Capital Market

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

An IPO is an abbreviation for Initial Public Offer. When a company goes public for the first time or issues a fresh stock of shares, it offers it to the public directly. This happens in the primary market. The primary market is where a company makes its first contact with the public at large.

The success of an IPO depends vigorously on business sector opinions. The IPO speculations are made for transient additions and speculators put resources into request to make benefits chiefly in a bullish market. Financial specialists in an IPO of a Company purchase offers at a settled value and don't need to pay stamp duty and brokerage charges. According to the new rules every retail investor will get a base number of shares subject to accessibility while the remaining will be allocated in the essential extent. As indicated by prior principles if there should arise an occurrence of an over membership the most noteworthy bidders were assigned shares and the bidders for lesser sums got no shares. This demoralized lesser speculators from taking an interest in the IPO. This deficit has been made up.

A commodity market facilitates trading in various commodities. It may be a spot or a derivatives market. In spot market, commodities are bought and sold for immediate delivery, whereas in derivatives market, various financial instruments based on commodities are traded. These financial instruments such as 'futures' are traded in exchanges.

    Who invests in commodities?

  1. Investors.
  2. Producers / Farmers.
  3. Commodity financers.
  4. Agricultural credit providing agencies.
  5. Hedgers, speculators, arbitrageurs.
  6. Large scale consumers. For e.g. refiners, jewelers, textile mills
  7. Corporate having risk exposure in commodities.

Why invest in commodities?

Hedging: It provides a platform for producers to hedge their positions according to their exposure in physical commodity. No Insider Trading: Dealing in commodities is free from the evils of insider trading. Besides, there are no company specific risks as those seen in stock markets. Simple Economics: Commodity trading is about the simple economics of demand and supply. More the demand for a commodity higher is its price and vice versa. Trade on Low Margin: Commodity Futures traders are required to deposit low margins, roughly 5 to 10% of the total value of the contract, much lower compared to other asset classes. The low margin, which again varies across exchanges and commodities, facilitates the taking of large positions at lower capital. Seasonality Patterns: Quite often provide clue to both short and long term players. No Counter party Risk: Much like the exchanges in the equity market, Commodity Futures market have Clearing Houses, which guarantee that the terms of the contracts are fulfilled, thereby eliminating the counter party risk.

Demat is a commonly used abbreviation of Dematerialisation, which is a process whereby securities like shares, debentures are converted from the “material” (paper documents) into electronic data and stored in the computers of an electronic Depository. You surrender material securities registered in your name to a Depository Participant (DP). These are then sent to the respective companies who cancel them after dematerialisation and credit your Depository Account with the DP. The securities on dematerialisation appear as balances in the Depository Account . These balances are transferable like physical shares. If at a later date you wish to have these “Demat” securities converted back into paper certificates, the Depository can help to revive the paper shares.

  1. Easy and convenient way to hold securities
  2. Immediate transfer of securities
  3. No stamp duty on transfer of securities
  4. Transmission of securities is done by DP, eliminating the need for notifying companies
  5. Automatic credit into demat account for shares arising out of bonus/split,consolidation/merger, etc.
  6. A single demat account can hold investments in both equity and debt instruments.
  7. Traders can work from anywhere (e.g. even from home).
  8. Reduced paperwork for transfer of securities
  9. Reduced transaction cost
  10. No "odd lot" problem: even one share can be sold

A stock market or equity market is the aggregation of buyers and sellers (a loose network of economic

  1. It reduces the burden on the entrepreneurs and allows them to expand their business without committing all the money themselves, which can become an unviable proposition for many.
  2.  An equity shareowner is a part owner of a business and thus people at large benefit out of the entrepreneurial efforts of businessmen and industrialists.
  3. For the country, this form of capital raising program helps channelize household savings into productive investments.
  4. Investment in equity is riskier than investment in debt of a company for the investor. However, the same could be highly rewarding.

