Stock market (2)

Stock exchanges and Stock market reforms

in IndiaLecturer: S.Sekhar

Group 8

Presented by

What are stocks?•A stock or share represents ownership of a piece in a company.

Why do people invest in stocks?

Why do people invest in stocks?

• Stocks can appreciate in price, creating capital gains, or an increase in the value of your assets, which grow your wealth.

• Companies generate earnings, or profits generated from providing goods and services.

• Shareholders in companies are compensated for their risk through a risk premium

Stock price

•The stock price of a company is the current market price of a single stock in that company.•Buyers put in bid price; Sellers put in ask price.

Stock price

What is stock market?

• A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price.

• Two main sections: the primary and secondary market. The primary market is where new issues are first offered, with any subsequent trading going on in the secondary market.

Stock exchanges•The stocks are listed and traded on stock exchanges

which are entities a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together.•Globally, there are many stock markets including the

famous New York Stock Exchanges ( NYSE), NASDAQ, London Stock Exchange, HongKong Stock Exchange etc.• In India, the most famous stock markets are Bombay

Stock Exchange (BSE) and National Stock Exchange (NSE).

Stock Exchange Reforms in India

• Registering with SEBI has become mandatory

The foremost activity that was initiated by the SEBI towards stock exchange reforms was the registering of brokers and sub brokers operating on the stock exchange

• Brokers and sub brokers has to hold certificate issued by SEBI

• Purely prohibits inside trading activities, which means the set of all unhealthy and manipulative dealings and practices

• SEBI has allowed retail buying and selling

Retail trading refers trading through a nationwide, anonymous , order-driven and screen based trading system of stock exchange in the same manner in which trading takes place in equities

• Dematerialization of shares become & made compulsory after 1998

It is a the process of converting physical form to electronic form so as to facilitate faster trading and settlement of transaction

• Pan card has made mandatory

• Entry load on M funds has been removed

Mutual Fund Companies incur some expenses to float a fund and also they have many administrative and operative expenses. So to meet those expenses they collect a percentage of fee from the investors, that is called loads.

• FII limits has been fixed by the SEBI

in government securities' 1500 crore

in corporate bonds 2000 crore

in infrastructure 2500 crore

• Retail investors can subscribe up to 1 lakh in IPO. It sets up guidelines for development of financial institutes

• SEBI allowed companies to buy back shares

Certain provisions in the companies act which allow the shareholders to sell their shares directly to the company and such provisions are termed as buy back of shares.

• FII minimum portfolio should be minimum 10 crore

• SEBI made mandatory to issue securities at fixed value

• Compulsory rolling was Introduced in 2000 to reduce the time of settlement of transaction

means when you will get your stocks in your demat account or in physical form. In a rolling settlement, each trading day(T) is considered as a trading period and trades executed during the trading day(T) are settled on a T+2 basis i.e. trading day plus two working days.

• Stock market liberalization is the decision by a government to allow foreign investors to purchase shares in local market and domestic investors to purchase shares aboard

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