There is a plenty of investment in India that come from foreign countries. These investments are in the form of FDI, FII, and FPI.

What is Foreign Investment?

   Foreign investment may be defined as the flow of capital from one country to another in order to acquire ownership in the domestic company or other kinds of domestic assets. For example, any investment made in India which has the source of funding outside India will be termed as a foreign investment. In this type of investment, the foreign investors may have the active role in management as a part of their investment.

   Foreign investments may be made by the individuals as well as corporates. But mostly this type of investment is made by corporates with enough assets that wish to expand their reach globally. All foreign investment come in the form of FDI, FII, and FPI.

   With an increase in the concept of globalization, multinational companies (MNCs) are investing in various countries across the world.

Types of Foreign Investments 

   All the foreign investment fall into various classes like commercial loans, official flows, FDI, FII, FPI etc. Following are the popular classes of foreign investments:-

1. Foreign Direct Investment (FDI),
2. Foreign Institutional Investment (FII), and
3. Foreign Portfolio Investment (FPI)

Foreign Direct Investment (FDI)

   When a company located in any country invests in another company which is located in a different country in order to acquire controlling ownership is called the Foreign Direct Investment (FDI). This investment can be made by an individual or by a corporate. This type of investment is welcomed in an open economy where skilled workforce with potential growth prospects is proposed to the investors.

   The FDI is made in many ways. It includes the opening of a subsidiary or associate company in a foreign country, or acquiring controlling ownership of a foreign company, or merging or joint venture with a foreign company.

    There are three types of FDI:-

1. Horizontal: When a company does the same type of business in a foreign country what it does in the home country. Example- Mobile phone companies opening stores in India.
2. Vertical: When a company does a different but related business in a foreign country. Example A car manufacturing company acquires dealership in India.
3. Conglomerate: When a company starts or invests in a totally different business in a foreign country.

Foreign Portfolio Investment (FPI)

   This type of investment consists of securities such as stocks, bonds, debentures held by foreign investors. Foreign Portfolio Investment (FPI) is different from Foreign Direct Investment (FDI). In FPI, the investor does not hold the controlling ownership of the company. The only goal of the investor in this type of investment is to create a good return on the invested amount. It is less risky than FDI. These portfolio investments are made directly by the investor or it is managed by financial professionals.

Foreign Institutional Investment (FII)

   The Foreign Institutional Investment (FII) is a type of foreign investment in which the investor, mostly investment fund, who is investing in a country is registered in an outside country. Institutional investors are generally mutual funds, pension funds, insurance companies, and hedge funds. This type of foreign investment is very much popular in India. Investors in this class are generally large investors like banks, large corporates buyers or representatives of large institutions. These investors take a position in the financial market of the foreign country on behalf of their home country.

   India is a country with the highest volume of foreign institutional investment. Since India is a developing economy and developing economies provide higher growth potential. This is the reason why India is a favourite destination of FIIs. These all investments are monitored by the Securities and Exchange Board of India (SEBI). SEBI has more around 1450 FIIs registered with it. All FIIs are allowed to invest in India only through the primary and secondary capital markets.

Tags: #FDI #FPI #FII #Foreign Investment

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(Read: What is Mutual Fund? How to invest in Mutual Funds? How Do Mutual Funds work?)

Hybrid Mutual Funds are considered as good retuning funds funds and safer in comparison to other equity mutual funds. These funds invest their assets in both equity and debts. They choose stocks and bonds for investment. Stocks have higher return but are less safe while bonds are safe but comparatively low return. Amid high pressure arond stock market, bonds give better return in comparison to stocks. Because of these benefits, hybrid funds manage to avail a good return because of partial investment in stocks and manage risk because of partial investment in bonds. 

(Read: What is Hybrid Mutual Fund? What are the various types of Hybrid Mutual Funds? How hybrid funds do Asset Allocation?)

