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Tag: Capital Market Certifications

Ways Trade Execution Can Improve Your Capital Market Business!

Posted on by Imarticus Learning

What exactly is Trade?
Trade is the exchange of items between two or more parties backed up by purchasing power. In a layman’s language, buying and selling of products and services are known as Trade.

What are Capital Markets?
Capital market is the kind of financial market where securities such as long-term debt, equities, etc. are traded frequently. This is a volatile market as the value of these securities and the interests and dividend rates involved with them keep fluctuating.

The capital market is further broken down into two categories: Primary Market & Secondary Market. The primary market is the capital market where new securities are bought and sold and the Secondary market is the one where the already issued securities are exchanged by various investors and companies.

Trade Execution and the Capital Market 
Whenever there is an exchange, trade comes into the picture, even in case of financial instruments. Financial instruments are heavily traded all around the globe every second. And with such exchange of securities, the trade aspect has to be clearly defined and should not be eclipsed by the volume of transactions. The capital market runs on the game of exchange. Such exchanges are facilitated by smooth trade execution, Asset Management Allocation, and a well-versed post-graduate diploma in Banking and Finance.The trade life cycle has to be optimized and every step has to deliver some value to make the process smooth and glitch-free. Mentioned below are the stages of the Trade Life cycle and how their execution leads to improvement in the capital market business.

  • Order Initiation

The order is initiated when the stocks of various companies are made to float in the market. Such a process can be called as “Security Existence Awareness”. Then an individual buyer or a company shows its intention to buy particular security with the help of their registered stock brokers. The brokers perform the buying and selling function for their respective clients in exchange for a small fee. After the order is placed, the brokers process the transaction, delivers the security or collect the money and transfer the benefit to his client.

  • Order Processing and Managing Potential Risks

A capital market is a place with fluctuating value. And with fluctuation, risks dawn in. To process the order, the broker must have a clear picture of the funds residing in his client’s account and also of the securities the client is interested in. If both the scenarios fall in line, the broker generates the receipt and processes the orders. If any default on the part of the client, the broker will have to keep a window up for such loopholes and manage the associated risks carefully. Also, the broker has to recover the additional charges from their clients efficiently.

  • Order Matching and Trade conversion

On the verification of what is required by the client, the particular securities are sent to exchange for verification of various details and allotment of the respective securities. The brokers charge a brokerage for executing the security trade function effectively and efficiently. The receipt of the order confirmation is then sent to the client and the details of the client are recorded by the broker for the allotment of a unique customer ID.

An agency that is commonly known as the custodian then intervenes in the settlement of any security deal. The custodian receives the details of the order from the exchange. This includes details like the type, price of the security, etc. This is done to make the custodian aware of an upcoming securities exchange. It is the job of a custodian to validate the details of the transaction and then show a green flag to the broker. This complicated process can be made much easier by proper capital market training.

  • Trade Settlement and Clearance

The trade is then settled after 2 days of a valid transaction. This is commonly known as a T+2 settlement. The clearance provider then informs the restrictions of the particular transactions which is followed by the settlement of balances. The securities are then allocated to the client in his DMAT account and the share value is credited to the companies raising capital. After completion of such a transaction, it is recorded by the Exchange offices.

