Stock Exchange BSE, NSE

7/31/2019 Stock Exchange BSE, NSE

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STOCK EXCHANGE


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SECURITIES MARKET IN INDIA- AN OVERVIEW

Basically, Securities markets provide a channel for allocation

of savings by an individual or an organization to those whohave a productive need for them.

A security market can be said a location where the savers

meet the real investors who need the fund. The savers and

investors are constrained by the economys abilities to investand save respectively which thus helps market in enhancing

savings and investment in the economy.

The Security market denotes buyers and sellers of

securities and agencies which help in the marketing of

securities.


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SECURITIES MARKET IN INDIA- AN OVERVIEW

Securities are broadly categorized into debt securities (such

as banknotes, bonds and debentures) and equity securities,e.g., common stocks; and derivative contracts, such as

forwards, futures, options and swaps.
http://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Banknoteshttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Debenturehttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Common_stockhttp://en.wikipedia.org/wiki/Derivative_(finance)http://en.wikipedia.org/wiki/Forward_contracthttp://en.wikipedia.org/wiki/Futures_contracthttp://en.wikipedia.org/wiki/Option_(finance)http://en.wikipedia.org/wiki/Swapshttp://en.wikipedia.org/wiki/Swapshttp://en.wikipedia.org/wiki/Option_(finance)http://en.wikipedia.org/wiki/Futures_contracthttp://en.wikipedia.org/wiki/Forward_contracthttp://en.wikipedia.org/wiki/Derivative_(finance)http://en.wikipedia.org/wiki/Common_stockhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Debenturehttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Banknoteshttp://en.wikipedia.org/wiki/Debt


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WHAT IS STOCK EXCHANGEStock exchange is that place where trading of shares is done in

terms of sale and purchase.

An organized market where securities issued by companies,

government organizations and semi government organizations aresold and purchased.

Securities include shares, bonds, debentures.
http://en.wikipedia.org/wiki/Image:Bombay-Stock-Exchange.jpg


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DEFINITION OF STOCK EXCHANGE

According to Securities Contracts Regulation Act, 1956 : Stockexchange means any body of individuals whether incorporated ornot, constituted for the purpose of assisting, regulating orcontrolling the business of buying, selling or dealing in securities.

FEATURES:

1. Organised Market

2. Dealings in securities issued by various concerns

3. Dealing only through authorised members

4. Necessary to obey rules


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Name of Indian stock exchanges:

1.Bombay stock exchange

2.National stock exchange(Mumbai)

3.Banglore stock exchange

4.Utter pradesh stock exchange(kanpur)

5.Magadh stock exchange(Patna)

6.Ahmedabad stock exchange

7.vadodara stock exchange(Baroda)

8.Bhubaneswar stock exchange

9.Calcutta stock exchange(kolkata)

10.madras stock exchange


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There are 23 stock exchanges inthe India. Mumbai's (earlier knownas Bombay), Bombay Stock

Exchange is the largest, with over6,000 stocks listed. The BSEaccounts for over two thirds of thetotal trading volume in the country.Established in 1875, the exchange

is also the oldest in Asia. Amongthe twenty-two Stock Exchangesrecognised by the Government ofIndia under the SecuritiesContracts (Regulation) Act, 1956, itwas the first one to be recognisedand it is the only one that had theprivilege of getting permanentrecognition ab-initio.


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Cont.

11.Cochin stock exchange

12.coimbatore stock exchange

13.Gauhati stock exchange

14.Hydrabad stock exchange

15.Madhya pradesh stock exchange(indore)

16.Jaipur stock exchange

17.Ludhina stock exchange

18.Mangalore stock exchange

19.Pune stock exchange

20.saurashtrakutch stock exchange


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FUNCTIONS

Provides a ready market for buying and selling of securities.

Performs an act of magic as it enables long term investments to befinanced by funds provided by individuals who are otherwise

interested in short term or medium term investment.

Directs the flow of capital in the most profitable channels.

Includes corporate enterprises to raise their standards of

performance.

Offers and easily understood evaluation of the financial conditions

and prospects of listed firms

Facilitates speculation,

Promotes the habit of saving and investment thereby helping incapital formation.

Promotes industrial growth and economic development.


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The Security market includes :

1. The market for new securities

2. The market for existing securities.

Activities in originating, distributing and trading in securities.

Organizations which facilitate and contribute to activities in the

securities market.

Persons and organizations who buy and sell securities. Regulations, practices and customs which influence and control the

conduct of business in securities market.

It will be convenient to study the securities market under twoheads:

1. The New Issues Market

2. The Stock Exchange


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The market for new securities

The new issue market directs the demand for fresh capital by expressing it in the form

of securities.

It comprises companies, individual, institutional investors, intermediaries ie

underwriters, stock brokers etc.

It is concerned with the floatation and disposal of new issue of shares and debentures

through their allotment to persons and organizations.

It facilitates transfer of investible funds from their owners to productive channels.