Best Hybrid Funds in 2019

Below is the list of top 5 hybrid funds in each categoyy

Aggresive Hybrid Funds

An Aggressive Mutual Fund is a type of mutual fund that which includes both equity and debt instruments in the portfolio but it focuses on risk instruments, i.e. equities. They invest 65-80% of the total asset in equities.

Conservative Hybrid Funds

These funds invest 75-90% of the total asset in bond instruments and rest in equity stocks,

Dynamic Asset Allocation or Balanced Advantage

These funds keep changing the focus between equity and debts depending on the market conditions. The allocation of asst varies between asset classes.

Equity Savings Fund

These mutual funds invest in debt instruments, equities and equity arbitrage. They maintain 65% focus on equities.

Disclaimer: These are the Best Hybrid Funds in 2019 based on their return value. This post does not give any advice or recommendation. Mutual Fund investments are subject to market risk. Please read all the related documents carefully before investing. It is also advised to consult your financial advisor for necessary suggestions. 

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Tags: #Mutual Funds #Investment #Hybrid Funds #Best Hybrid Funds in 2019

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Are you planning to invest in mutual funds in the year 2019? Are you looking for Best Large Cap Mutual Funds to Invest? Here we have given a list of best large cap funds in 2019. Do you know India is becoming a larger market of mutual fund industry year by year? Do you know why? This is because of the fast-growing mutual fund industry in India and competitiveness among them. The total growth in assets of the industry is higher than the growth in the GDP of India. Hundreds of companies in India are engaged in asset management of mutual funds and each is offering a better plan around every month  There are a variety of mutual funds available for investors to invest based on their risk appetite and investment horizon. From low-risk to high-risk and from moderate return to a high return, there are thousands of plans available.

(You are Reading Best Large Cap Mutual Funds 2019)

There are various types of mutual funds and they are broadly categorized into categories such as equity funds, debt funds, hybrid funds, exchange-traded funds, gilt funds, unit-linked insurance funds etc. Each category has its own advantage and associated risk or limitation. Further, equity mutual funds are divided into three broader categories, depending on their selection of companies for asset allocation. These categories are large cap funds, mid-cap funds and small-cap funds. There are many best large-cap funds, mid-cap funds, and small-cap funds. Here we will discuss only the best large cap mutual funds 2019 based on CRISIL ranking.

What is Large-Cap Fund?

Large-cap funds are those mutual funds which invest their assets into shares of the companies which have market capitalization rank from 1 to 100 among all the listed companies. Generally, if we refer to the market capitalization, these companies are the top performers in their sector. Because the best performing company has a larger market share and hence the big market capitalization. So roughly we can say that large-cap funds invest a major part of their asset in the equity shares of top performing companies of a selected sector. Investment advisors recommend large-cap funds to those who want a decent return on their investment with moderate risk. Here we list the best large cap mutual funds 2019 in India in 2019 based on CRISIL ranking.

Best Large Cap Mutual Funds – Based on CRISIL Ranking

Find below the list of Best Large Cap Mutual Funds 2019 based on the CRISIL ranking. We have also considered the recommendations of Moneycontrol on associated risk with each of the fund given below.

#1. Axis Bluechip Fund-Regular Plan

CRISIL RanK: 1

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 2,791.43 crore

Investment in Equities: 80.96%

5 Years Return: 14.9%

#2. Reliance Large Cap Fund-Direct Plan

CRISIL RanK: 1

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 1,371.15 crore

Investment in Equities: 98.00%

5 Years Return: 17.9%

#3. Reliance Large Cap Fund-Regular Plan

CRISIL RanK: 1

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 9,511.60 crore

Investment in Equities: 98.00%

5 Years Return: 16.8%

#4. Canara Robeco Bluechip Equity Fund-Direct Plan

CRISIL RanK: 1

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 9.69 crore

Investment in Equities: 95.64%

5 Years Return: 14.6%

#5. Canara Robeco Bluechip Equity Fund-Regular Plan

CRISIL RanK: 1

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 129.87 crore

Investment in Equities: 95.64%

5 Years Return: 13.4%

(You are Reading Best Large Cap Mutual Funds 2019)

