Indian Securities Market: Structure and Operations

These flashcards cover key concepts and definitions related to the Indian Securities Market structure and operations.

Indian Financial System

A set of institutions, instruments, and markets that foster savings and channelize them to their most efficient use.

Financial Intermediation

The process of transferring financial resources from surplus units to deficit units.

Regulatory Bodies

Organizations that oversee and regulate financial markets and institutions to ensure fair practices.

Primary Market

The market where securities are issued for the first time; also known as new issue market.

Secondary Market

The market where previously issued securities are bought and sold by investors.

Underwriting

An agreement where the underwriter agrees to subscribe to a specified number of securities if the public does not subscribe.

Debenture

A debt instrument issued by a company promising to pay interest and repay the principal on maturity.

IPO

Initial Public Offering; when a private company offers its shares to the public for the first time.

FPO

Further Public Offering; when an already listed company issues additional shares to the public.

Book Building

A pricing mechanism where the company provides a price band and investors place bids within this range.

ASBA

Application Supported by Blocked Amount; a method to apply for shares in an IPO where money is blocked in the applicant's bank account.

Green Shoe Option

A provision allowing underwriters to sell more shares than initially planned if demand is high.

Liquidity

The ability of an asset to be quickly converted into cash without significantly affecting its market price.

SEBI

Securities and Exchange Board of India, the regulatory body for securities market in India.

Financial Markets

Places or systems that facilitate the trading of financial assets such as stocks, bonds, and derivatives.

Capital Market

A segment of the financial market for long-term securities, including stocks and bonds.

Money Market

A sector of the financial market for short-term borrowing and lending, typically with maturities of one year or less.

Financial Institutions

Organizations that mobilize savings and provide credit or finance for investments.

Risk Management

Strategies used to minimize potential financial losses in investments.

Merchant Banker

An intermediary that manages the process of issuing new securities and offers advisory services.

Institutional Investors

Organizations like mutual funds, pension funds, and insurance companies that invest large sums of money.

Qualified Institutional Placement (QIP)

A method where a listed company raises capital by issuing shares to qualified institutional buyers.

Depository

An organization that holds securities in electronic form on behalf of investors.

Investor Grievance Cell

A facility set up by stock exchanges to address and resolve investor complaints.

Non-Voting Shares

Shares that do not carry voting rights but may offer higher dividends.

Derivative Instruments

Contracts whose value is derived from the value of underlying assets, used for hedging or speculation.

Pricing of Securities

The process of determining the offering price of new issues based on market demand and conditions.

Public Offer

When a company offers its shares to the public to raise capital.

Issuing Prospectus

A detailed document providing information about a company's business, financials, and risks related to an IPO.

Cumulative Preference Shares

Preference shares where unpaid dividends accumulate and are paid in future years.

Participating Preference Shares

Shares that entitle holders to dividends at a fixed rate and additional profits beyond a certain limit.

Registered Debentures

Debentures that are registered in the name of holders and pay interest automatically.

Floating Rate Bonds

Bonds where the interest rate is not fixed and may vary with market conditions.

Market Order

An order to buy or sell a security immediately at the best available market price.

Limit Order

An order to buy or sell a security at a specific price or better.

Voluntary Delisting

When a company decides to remove its securities from a stock exchange voluntarily.

Compulsory Delisting

When a company's securities are removed from a stock exchange due to non-compliance with listing requirements.

Price Discovery

The process of determining the price of a security based on supply and demand dynamics.

Pension Funds

Investment pools that manage retirement funds for individuals or organizations.

Taxation

The process of imposing financial charges on individuals or corporations by the government.

Market Capitalization

The total market value of a company's outstanding shares of stock.

Bull Market

A market condition characterized by rising stock prices and investor optimism.

Bear Market

A market condition characterized by declining stock prices and investor pessimism.

Economic Indicators

Statistics that provide information about the overall economic performance and health of a country.

Corporate Bonds

Debt securities issued by corporations to raise funds for capital expenditures.

Treasury Bills

Short-term government securities issued to finance government spending.

Investment Banks

Specialized financial institutions that assist in raising capital by underwriting and issuing securities.

Arbitrage

The practice of profiting from price differences in different markets.

Speculation

Investment in assets with the expectation that their prices will change in the short term.

Liquidity Management

Processes and strategies employed to ensure a firm can meet its short-term obligations.

Market Regulation

Rules and practices designed to maintain fair and orderly markets.

Risk Assessment

The process of identifying and analyzing potential issues that could negatively impact key business initiatives.

Financial Reporting

The process of presenting financial information in a structured manner.

Venture Capital Funds

Investment funds that provide funding to startups and small businesses with perceived long-term growth potential.

Financial Guarantees

Promises made by one party to assume the obligation of another party in the event of default.

RBI

Reserve Bank of India, the central bank responsible for regulating the monetary and credit system in India.

Securities Law

Regulatory framework governing the issuance and trading of securities.

Fiduciary Responsibility

The obligation of one party to act in the best interests of another.

Cost of Capital

The cost of obtaining funds to finance investment projects.

Stock Market Indices

Statistical measures that track the performance of a specific set of stocks.

Insider Trading

The illegal buying or selling of securities based on non-public, material information.

Portfolio Management

The art and science of making decisions about investment mix and policy.

Economic Growth

An increase in the production of goods and services over a certain period.

Consumer Protection Laws

Laws designed to protect the interests of consumers.

Financial Advisory Services

Consulting services aimed at helping individuals and businesses make informed financial decisions.

Monetary Policy

The process by which the central bank manages the supply of money.

Debt Market

A marketplace for trading debt securities.

Stock Market Crash

A sudden and significant decline in the stock market.