The loan granted against any collateral property such as a house or an empty land, is termed as Loan against Property. It is the most secured form of Loan that is available in India, after home loans. If you wish to have a capital, you could avail Loan against Property, provided you are having an earning income. If you wish to take a loan, it should not be a burden on you head, to follow the banks and get the loan approved. The main benefit of Property Loan is it has a lower interest rate than Personal Loan and Business Loan, thus you can get your dream fulfilled in relatively easier way and less burning your pockets.

  1. Loan Against Property approval in just four working days from best of the markets lenders
  2. Maximum repayment tenure is available and we are offering loan tenure up to 20 years
  3. Interest free months facility available from selected bank
  4. Get up to 100% loan funding against current market value of the existing property

A mutual fund is a pool of money from numerous investors who wish to save or make money just like you. Investing in a mutual fund can be a lot easier than buying and selling individual stocks and bonds on your own. Investors can sell their shares when they want.
Professional Management. Each fund's investments are chosen and monitored by qualified professionals who use this money to create a portfolio. That portfolio could consist of stocks, bonds, money market instruments or a combination of those.
Fund Ownership. As an investor, you own shares of the mutual fund, not the individual securities. Mutual funds permit you to invest small amounts of money, however much you would like, but even so, you can benefit from being involved in a large pool of cash invested by other people. All shareholders share in the fund’s gains and losses on an equal basis, proportionately to the amount they've invested.

Professional Management

When you invest in a mutual fund, your money is managed by finance professionals. Investors who do not have the time or skill to manage their own portfolio can invest in mutual funds. By investing in mutual funds, you can gain the services of professional fund managers, which would otherwise be costly for an individual investor.


Mutual funds provide the benefit of diversification across different sectors and companies. Mutual funds widen investments across various industries and asset classes. Thus, by investing in a mutual fund, you can gain from the benefits of diversification and asset allocation, without investing a large amount of money that would be required to build an individual portfolio.


Mutual funds are usually very liquid investments. Unless they have a pre-specified lock-in period, your money is available to you anytime you want subject to exit load, if any. Normally funds take a couple of days for returning your money to you. Since they are well integrated with the banking system, most funds can transfer the money directly to your bank account.


Investors can benefit from the convenience and flexibility offered by mutual funds to invest in a wide range of schemes. The option of systematic (at regular intervals) investment and withdrawal is also offered to investors in most open-ended schemes. Depending on one’s inclinations and convenience one can invest or withdraw funds.

Low transaction cost

Due to economies of scale, mutual funds pay lower transaction costs. The benefits are passed on to mutual fund investors, which may not be enjoyed by an individual who enters the market directly.


Funds provide investors with updated information pertaining to the markets and schemes through factsheets, offer documents, annual reports etc.

Well regulated

Mutual funds in India are regulated and monitored by the Securities and Exchange Board of India (SEBI), which endeavors to protect the interests of investors. All funds are registered with SEBI and complete transparency is enforced. Mutual funds are required to provide investors with standard information about their investments, in addition to other disclosures like specific investments made by the scheme and the quantity of investment in each asset class.

Tax benefits.

Investments held by investors for a period of 12 months or more qualify for capital and will be taxed accordingly. These investments also get the benefit of indexation.

Mutual funds invest in different securities like stocks or fixed income securities, depending upon the fund’s objectives. As a result, different schemes have different risks depending on the underlying portfolio. The value of an investment may decline over a period of time because of economic alterations or other events that affect the overall market. Also, the government may come up with new regulations, which may affect a particular industry or class of industries. All these factors influence the performance of Mutual Funds.

Risk and Reward:The diversification that mutual funds provide can help ease risk by offsetting losses from some securities with gains in other securities. On the other hand, this could limit the upside potential that is provided by holding a single security.

Lack of Control:Investors cannot determine the exact composition of a fund’s portfolio at any given time, nor can they directly influence which securities the fund manager buys.