#6. Axis Bluechip Fund-Regular Plan

CRISIL RanK: 1

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 379.00 crore

Investment in Equities: 80.96%

5 Years Return: 16.3%

#7. HDFC Top 100 Fund-Direct Plan

CRISIL RanK: 2

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 2,152.97 crore

Investment in Equities: 98.43%

5 Years Return: 15.6%

#8. ICICI Prudential Bluechip Fund-Regular Plan

CRISIL RanK: 2

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 14,520.85 crore

Investment in Equities: 94.77%

5 Years Return: 14.5%

#9. HDFC Top 100 Fund-Direct Plan

CRISIL RanK: 2

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 12,575.93 crore

Investment in Equities: 98.43%

5 Years Return: 14.8%

#10. Edelweiss Large Cap Fund-Regular Plan

CRISIL RanK: 2

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 127.79 crore

Investment in Equities: 88.65%

5 Years Return: 13.7%

(You are Reading Best Large Cap Mutual Funds 2019)

#11. LIC Mutual Fund Large Cap Fund-Direct Plan

CRISIL RanK: 2

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 34.79 crore

Investment in Equities: 89.70%

5 Years Return: 12.1%

#12. Indiabulls Bluechip Fund-Direct Plan

CRISIL RanK: 2

Moneycontrol Risk-o-Meter: High

Asset Under Management (AUM): 14.60 crore

Investment in Equities: 93.45%

5 Years Return: 14.4%

#13. Edelweiss Large Cap Fund-Direct Plan

CRISIL RanK: 2

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 6.65 crore

Investment in Equities: 88.65%

5 Years Return: 14.6%

#14. UTI Mastershare Unit Scheme-Regular Plan

CRISIL RanK: 2

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 5,129.17 crore

Investment in Equities: 97.26%

5 Years Return: 13.8%

#15. ICICI Prudential Bluechip Fund-Direct Plan

CRISIL RanK: 2

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 4,611.84 crore

Investment in Equities: 94.77%

5 Years Return: 15.6%

(You are Reading Best Large Cap Mutual Funds 2019)

#16. Indiabulls Bluechip Fund-Regular Plan

CRISIL RanK: 2

Moneycontrol Risk-o-Meter: High

Asset Under Management (AUM): 359.00 crore

Investment in Equities: 93.45%

5 Years Return: 12.5%

#17. HSBC Large Cap Equity Fund-Direct Plan

CRISIL RanK: 3

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 215.28 crore

Investment in Equities: 99.31%

5 Years Return: 12.9%

#18. JM Large Cap Fund-Regular Plan

CRISIL RanK: 3

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 23.89 crore

Investment in Equities: 81.05%

5 Years Return: 12.5%

#19. HSBC Large Cap Equity Fund-Regular Plan

CRISIL RanK: 3

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 432.69 crore

Investment in Equities: 99.31%

5 Years Return: 12.1%

#20. LIC Mutual Fund Large Cap Fund-Regular Plan

CRISIL RanK: 3

Moneycontrol Risk-o-Meter: Moderately High

Asset Under Management (AUM): 204.61 crore

Investment in Equities: 89.70%

5 Years Return: 11.00%

Bonus 21^st:-

#21. JM Core 11 Fund-Regular Plan

CRISIL RanK: 3

Moneycontrol Risk-o-Meter: High

Asset Under Management (AUM): 26.74 crore

Investment in Equities: 97.95%

5 Years Return: 18.3%

Note: The above details of best large cap mutual funds in 2019 is based on the information available on March 4^th, 2019. It may change further depending on the performance and asset allocation scheme of the fund.

