EXECUTIVE SUMMARY
Worldwide, equity markets attract a lot of attention. They are the subject of news articles, rumors, and cocktail party talk and are generally associated with exciting people. Debt is considered boring. No one talks about it. It is associated with old people. And there are many who will be surprised to know that in any country in the world, the debt market is several times bigger than the equity market.
So much bigger, that most of the market is beyond the reach of ordinary investors. Institutional investors are the major players in the market. These institutions buy bonds worth tens of millions and not thousands.
The project begins with the overview of Indian Financial Sector. This project contains detailed study on Debt Market covering various Instruments, Investors, and Issuers of the debt market. Project contains YTM (Yield To Maturity) as how it forms the basis of investment in the debt market
I have dealt with in detail on the "Wholesale Debt Market" as it accounts for most of the Debt Trades as compared to retail trade. In this part I have covered the trading process of the WDM segment at NSE
For retail investors, there is a special section on "Retail Debt". This section looks at various investment options available for retail investors.
Then apart from this the project throws light on the regulators of the market, as it is the most vital thing to be known before entering into any market.
The project also deals in the analytical study on the factors that affect the Market trends & its future prospects.
The project has arrived at the conclusion that the Debt Market is going to be the largest financial market in the years to come.
1. OVERVIEW OF INDIAN FINANCIAL SECTOR
1.1 INTRODUCTION
In a broad sense, finance refers to funds of monetary resources needed by individuals, business houses and the Government. Individuals and households require funds essentially for meeting their current requirements or day-to-day expenses or for buying capital goods (commonly known as investment). A business unit –a factory or a workshop – needs funds for paying wages and salaries, for buying raw materials for purchasing new machinery for replacing an old one, etc. Traders require finance for buying and stocking goods in their shops and go downs. Farmers require finance for different periods and for different needs. Finally, the government needs funds to meet its expenditure on the goods and services and finance its development programmes and deficit.
India’s financial system includes the many institutions and the mechanism, which affects the generation of savings by the community, the mobilization of savings and the effective distribution of the savings among all those who demand the funds for investment purposes.
1.2 COMPOSITION OF INDAIN FINANCIAL MARKET
Indian financial system is composed of
1) The banking system, the insurance companies, mutual funds, investments funds and other institutions which promotes savings among the public, collect their savings and transfer them to the actual investors
2) The investors in the country composed of individual investors, industrial and trading companies and the government – these enter the financial system as borrowers.
1.3 CLASSIFICATION OF INDIAN FINANCIAL MARKETS
Indian financial markets can be classified into 3 broad categories which are represented by the following diagram
