Capital Market
This is the market where shares, bonds, etc are traded. The primary role of the capital market is channelizing the surplus money to the sector that are deficient of cash to aid both the parties. They can be long term funds as well as overnight funds. It creates liquidity and enables the formation of capital.
The following are some of the instruments traded in the capital market
- Equity instruments
- Foreign exchange instruments
- Insurance instruments
- Hybrid instruments.
There are 2 types of capital market
In Capital market , investments are made both in stocks and bonds, so it is a market from where both organizations as well the government borrow money for the long term. The risks are associated with all the participating instruments.
Broadly the equity products are exposed to the market conditions, the bonds are affected by the monetary policies and also instruments having exposure in more than one country are always under the threat of unfavorable currency rates.
The functioning of the capital market is regulated by SEBI(Securities and Exchange Board of India) and the guidelines are properly laid down and non-adherence leads to stringent compensations.
In the Secondary Market securities are traded after its issue to the public on the primary market. After issue on Primary market, these securities are listed on the Stock Exchange.
With the saturation of internet and computers, the securities listed on the Stock Exchanges can be traded using a trading platform accessible from any part of the country with a computer and internet connection.