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Disclaimer: These are the Best Large Cap Funds in 2019 based on the Crisil ranking. This post does not give any advice or recommendation. Mutual Fund investments are subject to market risk. Please read all the related documents carefully before investing. It is also advised to consult your financial advisor for necessary suggestions. 

(You are Reading Best Large Cap Mutual Funds 2019)

Tags: #Mutual Funds #Investment #Large Cap Funds #Best Large Cap Mutual Funds in 2019

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(Read: What is Mutual Fund? How to invest in Mutual Funds? How Do Mutual Funds work?)

Best Mutual Funds in 2019 (Rank #1 Mutual Funds)

Best Equity Mutual Funds

Best Large-Cap Funds

Best Large and Mid Cap Funds

Best Mid Cap Funds

Best Small Cap Funds

Best Multi-Cap Funds / Diversified Equity Funds

Best ELSS Funds

(Also Read: Top Ranked ELSS Funds – Equity Linked Savings Schemes Crisil Ranking)

Best Sectoral / Thematic Funds

Best Hybrid Mutual Funds

Best Aggressive Hybrid Funds

(Read: What is Hybrid Mutual Fund? What are the various types of Hybrid Mutual Funds? How hybrid funds do Asset Allocation?)

Best Conservative Hybrid Funds

Best Arbitrage Funds

(Read: What is Arbitrage Fund? How do arbitrage funds work?)

Best Exchange Traded Funds (ETF)

(Read: What is Exchange Traded Fund or ETF? How ETFs Work?)

(Also Read: Top Solution Oriented Funds – Children’s Funds and Retirement Funds)

Note: R – Regular Plan, D – Direct Plan

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Disclaimer: These are the Best Mutual Funds in 2019 based on the Crisil ranking. This post does not give any advice or recommendation. Mutual Fund investments are subject to market risk. Please read all the related documents carefully before investing. It is also advised to consult your financial advisor for necessary suggestions. 

Tags: Mutual Funds, Investment, Best Mutual Funds in 2019

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What is the Regulator

A regulator is an authority or an institution who ensures the rational behaviour of security market participants. They make certain of the responsibilities of each of the player in the security market. They do it in order to protect the interests of investors. The regulators work to maintain the fairness and competitiveness of the marketplace where participants deliver a high quality of service. 

Various Regulators in the Indian Financial Market

Below is a list of key regulators in the Indian financial market:-

Ministry of Finance

The Ministry of Finance, within the government of India, concerns with the taxation, financial legislation, financial institutions, capital markets, budgets and centre and state finances. The finance ministry comprises the five departments which work as the major regulators in the financial market in India:-

1. Department of Economic Affairs: It works as the nodal agency of the government which work out and monitors the economic policies. The primary responsibility of this department is the annual preparation of the union budget. the  It covers monetary and fiscal policies and functioning of the capital market. It also has the responsibilities of mobilization of external resources and the issuance of bank notes and coins. 
2. Department of Expenditure: This department is responsible for the expenditure of the government of India. It administers the various financial rules and regulations such as service rules of the central government employees. It also has the responsibility of financial assistance to states and borrowing by states. 
3. Department of Revenue: It controls all the matters related to the direct and indirect union taxes. It works under the direction of Revenue Secretary. It has two major statutory bodies – The Central Board of Direct Taxes (CBDT), and The Central Board of Indirect Taxes and Customs (CBIC). 
4. Department of Financial Services: It covers Banks, Insurance, Financial services provided by the government agencies and private corporations. It also oversees the pension reforms, industrial finance and MSME. It has the statutory body Pension Fund Regulatory and Development Authority (PFRDA). 
5. Department of Investment and Public Asset Management: Its older name was Department of Disinvestment. It is responsible for the management of the centre’s investments in equities and its disinvestment in Public Sector Undertakings (PSUs). 

