A place where people trade their financial securities, commodities and other financial assets. Here the real transaction or exchange of money for goods and services takes place. Securities include stocks and bonds, and commodities include precious metals or agricultural products are traded in financial Markets.
Types of Financial Markets
- Money market
- Capital Market
The money market is where financial instruments with high liquidity and very short maturities are traded. It is used for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year.
Capital market is the market which gives medium and long term loans. It is different from money which deals only in short term loans. Further the capital market is divided in two segments.
- Primary market: The primary market is the part of the capital market that deals with issuing of new securities. Primary markets create long term instruments through which corporate entities raise funds from the capital market. The fresh IPO (Initial Public Offerings) are made here.
- Secondary Market: The secondary market is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are traded. The secondary market is also known as the aftermarket. BSE(Bombay Stock Exchange), NSE(National Stock Exchange) are example of secondary market.
It is the market for buying and selling of stocks, shares, securities, bonds and debentures etc. It increases the market ability of existing securities by providing simple method for public and others in buy and sell securities.
Bombay Stock Exchange
It is the first organised stock exchange in India, it is situated at Dalal Streat in Mumbai and established in 1875, BSE is Asia’s first stock exchange.
Sensex stands for Sensitive Index. Most sensitive share Index of Mumbai stock Exchange is traded here. It is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange. Its base year is 1978-79 and it is founded in 1875.
National Stock Exchange (NSE)
The National Stock Exchange Of India Limited (NSE) is India's largest financial market. Established in 1992, the NSE has developed into a sophisticated, electronic market, which ranks third in the world for transacted volume. The NSE conducts transactions in the wholesale debt, equity and derivative markets.