What is the difference between money market and financial market in India The main factors that show the difference between money market and capital market as well bonds market is time period or term that is money market deals in short term funds and capital market deals in long term funds. Money Market regulates by RBI where capital market regulates by SEBI. Money Market Instrument is bills of exchange, certificate of deposits, treasury bills, commercial paper, etc. where Capital Market Instrument is shares, debentures, bonds, etc.To know about Money or Capital market first we have to understand about Financial Market. It is a place where buyers and sellers trade in financial assets like investment in bonds, commodities, currencies, stock and derivatives. It has many types one of them is the capital gain tax investment and another is money market.
Difference Between Capital Market & Money Market What is Capital market: In this buying and selling is done as a long term investment in which money is provided for a long time more than one year. It is risky and these are for long term financial growth and stability. The instrument of this is stocks, bonds investment, shares, etc. and its regulate by SEBI. In this brokers deal in long term debt and equity capital in the form of shares, public deposits, NCD IPO and investment in debenture. Interest rates or dividend rates depend on supply and demand of securities and on stock market’s Sensex conditions.
Now capital market is also divided into two parts. Primary Market: In this buyer buys the stocks from sellers and seller sell the stock for the first time. In this transaction is made between issuers and investors. Secondary Market: In this buyer buys existing stock from seller. It means investors to buy or sell the existing securities. In this transaction is made between investors.
Another important segment of this is bond and stock market. What is Money Market: In this buy and selling done for short term period up to one year or less than one year, mainly its range from 30 days to a year, sometimes for loans that are expected to be paid back as early as overnight. Here lending and borrowing are done for short term thus; an investor who wants to place investment for short term period goes to the money market. The instrument of this is deposits, bill of exchanges, collateral loans, commercial paper, treasury bills, repurchase agreement and certificates of deposit. This is closely related to cash flow, it is the place where banks deal in short term loans in the form of treasury bills and commercial bills. The rate of interest is controlled by RBI or central bank of any country. It provides many functions to individual, corporate and it plays an important role in ensuring companies to maintain an appropriate level of liquidity on a daily basis. Generally, investors invest funds in the money market in a safe manner, thus it is consider as a low risk market. You can buy bonds online like corporate bonds, government bonds, tax free bonds, zero coupon bonds, 54 EC bonds and other state deveoplment loans from bondsindia.com