SEBI & Financial Markets — NISM Certification

SEBI — Structure & Role

SEBI (Securities and Exchange Board of India) — established 1992 (SEBI Act 1992). Statutory regulatory body for Indian capital markets.

Three-fold objectives:

1.Protect interests of investors in securities

2.Promote development of securities market

3.Regulate securities market

Indian Capital Market Structure

PRIMARY MARKET — new securities issued
    ├── IPO (Initial Public Offering)
    ├── FPO (Follow-on Public Offer)
    ├── Rights Issue
    └── Private Placement / QIP

SECONDARY MARKET — trading of existing securities
    ├── BSE (Bombay Stock Exchange) — Sensex (30 stocks)
    ├── NSE (National Stock Exchange) — Nifty 50
    └── Derivatives: NSE F&O, MCX (commodities)

DEBT MARKET
    ├── Government Securities (G-Sec) — RBI auctions
    ├── Corporate Bonds
    └── T-Bills (91/182/364 days)

Investment Products

Equity

•Shares/Stocks: Ownership in a company. Return through dividends + capital appreciation

•IPO process: Company → DRHP to SEBI → SEBI approval → Anchor investors → Open subscription (3 days) → Allotment → Listing

•Demat account: Electronic holding of shares. Depositories: CDSL, NSDL. Opened via Depository Participant (DP).

Mutual Funds

•Pooled investment vehicle managed by Asset Management Company (AMC)

•SEBI categorisation (2017): 10 equity categories, 16 debt, 6 hybrid, 2 solution-oriented, 2 others

•Key MF types:

- Large cap: Top 100 companies by market cap

- Mid cap: 101–250

- Small cap: 251+

- Flexi cap: Invest across market caps (minimum 65% equity)

- Debt funds: Liquid (< 91 days), Short duration, Long duration, Gilt

- ELSS: Tax-saving equity fund — 3-year lock-in, 80C deduction up to ₹1.5 lakh

NAV (Net Asset Value): Total assets - liabilities / Number of units. Published daily for open-ended funds.

Expense ratio: Annual fee charged by AMC. SEBI limits: 2.25% for equity, 2% for debt. Lower expense = higher returns for investor.

Derivatives

•Futures: Obligation to buy/sell at predetermined price on future date

•Options: Right (not obligation) to buy (call) or sell (put) at strike price

•F&O lot sizes determined by NSE/BSE

•Weekly (Thursday expiry) and monthly (last Thursday) contracts

NISM Certifications

SEBI-mandated certifications for financial market professionals:

Certificate	Who needs it	Cost

|-------------|-------------|------|

NISM-VA: Mutual Fund Distributors	MF distributors, ARN holders	₹1,500
NISM-VIIIA: Equity Derivatives	Persons dealing in F&O	₹1,500
NISM-VIIIB: Currency Derivatives	Currency F&O dealers	₹1,500
NISM-X-A: Investment Adviser Level 1	SEBI-registered advisers	₹3,000
NISM-X-B: Investment Adviser Level 2	Senior advisers	₹3,000
NISM-VII: Securities Operations	Back-office, clearing	₹1,500
NISM-III-A: Securities Intermediaries Compliance	Compliance officers	₹1,500

NISM exam format: 100 MCQs, 2 hours, 50% passing marks, negative marking (-25%). Valid for 3 years.

Stock Market Analysis

Fundamental Analysis

•P/E Ratio: Price/EPS. Higher = expensive relative to earnings

•P/B Ratio: Price/Book Value. < 1 = trading below book value

•EV/EBITDA: Enterprise value multiple. Used for comparison across leverage levels

•ROE (Return on Equity): Net profit / Shareholders equity. > 15% is generally good

•Debt/Equity ratio: Higher = more leveraged. Depends on industry

Technical Analysis

•Support: Price level where buying pressure arrests fall

•Resistance: Price level where selling pressure arrests rise

•Moving Averages: 50-DMA (short term), 200-DMA (long term). Golden cross: 50 crosses above 200 (bullish)

•RSI (Relative Strength Index): 0–100. > 70 = overbought, < 30 = oversold

•MACD: Trend-following momentum indicator. Signal line crossovers generate buy/sell signals

Investor Protection

SEBI Grievance Portal: SEBI SCORES (sebi.gov.in/sebiscores) — online complaint redressal

Investor compensation: IEPF (Investor Education and Protection Fund) — unclaimed dividends, shares transferred to IEPF. Can be claimed by investors.

Insider trading: Trading on UPSI (Unpublished Price Sensitive Information) is a criminal offence. Penalty: ₹25 crore or 3x profit, whichever higher. Imprisonment up to 10 years.

SEBI & Financial Markets — Overview