Ministry of Corporate Affairs

The Ministry of Corporate Affairs is concerned with the administration of The Companies Act 2013, The Companies Act 1956, The Limited Liability Partnership Act 2008 and other acts and rules and regulations which are framed for regulating the functioning of the corporate sector. It is also responsible for administering The Competition Act 2002, It also oversees the three professional bodies – Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI), and the Institute of Cost Accountants of India (ICAI). 

Reserve Bank of India (RBI)

Reserve Bank of India (RBI) is an autonomous body and it is the major regulators in the financial market in India. It has the primary responsibility of administering the monetary policy of the Government of India. Its key responsibility is to make it certain the rational growth of the supply of money in the economy in order to facilitate economic growth and financial transactions. The key functionalities of the RBI are:-

• Working as a Monetary Authority
• Regulation and Supervision of the Financial System
• Managing the Foreign Exchange
• Issuance of the Currency
• Role of Development
• Regulation and Supervision of the Payments and Settlement System
• Banker’s Bank
• Banker and Debt Manager to the Government of India
• Custodian to Foreign Exchanges

Securities and Exchange Board of India (SEBI)

Securities and Exchange Board of India (SEBI) is the autonomous statutory and regulatory body of the security market of India. It has the following major tasks to perform:-

• Protection of the interests of investors in the security market.
• Promotion and development of the security market.
• Regulation of stock exchanges and related operations.
• Regulations and monitoring of stock-brokers and sub-brokers.
• Awareness of investors education training of intermediaries in the security market.
• Prohibition of insider trading in securities and unfair trade practices.

Insurance Regulatory and Development Authority if India (IRDAI)

IRDAI is also one of the major regulators in the financial market in India. It is an autonomous and statutory body of the Government of India which has the primary responsibility of promoting and regulating the insurance and re-insurance industries in the country. The major functions are IRDAI are:-

• Administering the registration of insurance companies.
• Protecting the interests of policyholders.
• Administering the intermediaries and agents in the insurance sector.
• Promotion of the industry.
• Adjudicating disputes.
• Others.

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Highlights of the Financial Service Sector

The following are the highlights of the Indian financial service sector:-

• Gross National Savings (GNS): The Gross National Savings (GNS) of the country is 30% of the Gross Domestic Product (GDP). The GNS denotes the sum of all savings by people, companies, and the government. 
• High Net Worth Individuals (HNWI): The High Net Worth Individuals (HNWIs) are expected to grow at a CAGR of 19.7% The HNWI means the individuals with US$ 1 million or more liquid asset. In India, the number of HNWIs is expected to be doubled by the year 2020.
• Growth in AUM: The Asset Under Management (AUM) of the mutual fund industry has grown at a rate of 15.51% in last 10 years. 
• Funds Raised by IPOs: There were 37 Initial Public Offerings (IPOs) in the financial year (by June 2018) and they have raised a sum of US$ 1.2 billion.

(Read: Mutual Funds Industry Trends in 2018 – Investor’s Assets Report)

Growth Drivers of Financial Service Sector

According to the IBEF report, there are following factors which are working as growth drivers for the Indian Financial Service Sector:-

• Increased Demand: The rise of incomes of individuals, as well as corporates, demands the financial services to manage their wealth and meet the goals.
• Financial Innovation: The launch and growth fintech companies making it easier for both financial service providers and financial service consumers to provide and avail the financial services.
• Expansion of Services: The service providers are expanding their reach to investors through various mediums.
• Government Support: The government is supporting this sector by various policies and initiatives which work as a booster for their growth. 

(Read: People in the Security Market – Retail and Institutional Participants)

Structure of Financial Service Sector in India

The following figure represents the structure of the financial service sector in India:-

Growth in Assets Under Management (AUM)

According to the report, the total Assets Under Management (AUM) of the mutual fund industry was Rs 22.86 trillion in December 2018 (or, US$ 316.84 billion). It was US$ 125.40 billion in the financial year 2008.

