7/31/2019 Kch

1/56

STOCK EXCHANGE

PRESENT BY :-

KRISHNA GOYAL

VINEET SOGANI

SAHIL AGARWAL

SAHIL AGGARWAL

7/31/2019 Kch

2/56

INTRODUCTION :

There are 23 stock exchanges in theIndia. Mumbai's (earlier known asBombay), Bombay Stock Exchange isthe largest, with over 6,000 stocks listed.The BSE accounts for over two thirds of

the total trading volume in the country.Established in 1875, the exchange isalso the oldest in Asia. Among thetwenty-two Stock Exchanges recognisedby the Government of India under theSecurities Contracts (Regulation) Act,1956, it was the first one to be

recognised and it is the only one that hadthe privilege of getting permanentrecognition ab-initio.

7/31/2019 Kch

3/56

Name of Indian stock exchange:

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

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

7/31/2019 Kch

4/56

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

http://en.wikipedia.org/wiki/Image:Bombay-Stock-Exchange.jpg

7/31/2019 Kch

5/56

Cont.

Bombay stock exchange : it has 30 companies sripted.

Name:1.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.jpg

7/31/2019 Kch

6/56

CONT

11.HERO HONDA

12.HINDALCO

13.HUL

14.ICICI BANK 15.INFICYS

16.ITC

17.L&T

18.MARUTI 19.NTPC

20.ONGC

7/31/2019 Kch

7/56

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

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

7/31/2019 Kch

8/56

NSE

The National Stock Exchange (NSE),

located in Bombay, is India's first debt

market. It was set up in 1993 to encourage

stock exchange reform through system

modernization and competition. It openedfor trading in mid-1994. It was recently

accorded recognition as a stock exchange

by the Department of Company Affairs.

The instruments traded are, treasury bills,

government security and bonds issued bypublic sector companies

http://en.wikipedia.org/wiki/Image:National_Stock_exchange_Mumbai.JPGhttp://en.wikipedia.org/wiki/Image:National_Stock_exchange_Mumbai.JPGhttp://en.wikipedia.org/wiki/Image:National_Stock_exchange_Mumbai.JPG

7/31/2019 Kch

9/56

CONT.

The Organisation: The National StockExchange of India Limited has genesis in thereport of the High Powered Study Group onEstablishment of New Stock Exchanges,

which recommended promotion of a NationalStock Exchange by financial institutions (FIs)to provide access to investors from all acrossthe country on an equal footing.

7/31/2019 Kch

10/56

CONT

Based on the recommendations, NSE was promoted byleading Financial Institutions at the behest of the

Government of India and was incorporated in November

1992 as a tax-paying company unlike other stock

exchanges in the country

http://en.wikipedia.org/wiki/Image:National_Stock_exchange_Mumbai.JPG

7/31/2019 Kch

11/56

Cont

NSE Group:1. India Index Services & Products Ltd. (IISL)

2. National Securities Clearing Corporation Ltd.

(NSCCL)3. NSE.IT Ltd.

4. National Securities Depository Ltd. (NSDL)

5. DotEx International Limited

7/31/2019 Kch

12/56

OTC markets

electronic network of dealers all over the

world

ECNs

electronic communication networks

more than one dealer per stock

not obligated to make a market

7/31/2019 Kch

13/56

Nasdaq

not the only OTC system, but the largest

over 4000 companies listed

mkt. value $2 trillion (2/28/03)

leader in daily share volume

over 500 dealers

listing requirements

7/31/2019 Kch

14/56

7/31/2019 Kch

15/56

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

via method like dividends or interest.

http://en.wikipedia.org/wiki/Image:Assorted_United_States_coins.jpghttp://en.wikipedia.org/wiki/Image:Assorted_United_States_coins.jpg

7/31/2019 Kch

16/56

7/31/2019 Kch

17/56

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.

7/31/2019 Kch

18/56

Forex Market

Mar 19, 4:30 P.M.CurrencyIN ;

40.45(US.DOLLAR)

Euro 63.48

GB Pound

81.20

Japanese Yen 0.4072

S'pore Dollar

29.160

7/31/2019 Kch

19/56

BENEFITS OF STOCK EXCHANGE

FROM THE POINT OF VIEW OF COMMUNITY:

1.It assist the economis development by providing a bodyof interested investors.

2.it uploads the position of superior enterprises and assistthem in raising further funds.

