Capital Market and Investment Avenues-B.V.Raghunandan
1. Capital Market and Investment Avenues
-B.V.Raghunandan, SVS College, Bantwal
Management Development Programme
Sahyadri College, Adyar-Mangalore-India
November 12, 2011 Page 1
2. Capital Market
• A market for long-term funds
• Securities having a life of more than one year
• Based upon the interpretation of the Tax Laws
and Public Finance Page 2
3. Securities in the Capital Market
• Equity Shares
• Preference
Shares
• Debentures
• Bonds
• Innovative
Bonds or
Preference
Shares
Page 3
4. Equity Shares: A Unique Investment
• Regular Income by way of
Annual Dividend, Interim
Dividend, Special
Dividend, Surplus Dividend
• Capital Appreciation by way
of Bonus Shares
• Capital Appreciation by way
of Increase in market value
• Benefits from Corporate
Action like share
splitting, sponsored
ADR, M&A
• Real Time knowledge of
prices Page 4
6. Transactions in Stock Market
• Cash Market
• Derivatives Market:
- Futures and
Options Page 6
7. Investor Education: The Most Difficult Exercise
• Converting emotional decisions into rational decisions
• Convincing them about long-term investment
• Exposure to analysis of financial information
• Wisdom not to be moved by the vested opinions
• ignore the concept of loss of profit
Page 7
8. Traditional Retailers
• Geographic
concentration: Gujarat,
Rajastan, and West
Bengal
• Community Biased:
Parsis, Marwadis,
Chettiars, GSBs and
Brahmins
• Urban Concentration
• Broker Dominated with
broker participating in
the sale and purchase
Page 8
9. Change Agents
• Dhirubhai Ambani of
Reliance Industries70s
• IT Companies of the 80s
• Media Companies of the
90s
• Establishment of SEBI in
1988
• Establishment of NSE in
1994
• Entry of FIIs
• Dematerialisation
• Corporate Brokerage
• Shorter Period of
Allotment in Book-Building
• Shorter Settlement Cycle
Page 9
10. Investment in Primary Market
• Study the Prospectus
• Management Profile
• Product Profile
• Premium
• Risk Factors
• History of the Company
• Industry Profile
• Do not look at the
response to the Issue
Page 10
11. Opportunities
• Infrastructure projects
• Commercial Agriculture
• Bio-Technology
• Pharma-Research and Pharmaceuticals
• Hospitals and Hospitality
• Power Sector Development
• Shipping and Ship-Building Page 11
12. Stock Exchange: Strategies
• Buy in the Depressed Market
• Understand the Seasonality of Market
• Understand the Weekly Behavior of the Market
• Invest for Life Time or for Generation
• Sell only in a Boom Market
• Select Dividend Paying Companies Page 12
13. Things to be Avoided
• Acting on Tips
• Avoid Speculation and Day Trading
• It should not become a Full Time
Occupation
• Avoid Derivative Trading
• Avoid borrowing and investing
• Do not park short term funds
• Avoid Distress or Emergency Sale
Page 13
14. Opportunities
• More Inflow of FII money
• Better public finance through
disinvestment
• Gains for the Government through
recapitalisation of banks
• More Venture Capital Participation
• Larger body of retailers
• More stable operations
Page 14
15. Investment Avenues
• Corporate Securities • Medals and Others
• Government • Bank Deposits
Securities • Small Savings
• Mutual Funds • Introduction of Capital
• Exchange Traded for Starting Firms,
Funds Private Limited
• Real Estate Companies and
• Gold Public Limited
Companies
• Old Coins & Stamps
Page 15
