Security Analysis and Portfolio Management
- 1. Security Analysis and Portfolio Management Team - 2
- 2. Team Members
- 3. Introduction Market efficiency refers to how well asset prices reflect available information, with three forms: weak, semi- strong, and strong. In efficient markets, securities are fairly priced, and above-average returns require additional risk. India's diverse investment landscape includes major stock exchanges (BSE, NSE), a strong mutual fund industry, and active Forex trading. Digital platforms have enhanced accessibility for investors. The securities market consists of a primary market for new securities and a secondary market for trading existing ones, supported by key players like brokers and regulators such as SEBI.
- 4. Definition In this form, asset prices reflect all publicly available information, including financial statements, news, and reports. Implication Neither technical analysis nor fundamental analysis can consistently result in above- average returns. Only new, non- public (insider) information could potentially provide an advantage. Strong Form Efficiency Weak Form Efficiency Definition In this form, all past price and volume information is fully reflected in current asset prices. Implication Investors cannot use technical analysis (patterns from past prices or trading volume) to achieve above-average returns. However, fundamental analysis (looking at financial statements) may still help. Semi-Strong Form Efficiency Definition In this form, all information, both public and private, is reflected in asset prices. Implication No investor, including insiders with access to private information, can consistently achieve above-average returns, as all information is already priced in. MARKET EFFICIENCY
- 5. • Primary Market Definition : The market where new securities are issued and sold to investors directly by the company or government. Purpose : Companies use this market to raise fresh capital by issuing new stocks, bonds, or other securities. Example : A company selling shares for the first time in an IPO, or a government issuing a new bond. MARKETS FOR INVESTMENT AND TRADINGS
- 6. Definition : The market where previously issued securities are bought and sold between investors. Purpose : Provides liquidity to investors by allowing them to trade securities they already own. Example : An investor buying shares of a company from another investor after the IPO has already taken place. • Secondary Market
- 7. Definition : A decentralized market where securities not listed on formal exchanges are traded directly between parties, typically through brokers and dealers. Purpose : Facilitates the trading of stocks, bonds, derivatives, and other financial instruments that may not meet the requirements for exchange listing. Examples : - OTC Stocks: Smaller, less liquid stocks not listed on major exchanges. - Derivatives and Forex : These are often traded in OTC market • Over-the-Counter (OTC) Market
- 8. 1. National Stock Exchange (NSE) : - Founded : 1992 - Headquarters : Mumbai, Maharashtra - Market Type : Fully electronic exchange. - Benchmark Index : Nifty 50 - Features : Largest stock exchange in India by market capitalization. More liquid market compared to BSE, offering quicker transaction times. Offers trading in equities, bonds, derivatives (futures and options), and mutual funds. SECURITIES MARKETS
- 9. 2. Bombay Stock Exchange (BSE) : - Founded : 1875 - Headquarters : Mumbai, Maharashtra - Market Type : Oldest stock exchange in Asia. - Benchmark Index : S&P BSE Sensex (Sensitive Index) - Features : Offers trading in equities, debt instruments, derivatives, mutual funds, and currencies. Has a wider range of listed companies, particularly small and mid-cap firms. Still has a robust electronic trading platform but may have slightly lower liquidity than NSE.
- 10. Conclusion In conclusion, market efficiency ensures that asset prices reflect all available information, making it challenging to consistently outperform the market. The markets for trading and investments in India, through platforms like the BSE and NSE, offer diverse opportunities for investors across asset classes. The securities market, as a critical component of the financial system, provides a structured environment for the issuance and trading of financial instruments, driving capital formation and economic growth. Together, these elements foster a dynamic and transparent financial ecosystem, essential for sustainable investment and economic development.
- 11. THANK YOU