3.It encourages capital formation

4.Government can undertake projects of nationalimportance and 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)

7/31/2019 Kch

20/56

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 powerof the company in the event of a takeover,merger

or amalgamation.

7/31/2019 Kch

21/56

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 investorsthrough 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 purchaseslisted securities.

7/31/2019 Kch

22/56

ROLE PLAYER

EXTERNAL:----

1.SHAREHOLDER

2.DEBENTURE HOLDER

7/31/2019 Kch

23/56

SHAREHOLDER

Shareholders are divided into two parts

1.Preference shareholder: Preference shareholder

are those which have preferential right to the

payment of dividend during the life time of the

company,and a preferential right to the return of

the capital when the company is wound up.

7/31/2019 Kch

24/56

CHARACTERISTICS OF PREF.SHAREHOLDER

1.The dividend on them is fixed by the articles of

the company.

2.They get their fixed rate of dividend before any

dividend is distributed among the other class of

shareholders.

3.At the time of winding up of the company, the

preference shareholder must be paid back theircapital before anything is paid to the ordinary

shareholders.

7/31/2019 Kch

25/56

KINDS OF PREF.SHAREHOLDER

1.Comulative shareholder: These shares are

entitled to fixed dividends whether there are

profits or loss.If profits are not sufficient to pay

in a particular year then that will pay on nextyear.

2.Non comulative pref.share: These shares cannot

claim arrears of dividends of any year (if not paiddue to insufficiency of pfofits ) out of rofits of

subsequent year.

7/31/2019 Kch

26/56

Conti

3.Participating pref. Shares: These shares

receives a fixed rate of dividend in priority to

ordinary shares and further,the right to participate

in balance of profits in an agreed proportiontogether with ordinary shares.

4.Redeemable pref.shares: These are shares

which can be purchased back by thecompany.The company researves its rights to call

back or purchased these shares at any time .

7/31/2019 Kch

27/56

EQUITY SHARES

All shares which are not preference shares are

equity shares.These shares do not have a fixed

rate of dividend,they are always irredeemable and

their holders have normal voting rights. They are also the owners of the company.

They take dividend

7/31/2019 Kch

28/56

DEBENTURES

A document under the company seal which

provides for the payment of a principal sum and

interest there on at regular intervals which is

usually secured by a fixed or floating charge onthe companys property or undertaking which

acknowledges a loan to the company.

7/31/2019 Kch

29/56

BUY BACK SHARES

In simple term when company re-purchase of its

own shares that is called buy back shares.

7/31/2019 Kch

30/56

INTERNAL PLAYERS

The members of the stock exchange can bedivided into two parts:

A.Broker: He is a commission agent who

transacts business in securities on behalf of non-members.They may have number of sub-brokersto canvass and secure business for them.

B.Jobber: He is an independent dealersecurities.He purchase and sells securities in hisown name. He is not allowed to deal with non-members directly.He works for profit.

7/31/2019 Kch

31/56

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 or

agents.They buy or sell on the behalf ofemployers.They can not transact business on their

own account.

Remisers: They are the sub-brokers. He is alsocalled the half commission men.

7/31/2019 Kch

32/56

CAUSES OF PRICE FLUCTUATION

1. DAMAND AND SUPPLY

2. BANK RATE

3. SPECULATIVE PRESSURE

4. ACTIONS OF UNDERWRITERS AND

OTHER FINANCIAL INSTITUTIONS

5. CHANGE IN COMPANYS BOARD OF

DIRECTORS 6. FINANCIAL POSITION OF THE

COMPANY

7/31/2019 Kch

33/56

7/31/2019 Kch

34/56

CONT

D. CHANGES IN EXCHANGE RATE

E. BORDER TENSION

F. STOCK BROKERS SCAM LIKE

HARSHAD MEHTA AND KETHAN PAREKH G. STRIKES AND LOCK-OUT OF THE

COMPANY.

H. NEW BUDGET PROPOSALS

I. LOBERLIZATION AND PRIVATIZATIONOF THE COMPANY.

7/31/2019 Kch

35/56

SEBI

It was constituted and made a statutory body by

SEBI act 1992.With the coming into effect of

SEBI, some of the powers and function exercised

by the central government,in respect of regulationof stock exchanges were transferred to the SEBI (SECURITIES EXCHANGE BOARD OF INDIA).

7/31/2019 Kch

36/56

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

investment scheme including mutual funds.

3.Prohibiting insider trading in securities.

4.Regulating substantial acquisition of shares andtakeovers of companies.

