Financial Markets Management: XI

Preface

• NCFM Certification: Aimed at skill enhancement and competency building in financial markets.
• Registration: Available online and offline via NSE's website.

Contents Overview

1. Markets and Financial Instruments

   • Investment basics, stock exchanges, depositories, securities, regulators, and market participants.

2. Primary and Secondary Market

   • Role and functioning of primary vs. secondary markets, IPOs, and trading mechanisms.

3. Financial Statement Analysis

   • Concepts of simple and compound interest, time value of money, and ratio analysis.

4. Mutual Funds Products and Features

   • Structure of mutual funds, roles of AMC, custodian, registrar, different schemes.

5. ETFs, Debt and Liquid Funds

   • Features of exchange-traded funds, debt instruments, risks, and valuation.

6. Taxation and Regulation

   • Capital gains tax, dividend distribution, indexation benefits, and mutual fund regulations.

Detailed Chapter Highlights

Chapter 1: Markets and Financial Instruments

• Investment: Using savings to earn returns, crucial for handling inflation.
• Stock Exchange & Depositories: Platforms for trading financial securities and maintaining them electronically.
• Securities & Market Function: Transfer of resources via markets to meet corporate/government needs.
• Regulators: Includes SEBI and other bodies ensuring market integrity.

Chapter 2: Primary and Secondary Markets

• Primary Market: Facilitates new securities issuance.
• IPO Process: Pricing, book building, and allotment.
• Secondary Market: For trading existing securities, includes stock exchanges and trading mechanisms.

Chapter 3: Financial Statement Analysis

• Interest: Simple vs. compound interest.
• Time Value of Money: Importance of compounding.
• Ratio Analysis: Evaluating liquidity, leverage, and profitability.

Chapter 4: Mutual Funds

• Structure: Three-tier structure with sponsors, trusts, and AMCs.
• Types of Funds: Equity, debt, hybrid, sectoral, etc.
• NAV: Calculation and importance in mutual funds.

Chapter 5: ETFs, Debt, and Liquid Funds

• ETFs: Lower costs, trade like stocks, linked to indices or commodities.
• Debt Instruments: Characteristics, risks (interest rate, credit), and pricing.
• Liquid Funds: Short-term investments with high liquidity.

Chapter 6: Taxation and Regulation

• Capital Gains: Taxation differences between equity and debt funds.
• Indexation: Adjusting for inflation in long-term gains.
• AMFI and Regulation: Ensuring investor protection and market stability.

Key Concepts

• Stock Market Basics: Understanding primary vs. secondary markets, and their roles.
• Investment Strategies: Diversification, risks, and return expectations.
• Mutual Funds: Advantages like professional management, diversification, and ease of access.

Important Considerations

• Regulatory Framework: SEBI's role, investor protection mechanisms.
• Investor Rights: Understanding obligations and rights when engaging with financial products.
• Tax Implications: How taxes affect investment decisions and returns.

Additional Tools

• SEBI SCORES: Online complaint redressal system for investor grievances.
• Savings Instruments: Understanding options like bonds, FDs, and their implications.

These notes provide a comprehensive overview of financial markets management as outlined in the study material, focusing on key concepts, the structure of financial instruments, and the regulatory framework guiding these operations.