CAPITAL MARKET

Capital market is also very important part of Indian financial system .This segment of financial market meant to meet long term financial needs usually more than one year or more .Companies like manufacturing , infrastructure power generation and governments which need funds for longer duration period raise money from capital market. Individuals and financial institutions who have surplus fund and want to earn higher rate of interest usually invest in capital market.

S.E.B.I. regulate the capital market in India .It set the transparent mechanism rules and regulations for investors and borrowers .It task is to protect the interest of investors and promote the growth of capital market.

Capital market can be primary market and secondary market . In primary market new securities are issued where as in secondary market already issue securities are traded.

Capital market is divided into two

1.Equity

2.Bond

Capital Market Instruments

1. Shares

2. Debentures

3. Bonds

Equities

Equity market generally known as stock .In this company want to raise money issue shares in share market like B.S.E. or N.S.E.to individual or financial institutions who want to invest their surplus money 

Shares can be issued in two ways:

If company issuing share for first time that it is known as I.P.O.(Initial Public Offering ).IPO of any company issued in primary market and if company issuing shares for second or third time than it is known as FPO(Follow on Public Offering ) and trading of already issued shares take place in secondary market.

Share gives ownership right to individuals who subscribe to it, in this way company has to dilute his ownership right Same way public sector undertakings dilute up to 49 percent of their ownership and keep remaining 51 percent with them so that they have majority control.

A person earns from shares is company make profit which is distributed among share holders know as dividend and if company make loss value of share also falls so shares are high risk instruments