7/31/2019 Kch

37/56

CONTI

5.Calling for information from,undertaking

inspection,conducting inquiries and audits ofstock exchanges and intermediaries and selfregulatory organizations in the securities market.

6.Performing such function and exercising suchpowers under the provisins of the capitalissues(control) act 1947 and SCRA 1956,as maybe delegated to it by the central government.

7.Performing such other functions as may beprescribed.

7/31/2019 Kch

38/56

MODESS OF REPURCHASE

BASICALLY THERE ARE TWO MODES OFREPURCHASE:

1.Open market repurchase: company makes anannouncement regarding the repurchase of a specified

number of shares.The purchases are made anonymouslythrough a broker from the secondary market over aspecified period of time.

2.tender offers: this is basically two types

A.Fixed price tender offers: company announces a fixedprice at which it is willing to buy its shares,a maximumnumber of shares that it will commit to buy and anexpiration date for the offer.The offer price is premiumover the market price to encourage the shareholder.

7/31/2019 Kch

39/56

Cont

Dutch auction tender offers : In a dutch auction,

the company announces the maximum number of

shares it wishes to buy and a range of prices at

which it will entertain offers.Shareholders whochoose to participate must then select a single

price in this range at which to tender their shares.

7/31/2019 Kch

40/56

RULES FOR REPURCHASE UNDER SEBI ACT

1988

1.Regulations cover only the listed securities of the

company

2.In case of purchase through the stock exchange an offer

for buy back will not remain open for more than 30 days. 3.Buy back through negotiated deals, spot transactions or

private arrangements is not permitted.

4.In the purchases made through stock exchange, the

details under the buy back scheme shall be madeavailable to the stock exchange on daily basis:the details

in turn shall be made available to public regularly.

7/31/2019 Kch

41/56

HOW RATING IS GIVEN TO THE COMPANY?

Basically rating is given after see the company'image,management quality,assets quality,auditorsquality,accounting accuracy.Rating is not fixed, it may bechange. The rating grades are:

AAA: HIGHEST SAFTY AA: HIGH SAFTY

A: ADEQUATE SAFTY

BBB: MODERATE SAFTY

BB: IN ADEQUATE SAFTY BC&D: HIGH RISK AND DEFAULT

7/31/2019 Kch

42/56

CREDIT RATING AGENCY IN INDIA

1.CRISIL

2.ICRA

3.CARE

4.DPCR

7/31/2019 Kch

43/56

Institutional trading

vs. retail trades

institutional trades are larger

special execution

over 50% of NYSE share volume

7/31/2019 Kch

44/56

7/31/2019 Kch

45/56

program trades

large # shares, different stocks

used by mutual funds for asset allocation

wantlow commissions

prevent frontrunning

7/31/2019 Kch

46/56

Types of orders

instructions from investors to brokers

market order

buy/sell order to be executed at best price

-- get lowest price for buy order

-- get highest price for sell order

7/31/2019 Kch

47/56

market order (cont.)

market orders given priority in trading

no guarantee of execution price

-- price could rise/fall from time order is placed to

time it is executed

7/31/2019 Kch

48/56

limit order

buy/sell order where investor specifies price range

buy at $50 or less

sell at $52 or more

specialist records orders in

limit order book

7/31/2019 Kch

49/56

investor sets reservation price

BUTno guarantee that limit order will be executed

7/31/2019 Kch

50/56

stop order

order lies dormant

turns into market order when certain price (thestop) is reached

buy if price rises to $60

sell if price falls to $58

-- stop loss order

7/31/2019 Kch

51/56

investor does not have to watch market

but in a volatile market stop could be triggered

prematurely

-- end up trading unnecessarily

7/31/2019 Kch

52/56

stop limit order

turns into limit order when stop is reached

buy if price rises to $60, but only is executed at$65 or less

7/31/2019 Kch

53/56

market if touched order

turns into market order if certain price is reached buy if price falls to $55

sell if price rises to $62

h l i d d?

7/31/2019 Kch

54/56

how long is an order good?

fill or kill orderexecuted when reaches trading floor, or canceled

good until canceled/open order

is good indefinitely

7/31/2019 Kch

55/56

order size

round lotslots of 100 shares

odd lots

less than 100 sharesmore difficult to trade

block trades

10,000 shares or $200,000 value

7/31/2019 Kch

56/56

THE STOCK EXCHANGE IS

CONSIDERED TO BE THE

BAROMETER OF ECONOMIC

ACTIVITY.