INDIAN STOCK MARKET MEANING OF SECONDARY MARKETS

Transcript:INDIAN STOCK MARKET MEANING OF SECONDARY MARKETS:
INDIAN STOCK MARKET MEANING OF SECONDARY MARKETS Secondary markets are those markets which deal in existing securities. Existing securities are those securities that have already been issued and are already outstanding. Secondary market consists of stock exchanges. Stock exchanges are self-regulatory bodies under the overall regulatory purview of the Govt. /SEBI. In the secondary market, the existing owner sells securities to another party. The secondary markets support the primary markets. The secondary market/n MEANING OF STOCK EXCHANGE It is an organized market for the purchase and sale of securities of joint stock companies, government and semi-govt Bodies. It is the centre where shares, debentures and govt. Securities are bought and sold. In short these are market places where securities that have been listed there on may be bought and sold for either investment or speculation. FUNCTIONS OF THE STOCK EXCHANGE Liquidity Continuous market for securities Mobilization of savings Capital formation Economic development Safeguards for investors BENEFITS OF STOCK EXCHANGE Benefits to Investors: The stock exchange plays the role of a friend, philosopher and guide to investors by providing information about the prices of various securities. It offers a ready market for buying and selling securities It increases the liquidity of the investors. It safeguards the interests of investors through strict rule and regulations. It enables the investors to know the present worth of these securities It helps investors in making wise investment decisions providing useful information about the financial position the companies. The holder of a listed security can easily raise loan pledging it as a collateral security. (B) Benefits to Companies A company enjoys greater reputation and credit in market. Image of the company goes up. A company can raise large amount of capital from different types of securities. It enjoys market for its shares. The market price for shares and debentures will be higher. Due to this the bargaining power of the company increases in the events of merger or amalgamation. (C) Benefits to Community and Nation: Stock exchange encourages people to sell and invest their savings in shares and debentures. Through capital formation, companies to undertake expansion and modernization stock exchange enables It helps the government in raising funds through sale of government securities. This enables the government to undertake projects of national importance and social value It diverts the savings towards productive channels. It helps in better utilization of the country's financial resources It is an