Market, Capital Market, Derivative Market, Participants

Market, Capital Market,
Derivative Market,
Participants
Presented by:
Harshvi Shah- 23BSP0803
Ishita Gosalia- 23BSP0878
Jagriti Bothra- 23BSP0881
Jay Joshi- 23BSP0905
Kaustubh Raje- 23BSP0983
What is a market?
1. A place where buyers
and sellers deal in
financial assets.
2. A platform that allows

participants to trade
assets.
3. A gathering place for

traders, investors and
businesses.
 Capital Market: Trading of financial products,
Types of long term borrowing and lending of money.

 Stock Market: Shares of publicly traded
companies are bought and sold.
Market  Bond Market: Also called debt market. Here
fixed-income instruments are purchased and sold.
 Foreign Exchange Market: Known as the Forex
Market. Allows speculative or international trade.
 Commodity Market: Deals with exchange of
tangible things like metals, energy, gold etc.
 Derivatives Market: Financial instruments
known as derivatives derive their value from
underlying assets or benchmark rates.
 Money Market: Concerned with borrowing and
lending money for short periods of time.
Capital Market
 A financial system to raise capital by issuing
and trading various financial instruments.
 Participants: Investors, issuers, financial

institutions.
 Instruments:
• Stocks: Represents ownership in a company.
• Bonds: Debt instruments issued by

governments or corporations to raise funds.
• Commodities: Raw materials or primary

agricultural products traded on exchanges.
• Derivatives: Financial contracts whose value

is derived from an underlying asset.
Key Elements of
Capital Market
 Exchanges and Trading: Occur on various exchanges and trading
platforms, both physical and electronic.
 Investment Opportunities: Offer individuals and institutions

avenues to invest their savings and achieve financial goals.
 Liquidity and Price Discovery: Trading in capital markets

enhances market efficiency by enabling price discovery.
 Regulations: Capital markets are subject to regulations to ensure

transparency, protect investors, and maintain market integrity.
 Global Capital Markets: Capital markets are international in scope,

with interconnectedness across countries.
Components of the Market
Primary Market: Secondary Market:
• Initial sale of securities. • Previously issued securities are

bought and sold.
• Use of processes like IPOs or private
placements. • Provides liquidity to the investors.
• Companies can raise funds for • Examples of secondary markets

expansion, debt repayment, or other include stock exchanges like the New
financial needs. York Stock Exchange (NYSE) or
NASDAQ.
Derivatives Market
• A financial marketplace where

derivatives are traded.
02
01 • Derivatives are those whose value is
derived from an underlying asset or
benchmark like stocks, bonds,
commodities, currencies, or interest
rates.
 Interconnectedness
 Diversity
Features
 High Liquidity of
 Risk Management
Derivative
 Speculation
 Leverage
Market
Types of Derivatives
Options: Call
options, Put
options
Swaps: Interest Forwards: Customized
rate, commodity, agreement between 2
currency. parties.
Futures: Agreements Contracts for Difference

buy or sell an asset at a (CFDs): Speculation on
predetermined price on price movements.
a specific future date.
Weather Derivatives:
Manage risks associated
with weather Credit
fluctuations. Derivatives:
Equity Derivatives: Management of
Derived from stocks credit risk.
or equity indices.
Who are the
Participants?
1. Speculators: Traders who take huge risks by making predictions about value of
assets, speculations about market price movements and enter into derivatives
contracts.
2. Arbitrageurs: Traders who purchase securities from one market and sell them in
another. Arbitrageurs are traders with low-risk appetites.
3. Hedgers: Traders who invest in the derivatives market to mitigate risk. Hedgers are
risk-averse investors who use derivative instruments to reduce the losses that
market volatility entails.
4. Margin Traders: Speculators who aim to make quick profits through the derivatives
market. Margin traders use leveraging to make purchases that are beyond the
means of their current financial status.
Advantages and Disadvantages
Capital Market
 Capital Formation 01 02  Market Volatility
 Liquidity  Speculative Risks
 Diversification  Information Asymmetry
 Price Discovery
A D 

Systematic Risks
Inequality
• Smooth trading. • Risk

• Attracts more investors. • Time Factor
• Opportunities for hedging
A D
• Complex Nature
investment options. • Expertise.
• Investment in either an
exchange-traded derivative or
over the counter derivative.
• Higher return.
03 04
Derivative Market
THANK
YOU!

Market, Capital Market, Derivative Market, Participants

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Market, Capital Market,

2. A platform that allows

3. A gathering place for

Types of long term borrowing and lending of money.

 Participants: Investors, issuers, financial

• Bonds: Debt instruments issued by

• Commodities: Raw materials or primary

• Derivatives: Financial contracts whose value

 Investment Opportunities: Offer individuals and institutions

 Liquidity and Price Discovery: Trading in capital markets

 Regulations: Capital markets are subject to regulations to ensure

 Global Capital Markets: Capital markets are international in scope,

Primary Market: Secondary Market:

• Initial sale of securities. • Previously issued securities are

• Companies can raise funds for • Examples of secondary markets

• A financial marketplace where

Futures: Agreements Contracts for Difference

• Smooth trading. • Risk

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