Stock Market Basics

What is a Stock?
Stock is a share in the ownership of a company. It represents a claim on the company's assets and earnings
Whether you say shares, equity or stock, it all means the same thing.

What is a stock market?

Place where business of buying and selling stock takes place
The stock market is not a specific place, though some people use the term "Dalaal Street

Types of stocks
Equity Preference

Market Segments
Primary market -Channel for creation of new securities
Secondary market -The new securities issued in the primary market are traded the secondary market

Stock exchange
The Bombay Stock Exchange (BSE) National Stock Exchange of India Ltd (NSE) India Infoline is a member of both BSE and NSE

Market Timings
Trading on the equities segment takes place on all days of the week (except Saturdays and Sundays and holidays declared by the exchange in advance) The market timings of the equities segment are: Normal market open : 09:55 hours Normal market close : 15:30 hours

The closing session is held between 15.50 hours and 16.00 hours in NSE and 15.40 hours and 16.00 hours in BSE

Trading on BSE and NSE

To provide Transparency,Efficiency and Depth to market, BSE and NSE provide Screen Based Trading on Trading Platforms called BOLT and NEAT. These platforms provide Trading Facility to Brokers,Sub-brokers and their clients through thousands of trading terminals spread throughout the nation.

Trading on BSE and NSE

BSE and NSE provide trading facility on two segments ,which are - Cash Segment and - Derivative Segment NSE also has another segment called WDM, Wholesale Debt Market.

NEAT-F&O

NEAT- Cash

BOLT

Index
Number which measures the change in a set of values over a period of time. Stock index represents the change in value of a set of stocks which constitute the index A good stock market index is one which captures the behavior of the overall equity market It has to be well diversified yet highly liquid

Importance of a Market Index

A market index is very important for its use as

a barometer for market behavior as a benchmark portfolio performance a passive fund management in index funds an underlying for index futures and options

Major Indices in India

S&P CNX Nifty Sensex

Circuit Breakers

An index based market-wide circuit breaker system applies at three stages of the index movement either way at 10%, 15% and 20%. The breakers are triggered by movement of either S&P CNX Nifty or Sensex, whichever is breached earlier

Circuit Breakers
As an additional measure of safety, individual scripwise price bands has been fixed as below: Daily price bands of 2% (either way) on a set of specified securities Daily price bands of 5% (either way) on a set of specified securities Daily price bands of 10% (either way) on another set of specified securities

Circuit Breakers
Price bands of 20% (either way) on all remaining securities (including debentures,warrants, preference shares etc. which are traded on CM segment of NSE), No price bands are applicable on scrips on which derivative products are available or on scrips included in indices

Order Management
Entering Order Order Modification Order Cancellation

Entering Order

Active/Passive Order Order Book Symbol & Series Quantity Price

Types of Orders:
Time Conditions Price Conditions Quantity Conditions

Time Conditions
DAY IOC - An Immediate or Cancel

Price Conditions
Limit Price/Order Market Price/Order Stop Loss (SL) Price/Order

Quantity Conditions
Disclosed Quantity (DQ) All Or None (AON)

Clearing and Settlement

Stock Markets follow a system of settling trades on T+2 basis,which means transactions done on Monday,are to be settled by Wednesday by way of giving securities or funds. Providing of securities or funds to Exchange / Clearing Corporation is called Pay-In. Receiving securities or funds from Exchange / Clearing corporation is called Pay-Out.
Contd..

Clearing and Settlement

Sometimes trades dont get settled because of short or bad delivery or company objection. In such cases ,trade is settled through auction of securities. If a trade remains unsettled even after auction,then Exchange carries Close Out

Margins and Risk Management

It is of paramount importance that investors have faith smooth functioning of stock Markets. Exchanges achieve this by putting in place a comprehensive Risk Management system and margin requirements.

Frequently used terms

Margin Money Bull and Bear Settlement Cycle Squared transaction Delivery Transaction Positions - + (buy) & - (sell) contd..

Frequently used terms

Prices- Last traded price, closing price, opening price,average price Pay-in & pay-out Bid and offer Short selling Long position Auction Settlement Number

Thank You