(Read: Types of Investment Funds – A Classification of Alternative Investment)

The composition of Investors in Mutual Funds Industry

This report shows that the major asset holders in the mutual fund industry are the corporates which are followed by HNWIs and retail investors.

Top 5 Asset Management Companies (AMCs), according to the report are:-

(Read: Top 10 Finance (Investment) Companies in India)

The growth of the Life/Non-Life Insurance Sector

The report shows the performance life insurance sector as given in the below figure:-

The report shows the performance non-life insurance sector as given in the below figure:-

Performance of Non-Banking Financial Companies (NBFCs)

The NBFCs have shown rapid growth in this space where they have been established as intermediaries in the retail financial sector. The public deposits at NBFCs are increased to US$ 4.95 billion in the financial year 2018 from US$ 0.29 billion in the financial year 2009.

Future Scope

There are following future scope in the financial services sector in India:-

• Expansion of Indian Equity Market and increased listing of companies.
• Increasing retail penetration with growing awareness among investors.
• Growth in Domestic Institutional as well as Foreign Institutional Investments.
• Innovation and Development of Fintech companies and increased use of technology.
• Support from the government through new policies and initiatives.

Disclaimer: This post is based on the data and information privded in the IBEF report., January 2019.

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Mutual Funds Industry Trends

Find below the report on Mutual Funds Industry Trends.

Asset Managed by Mutual Funds

According to the report, the total asset managed by the mutual fund industry in India has reached Rs 24.09 trillion in December 2018 which was Rs 22.60 trillion in December 2017. This is a growth of around 6.55% in the total asset managed by Indian mutual fund companies in a year. However, this total asset was reached up to Rs 24.70 trillion in August 2018 which was a growth of around 9.29%. But it dipped in October 2018 and reached Rs 23.15 trillion.

Proportionate Shares of Schemes in Total Assets

 As per the report, there are 4 types of mutual fund schemes which have their proportionate share in the total assets of the entire mutual fund industry. These 4 types of schemes are debt-oriented schemes, equity-oriented schemes, ETFs & FoFs and liquid/money market funds. Among all these 4 types of schemes, the major stakeholder in total assets are the equity-related schemes, as in December 2018 and they have 41.9% proportionate share. These schemes are followed by debt-oriented schemes which have 29.1% of proportionate share. The liquid/money market funds are at the third position with 24.4% shares and ETFs and Funds of Funds have the remaining share. 

The composition of  Investors in Total Assets

There are two types of investors invest in mutual funds – individual investors and institutional investors. According to the AMFI’s report, the individual investors are the major shareholders of the total assets of the mutual fund industry. As in December 2018, the individual investors have a 53.6% share of the total asset while the institutional investors hold the 46.4% share. In December 2017, the individual investors were holding the 50.6% share of the total assets and 49.4% share was held by the institutional investors. 

Investors Composition in Mutual Funds Schemes

As given in the report, the composition of investors – individual and institutional – can be seen scheme wise. In the debt-oriented schemes, 54% of the total asset is held by the institutional investors, while 46% of the total share is held by the individual investors. In equity-oriented schemes, the major shareholders are individual investors with 87% of the total asset while the institutional investors hold 13% of the total asset. The liquid/money market funds have just opposite case. Here, 87% stakes are held by institutional while 13% stakes are held by individual investors. In ETFs & FOFs, 93% of the total asset is held by the institutional investors, while 7% of the total share is held by the individual investors.

Investor’s Holdings of Mutual Funds

According to the report, the institutional investors have major holdings in the liquid/money market funds which are followed by debt-oriented schemes. Out of their mutual fund holdings, they invest 46% of their asset in equity-oriented mutual funds and 34% in debt-oriented mutual funds. On the other hand, individual investors have major holdings in equity-oriented mutual funds where they invest 68% of their total assets. This holding is followed by the debt-oriented mutual funds where individual investors invest 25% of their totals assets. 

