTFOLIO INVESTORS INVESTMENT FACILITATOR SUPPORTING INTERMEDIARIES MARKET ISSUERS INFRASTRUCTURE INTERMEDIARIES INVESTMENT FACILITATOR INTERMEDIARIES Registrar and Transfer Agent Custodians Depository Participants Research Analysis Credit Rating Agencies Debenture Trustees Proxy Advisory Services MARKET INFRASTRUCTURE INTERMEDIARIES SUPPORTING INTERMEDIARIES Stock brokers Mutual funds Portfolio managers Merchant bankers Alternate investment funds Collective investment schemes Investment advisors Stock Exchange Clearing Corporators Depositories Spetember 02, 2020 5
Size of Indian Capital Market Size of Indian Capital Market Market Capitalisation (End of August, 2020) BSE: Rs 1,53,76,303 Crore NSE: Rs 1,52,34,207 Crore Number of Companies Listed (End of August, 2020) BSE: 5,413 NSE: 1,943 Gross Turnover during August, 2020 Cash market BSE: Rs 93,080 Crore (Daily = Rs 4,230 Crore) NSE: 12,82,557 (Daily = Rs 58,298 Crore) Gross Turnover during August, 2020 Equity Derivatives Market BSE: RS 18,48,117 CR (Daily = RS 84,005 Cr) NSE: Rs 3,94,29,369 CR (Daily = Rs 1,79,244 CR) Gross value of Commodity derivative trading during August 2020 Rs 10,37,849 crore Spetember 02, 2020 LLM Orientation Program 6
Size of Indian Capital Market Size of Indian Capital Market contd.. contd.. Debt Trades during August 2020 BSE: Rs 53,916 Crore from 4,946 Trades NSE: Rs 80,075 Crore from 5,200 trades. Rs 27,50,000 Crores. Net Assets Under Management of Mutual funds in India (49) Net Funds mobilised during August 2020 = Rs 14,552.8 crore Number of Brokers in the country Cash Segment: 4,605 Derivative segment: 3,477 Commodity derivative segment: 2,261 Foreign Portfolio Investors (FPI)registered 9,911 Net investment by FPI during August 2020 Rs 47,080 Crore; Total value of FPI investment in the country = Rs 33,17,805 crore Spetember 02, 2020 LLM Orientation Program 7
Capital Market Process Raising Capital Public Issue including Offer for Sale, ADR/GDR (their conversion into equity) Rights Issue Preferential Allotment Debt Issuance including issue of synthetic instruments Corporate Actions Bonus issue Conversion of other securities into Equity; Corporate debt restructuring. Merger/Acquisition Demerger Listing and Delisting Trading and settlement Trading on Stock Exchange; Securities Lending and Borrowing Portfolio Management Mutual Fund Investments; Alternate Investment funds, etc. 8 Spetember 02, 2020 LLM Orientation Program
Role and contribution of intermediaries To connect issuers and investors. To connect investors and investors. To absorb risk of settlement. Other functions: to conduct KYC to educate investor on investment opportunities to throw light on corporate action opportunities to corporates to support corporate action processes to deal with regulators on changes in regulations Spetember 02, 2020 LLM Orientation Program 9
Capital Market Intermediaries Intermediary Broad function Merchant Banker Link between issuer and market. Due diligence; book building Investor services relating to ownership records, transfers and transmission. Custodian of securities owned by investors - household Link between investor and trading system Registrar and Share Transfer Agent Depository Participant Stock Broker Underwriters Underwrite issue of shares and assure to buy in case of undersubscription Evaluate credit worthiness of issuers/debt issues and give ratings. Monitor debt issuers on behalf of debt investors Advise investors (mutual fund) Credit Rating agencies Debenture trustees Investment Advisors Research analysts Analyse listed companies and offer opinion 10 Spetember 02, 2020 LLM Orientation Program
Capital Market Intermediaries contd.. Intermediary Function Custodian Custodian of investments of institutional investors Manage portfolios on behalf of investors. Portfolio Managers 11 Spetember 02, 2020 LLM Orientation Program
Global Linkages Global Linkages Major markets in the world are closely linked. Common set of investors Pension Funds Sovereign Funds Hedge Funds Mutual Funds Global Investors Global linkages of commercial and industrial activities Resonating central bank policies Interlinked economic and fiscal conditions US to Japan to Korea/Hongkong/Shengai to Singapore to India to Europe market. Spetember 02, 2020 LLM Orientation Program 12
Investment Opportunities Investment Opportunities A market participant can be a day trader ; active investor ; passive investor ; speculator . There other descriptions as well. Opportunities are a factor of: Investment amount at disposal commercial orientation Risk orientation Other occupations and time available for investment management Emotional preferences Understanding of various instruments Ability to implement investment strategies Ability to withstand short term losses Spetember 02, 2020 LLM Orientation Program 13
Asset Classes relevant to securities markets Asset Classes relevant to securities markets Equity Debt including convertible instruments and synthetic instruments Equity derivatives Currency Derivatives Interest Rate derivatives Commodity Derivatives Mutual fund investments AIF investments Spetember 02, 2020 LLM Orientation Program 14
Investment objectives Investment objectives Long term investment derive benefit from value creation/accrual. Short term investment derive benefit from market volatility Derive benefit from Listing. Hedging to build safety net. Arbitrage to benefit from difference in price of a single instrument or multiple instrument. arbitrage between two markets arbitrage between two scrips in the same industry arbitrage between two scrips across industries arbitrage between equity instrument and its derivative arbitrage across asset classes. Spetember 02, 2020 LLM Orientation Program 15
Trading Styles Trading Styles Technical traders Fundamental traders Algo traders High Frequency Traders Strategy based traders. Spetember 02, 2020 LLM Orientation Program 16
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