An effective new issue market encourages savings and flow of savings into industrialenterprises.

Its primary role to play in mobilizing the savings of the individual investors and

institutional investors.

The market for existing securities

Stock exchange is concerned with re sale of securities.

It is the market where stocks or securities are exchanged for investment or speculative

purposes.


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FUNCTIONs OF STOCK EXCHANGE

1. To create liquidity into securities:whenever required investor caninvest his money through this market into securities and canreconvert this investment into cash.

2. To facilitate better allocation of capital: it provides properdirection to flow of capital. When co.s having profitable securitiesenter capital market to meet out the funds, their previous record

helps in raising additional capital.3. To facilitate the valuation of securities: The prices of sec. changes

every day due to the sale & purchase. Stock exchanges evaluatethe market value of various sec.

4. To promote habit of saving & investment:investors earn interest& dividends as permanent income from such investment. Theyget 2 benefits from this : advantage can be taken of changingprices and at the time of need sec. can be sold anytime at theirmarket price.


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FUNCTIONs OF STOCK EXCHANGE

5. To provide safety of dealing: these markets fully protects theinterest of the investors. They have their own bye-laws whicheach member has to follow. Violation may lead to cancellation ofmembership.

6. To provide full information regarding listed co.s: it collectsimportant information about the co.s listed, while collecting such

information main emphasis is on information related to financialstrength.

7. To educate the investors: a public relation office is established inevery exchange, this office publishes the dailhy quotations ofvarious sec., weekly reports,annual reports etc. Investors can take

intelligent decisions about their investment so that maximumprofit can be generated.


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BENEFITS OF STOCK EXCHANGE

FROM THE POINT OF VIEW OF COMMUNITY:

1.It assist the economic development by providing a body ofinterested investors.

2.it uploads the position of superior enterprises and assist

them in raising further funds. 3.It encourages capital formation

4.Government can undertake projects of national importanceand social value raising funds through the sale of its securities

on the stock exchange. 5.It is the stock exchanges that central bank of a country can

control credit by undertaking open market operations(purchase and sale of securities)


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FROM THE COMPANY POINT OF VIEW

1.A company whose shares quoted on stock

exchange they enjoy better reputation and credit.

2.The market for the shares of such a company is

naturally widened. 3.The market price of securities is likely to be higher

in relation to its earnings,dividends and property

values.This raises the bargaining power of the

company in the event of a takeover,merger or

amalgamation.


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FROM THE INVESTORS POINT OF VIEW

1.Liquidity of the investment is increased

2.The securities dealt on a stock exchange are good collateral

security for loans.

3.The stock exchange safeguards interests of investors through

strict enforcement of rules and regulations.

4.The present net worth of investments can be easily known

by the daily quotations.

5.His risk is considerably less when he holds or purchases

listed securities.


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BOMBAY STOCK EXCHANGE (BSE)

ABOUT BSE:The oldest exchange in Asia and the first exchange in the country to be granted

permanent recognition under the Securities Contract Regulation Act, 1956,Bombay Stock Exchange Limited (BSE) has had an interesting rise toprominence over the past 130 years.

The Stock Exchange, Mumbai, popularly known as "BSE" was established in1875 as "The Native Share and Stock Brokers Association", as a voluntary non-profit making association.

Governing Board comprising of 9 elected directors (one third of them retire every

year by rotation), two SEBI nominees, a Reserve Bank of India nominee, sixpublic representatives and an Executive Director is the apex body, which decidesthe policies and regulates the affairs of the Exchange

BSE SENSEX

The BSE SENSEX, short form of Sensitive Index, first compiled in 1986 is amarket Capitalization-Weighted index of 30 component stocks representing asample of large, well-established and financially sound companies. The index iswidely reported in both, the domestic international, print electronic media and iswidely used to measure the used to measure the performance of the Indian stockmarkets.

The BSE SENSEX is the benchmark index with wide acceptance among

individual investors, institutional investors, foreign investors, foreign investors andfund managers. The objectives of the index are:


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BSE

Bombay stock exchange : it has 30

companies scripted.

ACC

2.BAJAJ

3.AIRTEL 4.BHEI

5.CIPLA

6.DLF

7.GRASIM

8.GUJRAT AMBUJA

9.HDFC

10.HDFC BANK
http://en.wikipedia.org/wiki/Image:Bombay-Stock-Exchange.jpghttp://en.wikipedia.org/wiki/Image:Bombay-Stock-Exchange.jpghttp://en.wikipedia.org/wiki/Image:Bombay-Stock-Exchange.jpghttp://en.wikipedia.org/wiki/Image:Bombay-Stock-Exchange.jpghttp://en.wikipedia.org/wiki/Image:Bombay-Stock-Exchange.jpg


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CONT

11.HERO HONDA

12.HINDALCO

13.HUL

14.ICICI BANK

15.INFICYS

16.ITC

17.L&T

18.MARUTI

19.NTPC

20.ONGC


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CONT

21.RANBAXY

22.RELIANCE COMMUNICATION

23.RELIANCE ENERGY

24.RIL

25.SATYAM

26.SBI

27.TCS

28.TATA MOTERS

29.TATA STEEL

30.WIPRO


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NATIONAL STOCK EXCHANGE (NSE)

On its recognition as a stock exchange under the Securities Contracts(Regulation) Act, 1956 in April 1993, NSE commenced operations in the

Wholesale Debt Market (WDM) segment in June 1994. The National Stock Exchange (NSE) is India's leading stock exchange

covering around 400 cities and towns all over India. NSE introduced forthe first time in India, fully automated screen based trading.

