How to read financial news
Finance news may be a daily feature in many living rooms, alongside the game and weather. For the more financially literate, it is a handy overview of stock market movements and economic developments. But it doesn’t need to be that way. Here’s a fast breakdown of what finance news is all about.
The market and therefore the economy aren’t an equivalent thing. it’s only one of the markets that structure the economy, just like the housing market.
While the market is taken into account a number one indicator of the economy, the 2 don’t share a dependable relationship. you should not extrapolate what the economy will do tomorrow from what the market does today.
Broadly speaking, there are two *segments* within the financial market.
The financial market comprises of the cash markets* that affect the short-term lending and borrowing of funds and therefore the *securities or capital markets* that enable long run transfer of funds using debt and equity instruments.
The financial market isn’t just a provider of funds..but also liquidity and exit options for the participants.
Now, allow us to see the structure of the financial markets within the Indian context
The *banking system* acts because the intermediary to channel funds to economic enterprises. Banks also provide a secure system for settling financial transactions. RBI is that the *regulator of the banking sector* impacts stock market. it’s the bank licensing and note-issuing authority. It also controls the credit and monetary activities within the economy.
The *securities market* provides the structure for businesses to boost funds through the difficulty of securities. Two segments in this:
1. The *primary market* also called the new issue market, is where issuers raise capital by issuing securities to investors.
2. The *secondary market* also called the stock market, facilitates trade already-issued securities. The stock exchange may be a very busy place.