Growth in the Assets

The AMFI’s report shows that the assets held by the individual investors in December 2018 are Rs 12.91 lakh crore which was Rs 11.44 lakh crore in December 2017. It increased with an absolute growth rate of 0.1% in a year. The value of the institutional assets in December 2018 is Rs 11.17 lakh crore which was Rs 11.16 lakh crore in December 2017. 

(Mutual Funds Industry Trends.)

Acknowledgement: This post is based on the data provided in AMFI’s report.

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Participants in the Security Market

Participants in the security market are the people or functionaries. These participants may be buyers, sellers or intermediaries between buyers and sellers. There are following key participants which play important roles in the security market:-

• Market Intermediaries
• Institutional Participants
• Retail Participants

Market Intermediaries

Market intermediaries are those participants in the security market which work as facilitate various market operations between buyers and sellers. The following are the important intermediaries in the security market:-

Stock Exchange

 Stock Exchange facilitates the trading between buyers and sellers. It provides a platform for buying and selling of already issued securities. In India, stock exchanges are Bombay Stock Exchange (BSE), National Stock Exchange (NSE).

Depositories: These are the institutions which hold the traded securities of investors such as shares, bonds, mutual funds etc. They hold these securities in the electronic forms. In India, there are two depositories: Central Depository Services Limited (CDSL), and National Securities Depository Limited (NSDL)

Depository Participant

A Depository Participant (DP) is an agent of the depository through which it interfaces with the investors and provides depository services. Depository participants enable investors to hold and transact in securities in the dematerialized form.

Stock Brokers: They are the registered members of the stock exchange. They facilitate buy and sell transactions of investors on stock exchanges. All the secondary market transactions are conducted through these registered stock brokers only.

Sub-Brokers: A sub-broker is an entity who is not a member of Stock Exchange but who acts on behalf of a trading member or Stock Broker as an agent for assisting the investors in buying, selling or dealing in securities through such trading member or Stock Broker with whom he is associated.

Authorised Person

An authorised person is any person, who is appointed by a stock-broker or trading member as an agent to reach out to
the investors. These may be individuals, partnership firms, LLPs or corporates.

Custodian

It is an entity that has the responsibility of holding funds and securities of large clients. The large clients may be banks, insurance companies, and foreign portfolio investors (FPIs).

Merchant Bankers

These are SEBI registered entities which act as issue managers, investment bankers or lead managers. They help the issuer of securities in accessing the security market with the issuance of securities. They are single point contact for issuers during a new issue of securities.

Underwriter

The underwriters are the entities in the security market who commit to subscribing any portion of a public offer of securities which may not be bought by investors.

Institutional Participants

Institutional participants in the security market are mainly institutional investors. It may be domestic financial institutions, banks, insurance companies, mutual funds or Foreign Portfolio Investors (FPIs). The important institutional participants in the security market are:-

Foreign Portfolio Investors (FPIs)

A Foreign Portfolio Investor (FPI) is an investor which is established or incorporated outside India and proposes to make investments in India.

P-Note Participant

These participants invest in the P-Notes or Participatory Notes. P-Not is an instrument issued by SEBI registered foreign portfolio investors to overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator.

Mutual Funds

A mutual fund is a professionally managed collective investment scheme that pools money from many investors to purchase securities on their behalf.

Other Participants:-

• Insurance Companies
• Pension Funds
• Venture Capital Firms
• Private Equity Firms
• Hedge Funds
• Alternative Investment Funds
• Investment Advisers

Retail Participants

Retail participants are those individuals who buy and sell securities for their personal account, and not for another company or organization. A retail participant may be:-

• Indian Individuals
• Non-Resident Indians (NRIs)
• Person of Indian origin (PIOs)
• Qualified Foreign Investors (QFIs)

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Disclaimer: This post is meant for educational purpose only and it does not give any advice or recommendation. Investments in securities are subject to market risk.

Tags: #Securities #Security Market #investments #Investors

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What is the Security Market?