It provides a modern, fully computerized trading system designed tooffer investors across the length and breadth of the country a safe andeasy way to invest or liquidate investments in securities.

NSE started equity trading on November 3, 1994 and within a short spanof 1 year became the largest exchange in India in terms of volumestransacted.

One of the objectives of NSE was to provide a nationwide trading facility

and to enable investors spread all over the country to have an equalaccess to NSE.


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SPECULATION :

Definition : it involves the buying,holding,selling,short-term

selling of stocks,bonds.commodities,currencies,collectibles or

any valuable financial instrument to profit from fluctuations in

its price as opposed to buying it for use or for income via

method like dividends or interest.
http://en.wikipedia.org/wiki/Image:National_Stock_exchange_Mumbai.JPGhttp://en.wikipedia.org/wiki/Image:Assorted_United_States_coins.jpghttp://en.wikipedia.org/wiki/Image:National_Stock_exchange_Mumbai.JPG


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Kinds of speculation

Bull Market (Tejiwala): In case of that they purchase the

shares at current prices to sell at a higher price in the near

future and makes a profit if his expectations come true.he is

also called a long buyer.

Bear Market (Mandiwala) : He sells security in the hope that

he will be able to buy them back at lesser price.It is also called

short selling.
http://en.wikipedia.org/wiki/Image:Assorted_United_States_coins.jpg


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Cont

Lame duck : When a bear has made contracts to sell

securities,find it difficult to meet his commitment due to non-

availability of security,,they always struggling..

Stag : He is that type of speculator who applies for a large

number of a shares in a new issue with the intention of selling

them at a premium.He is bullish and very cautious.


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INTERNAL PLAYERS

The members of the stock exchange can be divided intotwo parts:

A.Broker: He is a commission agent who transactsbusiness in securities on behalf of non-members.They

may have number of sub-brokers to canvass and securebusiness for them.

B.Jobber: He is an independent dealer securities.He

purchase and sells securities in his own name. He is notallowed to deal with non-members directly.He works forprofit.


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Tarawaniwala

Non-members : The following categories of non

members are also permitted to enter trading hall and

transact business on the behalf of members.

Authorized clerks: They are the assistant oragents.They buy or sell on the behalf of

employers.They can not transact business on their

own account.

Remisers: They are the sub-brokers. He is also called

the half commission men.


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THE REGULATORY AUTHORITY: SEBI

The rise in number of investors was also leading to an increase in

malpractices on part of the companies, brokers, merchant bankers,investment consultants and various other agencies involved in new

issues. This led to erosion of investor confidence. The Government

and the stock exchanges were helpless as the existing legal

framework was just not enough. Realizing this, Securities Exchange

Board of India (SEBI) was constituted by the Government of India in

April 1988.

It was constituted and made a statutory body by SEBI act 1992.With

the coming into effect of SEBI, some of the powers and functionexercised by the central government, in respect of regulation of

stock exchanges were transferred to the SEBI.


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OBJECTIVES OF SEBI

1.Registring and regulating the working of stock brokers, sub-brokers,share transfer agents, underwriters.who may be associated

securities market in any manner.

2.Registering and regulating the working of collective investmentscheme including mutual funds.

3.Prohibiting insider trading in securities.

4.Regulating substantial acquisition of shares and takeovers ofcompanies.

5.Calling for information from, undertaking inspection, conductinginquiries and audits of stock exchanges and intermediaries andself regulatory organizations in the securities market.

6.Prohibiting fraudulent and unfair trade practices related to sec.market.

7.Promoting investors knowledge and training of intermediaries .


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The major functions of SEBI are:

1Protecting interest of investor in securities

a) Prohibiting fraudulent & unfair practicesb) Prohibiting misleading statements, inducing purchase &

sale of securities.c) Educating investors

d) Promoting fair practices and code of conducte) Stopping preferential allotment


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The major functions of SEBI are:

2 Promoting development of securities market

a) Registration of FIIb) Promoting training of intermediaries of market.c) Making underwriting optionald) Debenture trustees to be registered with SEBI

e) Permitting internet trading through registered broker.

3 Regulating securities market

a) Regulating business in stock marketb) Regulating intermediariesc) Registering and regulating working of stock brokersd) Regulating takeover of companies.

Stock Exchange BSE, NSE

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