Participants in secondary market, Financial Management

PARTICIPANTS IN THE SECONDARY MARKET

The players in the secondary capital market include:

  • Individual Investors (Public).
  • Companies.
  • Mutual funds.
  • Financial Institutions.
  • Foreign Institutional Investors.
  • Individual Investors (Public)

 

The general investing public plays a notable role in the stock market. Popularly referred to as small investors, they are investing traditionally in tax savings schemes. Mutual funds are very popular among small investors. Even among the mutual fund schemes, debt related schemes garner several times more funds than equity related schemes.

Companies

Most of the companies having surplus funds will invest in the money markets. Generally, inter-corporate deposits and commercial papers are favored by these companies. But for long-term needs, companies tap capital markets. These companies, which have made investments using their surplus funds are required to disclose the same in their annual reports. Generally, companies are not regular players in the capital market. Some finance/investment companies offering portfolio management services to clients or companies with stock market operations as their main objective, however, are regular players in the secondary market.

Mutual Funds

Mutual Funds pool funds from investors and invest them in well-diversified portfolios. Fund managers and investment consultants select the of companies for investment for maximizing returns on investments. All the mutual funds in the country are regulated in accordance with the provisions laid down by the government. Mutual Funds are the single largest player category in the stock market.

Financial Institutions

Generally, financial institutions partake in the share capital of various companies. By their active buying and selling of securities from the secondary market, the financial and investment institutions maintain a balance in the market.
Foreign Institutional Investors

Foreign Institutional Investors (FIIs) means institutional investors (mutual funds or equity firms) maintained and controlled from outside the country. Generally, FIIs pick up stocks keeping an eye on long-term gains. The presence of FIIs in the stock markets has been a big boost to the market sentiments. Usually, the orders from FIIs are large blocks of shares which cannot be picked up from the trading rings alone. Such purchases are effected by off-market deals. Block transactions arranged by brokers between FIIs and large shareholders like government financial institutions are termed as off-market deals. They have to take prior permission from the authorities concerned in the countries where they want to invest.

 

Posted Date: 9/10/2012 5:39:14 AM | Location : United States







Related Discussions:- Participants in secondary market, Assignment Help, Ask Question on Participants in secondary market, Get Answer, Expert's Help, Participants in secondary market Discussions

Write discussion on Participants in secondary market
Your posts are moderated
Related Questions

Following details are related to three companies which are identical except in terms of ''r''. Company ABC Ltd. MNC Ltd. XYZ Ltd. Cost of capital 10% 10% 10% Earn per

What can a financial institution often do for a deficit economic unit (DEU) that it would have difficulty doing for itself if the DEU were to deal directly with an SEU? SEUs us

Capital Asset Pricing Model (CAPM)   Capital Asset Pricing Model (CAPM) is a model which utilizes the measure of systematic risk, 'B' to price assets. The expected rate of r

Q. Explain about Loans - Forms of Bank Finance? When a bank makes an advance in lump-sum against some security it is called a loan. In Case of a loan, a specified amount is san

Accounts receivable are sometimes not collected.  Why do companies extend trade credit when they could insist on cash for all sales? Extending trade credit almost all the time le

Q. How are LIBOR, TIBOR and EURIBOR determined? London Inter Bank Offered rate ( LIBOR) and is the rate of interest at which banks offer funds to other banks in marketable siz

Default risk is the risk that arises when the issuer is not able to satisfy the terms and conditions of the obligation with respect to timely pa

Q. Short terms working capital? 1) Indigenous bankers: private money leased and other country banking used to be the only source of finance prior to the establishment of the

Cash management is about managing excess cash also. The response of management must depend on whether the surplus is large and how long it is likely to exist. If the balance is