stock market india bse and nse

Rakesh Jhunjhunwala

56th on Forbes India Rich List 2015

Chandrakant Sampat

Veteran of Indian Stock market.

Was into 70% (equiti) in market.

Radhakrishnan Damani

98th on Forbes India Rich List 2015

Prepared byRaju chandiwal 15113093

Rajvendra singh 15113094

What is a Stock?

An financial instrument- that signifies an ownership position in a publicly traded corporation, and represents a claim on its proportional share in the corporation’s assets and profits.

Voting rights to shareholders

What is Stock market?A stock market is a place where the stocks

and securities of various companies are traded.

Stock exchange - means anybody of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities.

HISTORY OF STOCK EXCHANGE The stock exchange was established by

“East India company” in 18th century . In India it was established in 1850 with 22 stock brokers opposite to town hall Bombay .

History of BSE• BSE was established in 1875 as "The Native Share and

Stock Brokers Association". • Bse obtained permanent recognition in 1956 from the

Govt. of India under the Securities Contracts (Regulation) Act, 1956

What is Trading ?The buying and selling of shares termed

as trading.

A company may list its shares on an exchange by meeting and maintaining the listing requirements of a particular stock exchange.

Why does a company issue shares to the public?

A company may want additional capital to invest in new projects.

Once a company is listed, it will be able to issue further shares via a rights issue.

Financing a company through the sale of stock in a company is known as equity financing.

IMPORTANT FUNCTION OF STOCK EXCHANGE

• Provide convenient meeting places. • Help the investors to know the worth

of their holdings • Help capital formation• Help companies and government to

raise funds.• Provide forecasting service

BROKER AND JOBBER• BROKER: He is one who acts as a intermidiary on behalf

of others. A broker in a stock exchange ,is a commission agent who transacts business in securities on behalf of non members.

• JOBBER: He is not allowed to deal with the public directly .He deals with brokers who are engaged with the investors . Thus, the securities is bought by the jobber from members and sells to members who are operating on the stock exchange as broker.

DIFFERENCES BETWEEN A JOBBER AND A BROKER

JOBBER BROKER• A jobber is an independent

dealer in securities, purchasing or selling securities on his own account

• A jobber deals only with the brokers ,does not deal with the general public

• A jobber earns profit from his operations i.e., buying and selling activities

• Each jobber specializes in certain group of securities

• A broker deals with the jobber on behalf of his clients. in other words, a broker is a middleman between a jobber and clients

• A broker is merely an agent, buying or selling securities on behalf of his clients

• A broker gets only commission for his dealings

• The broker deals in all types of securities

SPECULATION AND SPECULATOR• SPECULATION : It is the transaction of members to buy

or sell securities on stock exchange with a view to make profits to anticipated raise or fall in price of securities.

• SPECULATOR : The dealer in stock exchange who indulge in speculation are called speculator . They do not take delivery of securities purchased or sold by them , but only pay or rescue the difference between the purchase price and sale price . The different types of speculators are

• BULL• BEAR • STAG• LAME DUCK

SPECULATOR

BULL {TEJIWALA}

BEAR {MANDIWALA}

SPECULATOR

LAME DUCK

STAG {DEER}

Major Stock Exchanges

• New York Stock Exchange (NYSE- USA)• Toronto Stock Exchange (Canada)• Amsterdam Stock Exchange• London Stock Exchange • Singapore Exchange• Tokyo Stock Exchange• Hong Kong Stock Exchange• Bombay Stock Exchange (BSE- India)

TWO MAJOR STOCK MARKETS of india

BSE(BOMBAY STOCT EXCHANGE

)

NSE(NATIONAL STOCK

EXCHANGE)

BOMBAY STOCK EXCHANGE (BSE)

Is the oldest Stock Exchange in Asia with a rich heritage.

Around 5700 companies listed with Stock Exchange.

In 2005, it was among the five biggest Stock Exchanges in the world in terms of transactions volume.

• The BSE or Bombay stock exchange sensitive Index(Sensex) is a value weighted index.

• Launched on full market capitalization method and

from September 01, 2003, calculation method shifted to free-float market capitalization.

BOMBAY STOCK EXCHANGE (Cont..)

BOMBAY STOCK EXCHANGE (Cont..)

The abbreviated form Sensex was invented by Deepak Mohoni.

The index has increased by over 28 times from June 1990 to today.

National Stock Exchange (NSE)• In the year 1991 Pherwani Committee recommended to

establish National Stock Exchange (NSE) in India.

• In National Stock Exchange there is trading of equity shares, bonds and government securities.

• Membership is not confined to a group of brokers.

• Presently there are 24 stock exchanges in India, out of which 20 have exchanges National Stock Exchange (NSE)

Features of NSE

• Nation wide coverage• Ringless• Screen-based trading• Transparency• Professionalization in trading

FACTORS AFFECTING STOCK MARKET

• INFLATION• INVESTOR SENTIMENT/CONFIDENCE• GLOBAL MARKETS• GOVT. POLICIES• FINANCIAL STATEMENT OF COMPANIES

Listing requirementsThe set of conditions imposed by a given stock exchange upon

companies that want to be listed on that exchange. Examples include minimum number of shares outstanding,

minimum market capitalization, and minimum annual income.

These requirements vary from exchange to exchange. Example: Bombay Stock Exchange (BSE) has requirements for a minimum market capitalization of Rs.25 Cr and minimum public float equivalent to Rs.10 Cr whereas the London Stock Exchange has requirements for a minimum market capitalization (£700,000) .

Ways of buying and selling sharesThrough a stock broker: They arrange the transfer of stock

from a seller to a buyer. Both the buyer and the seller of the share pay commission known as brokerage to the broker.

Directly from the company: • If at least one share is owned, most companies will allow

the purchase of shares directly from the company through their investor relations departments.

• A direct public offering is an initial public offering(IPO) in which the stock is purchased directly from the company, usually without the aid of brokers.

HOW TO DEAL AND INVEST IN STOCK EXCHANGE

In order to deal with a securities one as to have an account called Demat a/c or Trading a/c. It is just like a bank account. Same procedure of opening the bank account is followed to open the a/c. But all the banks does not give this facility of opening the account , only few banks provide this facility. After demat a/c or Trading a/s is opened then the securities is bought and sold. The banks which gives facility of demat a/c in India is

• ICICI Bank• Citi Bank• Bank of Baroda

The role of stock exchanges

Raising capital for businessesMobilizing savings for investmentFacilitating company growthRedistribution of wealthCorporate governanceCreating investment opportunities for

small investorsGovernment capital-raising for

development projectsBarometer of the economy

SECURITIES AND EXCHANGE BOARD OF INDIA(SEBI)

• Regulating the business in stock exchange and any other securities markets.

• Promoting and regulating self-regulatory organization.

• Registering and regulating the work of collective investment scheme,incluing mutual funds.

• Prohibiting fraudulent and unfair trade practices relating to securities market.

• Promoting education, and training of intermediaries of securities market

Power of SEBI

• Power to approve the bye-laws of stock exchange

• Power to inspect the books of accounts • Power to grant license to any person for the

purpose of dealing in certain areas.• Power to delegate powers exercisable by it.• Power to try directly the foliation of certain

provision of the company Act

Thank You!