Security market provides a platform where a party in the need of capital issues the securities and the other party who has access capital acquires these securities by paying the capital.

Segments of the Security Market

There are two segments of the security market:-

1. Primary Market, and
2. Secondary Market

Primary Market

Primary Market is also called the new issue market because it deals with the issue of new and fresh securities. In this market, the issuer raises the capital by issuing new securities to the investors. These securities are issued by the companies, corporates or governments by selling the new stocks. The following operations are performed in the primary market:-

• Public Issue: Securities are issued to the public as a retail issue. Public issues may be Initial Public Offering (IPO) and Debt Offer (NCD, Bond Issue)
• Follow on Public Offer (FPO): An already listed company makes and public issue.
• Private Placement: Securities are issued to a specific group of persons.
• Qualified Institutional Placement (QIP): Securities are issued by already listed companies to Qualified Institutional Buyers (QIBs).
• Preferential Issue: Specified securities are issued to a selected group of persons on a private placement basis by already listed companies.
• Onshore and Offshore Offering: The securities can be issued either for domestic or international investors.
• Offer for Sale (OFS): Selling of already allotted shares by shareholders.

Secondary Market

The secondary market provides a platform for trading of already issued securities. It allows the investors to exit from their investment and new investors to buy already allotted securities. In this market, the previously issued financial instruments such as stock, bonds, options, and futures are bought and sold. The secondary market has the following segments:-

• Over-The-Counter-Market (OTC Market): In this Market, trades are directly negotiated between two or more counterparties. In this type of market, the securities are traded and settled over the counter among the counterparties directly.
• Exchange Traded Market: In this segment, trading and settlement are done through the stock exchanges.

The following operations are performed in the secondary market:-

• Trading: This is a formal contract to buy or sell securities.
• Clearing and Settlement: These are the post-trading operations. Clearing means ascertaining the net obligations of buyers and sellers for a specific time period. The settlement is the next step of settling obligations by buyers and settlers such that paying the money in case of buy or delivery of securities in case of sell.

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Disclaimer: This post is meant for educational purpose only and it does not give any advice or recommendation. Investments in securities are subject to market risk.

Tags: #Securities #Security Market #investments #Primary Market #Secondary Market

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What is Security?

Security is a financial instrument that holds a monetary value and issued to raise the funds for a company, corporate or government. It is a medium of exchange between two entities. Securities are purchased by those who have money and want to invest their money. It lets the investor exchanging their money into financial assets which will provide a return on investment. A security may be shares, stocks, bonds, debentures of a company, corporate or government. It may also be a unit issued by any investment scheme such as a mutual fund. 

Security Market

  The security market is a market-place which conducts the flow of capital from those who want to invest to those who require investment. It enables the transfer of financial assets from entities having it in excess to the entities who have a productive requirement. It offers a channel for exchange of savings and investments.

    A security market comprises the following:-

• Borrowers: Entities who sell the securities.
• Investors: Entities who buy the security.
• Intermediaries: Entities who facilitate the transfer of funds and securities.
• Regulators: Institutions who enforces the rules and regulations.

Types of Securities

The securities in the Indian market are categorized broadly into three categories:-

1. Equity Securities: These types of securities are shares of a company into which the fractional ownership of the company is divided among investors. The shareholders bear the risk of companies performance and benefitted from its profit.  These securities are issued by the company and individuals and institutions invest into it. This investment is made by the investors either directly or through the stock exchange. The investments in equity shares are regulated by the Security and Exchange Board of India (SEBI). 
2. Debt Securities: Bonds, debentures, Notes are termed as debt security. These are issued by companies, corporates, and governments when they are in need of capital. These instruments are issued in view of long-term debt. Bonds are supported by the collaterals while debentures may or may not be supported by collaterals. In some issues, debentures are converted into equity shares of the company.
3. Derivatives: This security is a contract which derives the value from the performance of the equity. The derivative may be an asset or index. 

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