Capital Market Practice in India
SECTOR OVERVIEW 2007-08
In the preceding year, correction in a bullish market subsequently followed by bear market rallies was never apprehended to result in a widespread pessimism. Indian stock markets have really been on doldrums and is still trying to achieve a optimal and stable position. However, the apparent crisis has not stopped significant industrial sectors of Corporate India showing growth. The well said idiom “ Necessity is the mother of Invention” has significantly manipulated the key players of Indian capital market to innovate new financial instruments, investment strategies and alike. In the last year, Indian companies have used American Depository Receipts (ADRs), Overseas listing on AIM, SGX, LSE, etc, Global Depository Receipts (GDRs), Convertible Alternative Reference Securities (CARs), Foreign Currency Exchangeable Bonds (FCEBs) and Qualified Institutional Placements (QIPs).
Its Is not only SEBI who has contributed to the development of innovating by increasing the scope and application of its regulations, but other regulatory bodies like RBI, FIPB, etc have made significant contributions . With liberalization of FDI & ECB Policies, FII investments in the capital markets, which began in January 1993, increased from USD 1 million at end-March 1993 to USD 66.6 billion at end-March 2008. In addition, venture capitalists invested around USD 928 million in 80 deals for entrepreneurial companies in India in 2007. This was a 166 per cent increase over the USD349 million invested in 36 deals in 2006 – easily the highest total on record for the region.
Capital Market Practice
With Investment Bankers and Merchant Bankers trying to handle the crisis, the other key player who makes significant productive contributions to the capital market scenario such that subsequent investments do not generate suboptimal returns are the Capital Market Lawyers. However, law firms have not just worked on innovating new forms of financial instruments, instruments. A new arm of capital market practice better known as structured finance has become the bread and butter of many law firms who have advised clients on securitization, project finance, leveraged or management buy outs, etc. Capital market transactions involving corporate restructuring like takeovers, acquisitions, mergers and demergers buy back of securities, incorporation of mutual funds and venture capital funds, acting as advisers while for issuers, financial institutions and intermediaries such as stock brokers, underwriters, merchant bankers, portfolio managers and investors also form a chunk of the work of the firms committed in capital market practice.
Ross, S.A., Westerfield, R.W., Jaffe, J.F., & Roberts, G.S (2001) Corporate Finance. 3 th ed.Toronto, McGraw-Hill Ryerson.
The fact that majority of the capital funds was in the form of portfolio capital instead of foreign direct investment (FDI) had also worsen the situation. The ratio of portfolio capital to FDI had increased substantially from 1:1.3 in 1990 to 1:6.5 in 1993. Given the volatile nature, portfolio capital tends to respond with greater speed to changes in the environment.
...f-regulate? A reasonable case for increased regulation can be made given the massive cost of recent financial turmoil and attorneys’ ostensible role in these crises. Moreover, as lawyers effectively operate as gatekeepers and rubberstamps for much of business decsionmaking, they may serve as the most efficient risk bearer to reduce externalized costs, whether through a division of ethical responsibilities between in-house attorneys and independent firms or simply staying the drastic course of Lawson. This modification of the role of attorneys does present a difficult contradiction as the exact value added by lawyers is leveraged into a social duty and it’s not obvious whether the two can co-exist. Given the relative lack of traction and progress, however, it seems the stickiness of established behavior may present too much value, for attorneys and clients alike.
The large-scale multinational financial giants are probably represented by the renowned investment banks such as Goldman Sachs, UBS, D...
Watson, D. & Head, A. (2010) Corporate Finance: Principles & Practise. 5th edn. Harlow: Prentice Hall.
One of the roles of Societe Generale Corporate & Investment Banking is Global Finance. It supports the clients (mainly corporate clients, but also financial institutions, local authorities, sovereigns as issuers or borrowers) to find funding in order to help them grow and develop their business. This is called Structured finance – the sector of finance that helps transfer the risk using complex legal and corporate entitites.
The forced liquidation of some $3 trillion in private label structured assets has been deprived from the financial markets and the U.S. economy has obtained a vast amount of liquidity that the banking system simply cannot restore. It is not as easy to just assign blame within these case however it is noted that the credit rating agencies unethical decisions practices helped add onto the financial crisis of 2008 and took into account the company’s well-being before any other stakeholders.
Brealey, Richard A., and Myers, Stewart C. Principles of Corporate Finance. Sixth ed. McGraw Hill, New York, © 2000.
This paper will serve as a discussion on the topic of investment banking. In this paper the author includes various articles and thoughts that help to understand the background and principle of investment banking. This discourse will attempt to address this issue through explaining what investment banking is, introducing major investment bankers, and how investment banking affects our globally economy. Investment Banking Defined Investopedia (2008) stated this definition about investment banking, “A specific division of banking related to the creation of capital for other companies. Investment banks underwrite new debt and equity securities for all types of corporations.
Berk, J., & DeMarzo, P. (2011). Corporate finance: The core, second edition. (2nd ed.). Boston, MA: Prentice Hall.
[6] Kripalani, Majeet & Egnardio, Pete. The Rise Of India. Business Week Online. December 8, 2003. http://www.businessweek.com/magazine/content/03_49/b3861001_mz001.htm
The main importance is to take part in the speculative activity in order to generate future earnings. For this purpose, individual operators use tools for investment analysis or investment company’s services are bought in order to manage the capital in the names of investors.
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.
For an organisation to rise fund, they usually tend to look at the stock market and capital market to do it so. This is two markets are usually seemed similar by the investors as they both contributes to the development of an economy. But there are significant difference between them. The capital market is a market that consist of stock market as well as the bond market. As a result, the capital market provides a long-standing finance using the debt capital and the equity capital. Capital markets divided into two sectors known as primary markets and secondary markets. The primary market is where securities are issued for the first time whereas the secondary market is where securities that have been already issued are traded among investors (Difference...
The capital structure of a firm is the way in which it decides to finance its operations from various funds, comprising debt, such as bonds and outstanding loans, and equity, including stock and retained earnings. In the long term, firms seek to find the optimal debt-equity ratio. This essay will explore the advantages and disadvantages of different capital structure mixes, and consider whether this has any relevance to firm value in theory and in reality.