Passenger Vehicles Sales Drop For 9 Months In A Row

Posted on by Imarticus Learning

 
Tata Motors was supposed to launch its Altroz premium hatchback brand in mid-August. But a flurry of critical happenings forced it to defer, considering that every car launch in India is a 4000-crore gamble. The decision might seem like Tata Motors’s prerogative, but what it also highlights is a hint at the current state of the passenger vehicle market of India. In more critical words, it is a tiny example of the causes and effects of the great Indian passenger vehicle slump of 2019.
The question then is: what is happening with the auto industry and why?
To answer that question in the simplest way possible, there arises a need to cover all the aspects of the event. Let’s have a quick look.
What is Happening with the Auto Industry?
Historical and current data by the Society of Indian Automobile Manufacturers (SIAM) show that in July 2019 sale of passenger vehicles across categories (two-wheelers and four-wheelers) dived by about 19% compared to the same period in 2018. This is a very steep fall.
The worst affected is the passenger vehicle segment which registered an annual drop of 31% compared to 2018 even as the industry saw government intervention through restrictions involving the Bharat state emission standards. Earlier in 2019, the BJP-led central government had mandated that only BS-VI-compliant vehicles will be allowed for sale in India from April 2020, hinting at a possible goodbye to the older BS-IV versions. This drop is the steepest since December 2000.
While experts have attributed the cause to multiple factors, what this slump has further resulted in is what is controversially described as ‘fear-mongering’ on the part of the industry players. Job cuts in lower-tier cities, deep discounts, and new model launches failing to attract the potential buyer, and sluggish stock market forms the circular loop of both causes and effects, which can only be simplified by taking a look at the possible cause of this slump. Or causes.
What Caused this Slump?
While the Goods and Services Tax (GST) introduced in 2017 helped improve overall passenger ownership numbers, it began to experience a sharp decline sometime in early 2018. What exactly caused it?
Increase in fuel prices (in major metropolitan cities like Mumbai), higher interest rates, and a major hike in vehicle insurance costs were the major factors, as reported by The Hindu. The flood situation in states like Kerala also had an adverse impact in the third quarter of the 2018-2019 fiscal.
It further reported the effects of the IF&LS crisis as it tied the slump in sales in rural areas to the decline in trust with non-banking finance companies (NBFCs). In rural India, NBFCs are trusted more than actual banks. This was further accentuated by the high inventory pile-up among dealers and manufacturers.
In December 2018, the industry set off the alarm, putting its final rays of hope on the Lok Sabha elections in early 2019. The old government regained its power and nothing changed.
What perhaps is the often-neglected cause but one which has the highest weight is the combination of the BS emission standards as well as the unanimous heralding of electric vehicles. Any wise person buying a car today wants to drive it for at least a few years. And what with fuel prices refusing to go down and government standing outside everyone’s door with the emissions placard, she wants to ensure that her future private commute is ensured as well as insured with low maintenance costs.
The new BS emissions mandate comes into effect on April 2020. So, naturally, the dilemma of buying a car before or after the due date has put off a lot of discerning buyers. More of them are holding off their purchases due to one reason or the other.
Lastly, what is interesting is also the rise in growth of pre-owned cars sales. Compared to the figures in 2018, the sales for used cars grew by 12% as reported by The New Indian Express on June 2019. If one looks at the features of cars launched in the last year and compares it with those that were launched five years ago, nothing much has changed.
With the young population making wise choices when it comes to finances, thanks to increased awareness of financial literacy in the nation, they no longer need a car, let alone a new car. Taxi-cab aggregators, despite their occasional newsworthy actions, are still going strong, thanks to the young India who does not yet believe in owning a car when all it does is take him from point A to point B. Which is what he wants.
What’s Going to Happen?
In August 2019, economist and former vice-chairman of the NITI Aayog thinktank Arvind Panagariya wrote a critical analysis of the auto industry slump. He criticized the industry for waiting on the government to bail them out as he also observed the decline as not cataclysmic.
What he suggested were the industry players to keep patience and use their former profits to club the gap in this ‘phase’ even as the nation moves on to a financial market that looks favorable to consumerism.
Although the slump has triggered losses in the form of large layoffs (about 10 lakh jobs at risk) by almost all companies, there is still hope that the performance will improve in the coming months. The industry has made a demand for a reduction in GST to 18% from the current rate of 28%, but there does not seem to be a clear resolution on that front even as the government ponders over it.
This could well be a phase for the industry, as noted by experts and some auto manufacturers alike, but when that ‘end’ will be cannot be guessed, especially during the high level of uncertainty in the Indian financial and consumers market.
Influential events like the recent revocation of Article 370 will take time to subdue, and only then can one even expect to see a change, as one analyst commented on the promise of anonymity. So, the best course of action is to just wait and watch.