What is the role of the ‘Primary Market’
The primary market provides the channel for sale of new securities. Primary market provides opportunity to issuers of securities; Government as well as corporates, to raise resources to meet their requirements of investment and/or discharge some obligation. They may issue the securities at face value, or at a discount/premium and
these securities may take a variety of forms such as equity, debt etc. They may issue the securities in domestic market and/or international market.
What is SEBI and what is its role
The Securities and Exchange Board of India (SEBI) is the regulatory authority in India established under Section 3 of SEBI Act, 1992. SEBI Act, 1992 provides for establishment of Securities and Exchange Board of India(SEBI) with statutory powers for
(a) protecting the interests of investors in securities
(b) promoting the development of the securities market and
(c)regulating the securities market. Its regulatory jurisdiction extends over corporates in the issuance of capital and transfer of securities, in addition to all intermediaries and persons associated with securities market. SEBI has been obligated to perform the aforesaid functions by such measures as it thinks fit. In particular, it has powers for:
§ Regulating the business in stock exchanges and any other securities markets
§ Registering and regulating the working of stock brokers, sub–brokers etc.
§ Promoting and regulating self-regulatory organizations
§ Prohibiting fraudulent and unfair trade practices
§ Calling for information from, undertaking inspection, conducting inquiries and audits of the stock exchanges, intermediaries, self – regulatory organizations, mutual funds and other persons associated with the securities market.
function of Securities Market
Securities Markets is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares, bonds, debentures etc. Further, it performs an important role of enabling corporates, entrepreneurs to raise resources for their companies and business ventures through public issues. Transfer of resources from those having idle resources (investors) to others who have a need for them (corporates) is most efficiently achieved through the securities market. Stated formally, securities markets provide channels for reallocation of savings to investments and entrepreneurship. Savings are linked to investments by a variety of intermediaries, through a range of financial products, called ‘Securities’.
Sensex sheds 766 pts
The Sensex recorded its second biggest single session loss on Monday last week (March 17 – 21, 2008) as weak global markets triggered a major sell-off in front line stocks.
Following a significant deterioration of its liquidity position, leading US investment bank Bear Stearnsh 2008, turned to the Federal Reserve and JPMorgan Chase for emergency funds. While JP Morgan agreed to buy Bear Stearns in an all-stock deal, the Federal Resever stated that it would fund up to $30 billion of Bear Stearns’ less liquid assets. The resultant weakness on the Asian bourses cast its shadow on the Indian turf and stock across the board went into a tailspin on Monday.
While the Sensex went crashing down by 951 points to 14,809.49, the broader 50 stock Nifty index of the National Stock Exchange lost close to 243 points as it tumbled to 4503.10.
A partial recovery in global markets aided the sentiment in early trade on Tuesday. But, with participants choosing to exit counters at every small rise, the market remained quite choppy that day and the Sensex managed just a marginal gain of 23.97 points in the end.
The 75 basis points cut in US interest rates triggered a rally across global markets on Wednesday and the Indian bulls had a good time as well. Better than expected results from Goldman Sachs Inc and Lehman Brothers also contributed to the recovery in US and Asian markets that day.
Blue chip stocks cutting across sectors had a smart ride up the charts till around mid afternoon. However, with traders choosing to tread a cautious approach ahead of a long weekend, several front line stocks gave up their gain in late afternoon trade. As a result, the Sensex, which had vaulted to 15,465.81 in early trade that day, ended the session at 14,994.83, up by a little over 160 points.
While the Sensex lost 765.69 points or 4.85% in the week, the Nifty, which settled at 4573.95 on Wednesday, suffered a loss of 171.85 points or 3.62%.
FIIs, who were relentless with their purchases since the beginning of Year 2003, have pulled out close to Rs 16,000 crore in less than three months in the current calendar year. Though domestic mutual funds remain net buyers, their net purchases, at around Rs 6,600 crore, has not been strong enough to keep the market at higher levels.
Advance tax paid by a few top notch companies turned out to be sharply higher. There were some stock specific developments too. But weak global markets, rising inflation and declining industrial growth rendered the mood highly cautious during the truncated week.
Among the sectoral indices, BSE CD went down by 11.54%. Mirroring heavy sell-off in the banking space, the Bankex slipped by 9.95%. The Metal and Realty barometers lost 9.07% and 8.11% respectively. BSE Oil & Gas (down 6.15%), Power (down 5.25%), PSU (down 4.49%), Healthcare (down 3.91%), CG (down 3.57%), Auto (down 3.1%) and FMCG (down 2.14%) also closed with sharp losses. The BSE IT edged lower by 1.08%, the same margin of loss suffered by BSE Teck.
Mid and smallcap stocks were mauled again. Reflecting the sharp erosion in values in these segments, the BSE Midcap and Smallcap indices crashed by 9.41% and 10.61% respectively.