Presented By :

Aditya Bhujbal M-3005

Sushant Gawali M-3010
Pritam Jadhav M-3013
Nikhil Kurle M-3025
Kaustubh Patil M-3038
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Stock Market
Indices

A, B, C,… of Stock Market

Aditya

Pritam Jadhav
M-3013
 Agenda
The Stock Market is a very broad
term which involves trading of variety
of entities.
This presentation provides basics of
some of the terms & understanding of
stock market indices at macro level.
In this we will focus on BSE, NSE,
NIFTY, SENSEX.
Introduction to stock
About Stock Market
History of stock market indices
Introduction of stock market
indices
Why do we need stock market
indices?
Stock index calculation
Types stock market indices
 Introduction to Stock

A stock is a small share that represents a partial ownership of a

company.

Stocks are issued by companies in order to raise capital.

Stock is also referred to as equity, & it is limited to particular

number of shares.
 About Stock Market

“Stock market” is a term used to describe the physical location

where the buying and selling of stocks take place.
The correct term to be used in pertaining to the physical location
for trading stocks is “stock exchange.”
The Stock market in India consists of about approx. twenty two
stock exchanges.
The stock exchanges constitute a market where securities
issued by the Central & State Govt., Public bodies & Joint Stock
companies are traded.
 The early history of stock market indices

Stock market indices are vital to macroeconomists as well

as to actors in the financial world, indices consistently
build on the long term are essential to assess those
regularities that help understanding the actual behavior
of financial actors, the evolution of the economy and its
position in international comparisons.
 Stock market indices : INTRODUCTION

• A stock market index tracks the movement of a market as a

whole. Other indices track the performance of sectors,
regions and different class of security.
• The basic data used to calculate an index are securities prices,
but the calculation of an index means weighting price changes
appropriately to reflect company size and the availability of
securities to investors.
 Why do we need Stock market indices?

1. They provide a historical comparison of returns on money

invested in the stock market against other forms of
investments such as gold or debt.
2. They can be used as a standard against which to compare the
performance of an equity fund.
3. It is a lead indicator of the performance of the performance
of the overall economy or a sector of the economy.
 Stock index calculation

• Index level = Σ(P1 * Q1) / Σ(P0 * Q0)*

Base index value.

P1 = Current value securities

Q1 = No.of currently outstanding shares
P0 = Base period price of securities
Q0 = Base period quantity of securities
 Types of stock market indices

• Free float capitalization weighted indices

• Price weighted indices

• Fundamentally based stock indices

KP

Kaustubh Patil
M-3038
• NATIONAL STOCK EXCHANGE (NSE)
• BOMBAY STOCK EXCHANGE (BSE)
• STOCK MARKET INDICES- NIFTY
DOW JONES
FTSE INDEX
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 INTRODUCTION

• MUMBAI BASED STOCK EXCHANGE

• LARGEST STOCK EXCHANGE
• MARKET CAPITALIZATION- 47,01,923 CRORE
• MOST SIGNIFICANT
 FEATURES

• OWNED BY SET OF FINANCIAL INSTITUDE,

BANKS, INSURANCE COMPANY
• FOREIGN INVESTMENT
• WIDE RANGE
• 2ND LARGEST STOCK MARKET IN SOUTH ASIA
• 3RD LARGEST IN WORLD
• 2ND FASTEST GROWING IN WORLD
• GROWTH- 16.6%
 INNOVATINS

• Setting up the first clearing corporation "National Securities

Clearing Corporation Ltd." in India.
• Co-promoting and setting up of National Securities Depository
Limited, first depository in India
• Setting up of S&P CNX Nifty.
• Being the first and the only exchange to trade GOLD ETFs
(exchange traded funds) in India.
• NSE has also launched the NSE-CNBC-TV18 media centre in
association with CNBC-TV18.
• NSE.IT Limited, setup in 1999 , is a 100% subsidiary of the
National Stock Exchange of India
 MARKETS

Currently, NSE has the following major

segments of the capital market:
• Equity
• Futures and Options
• Retail Debt Market
• Wholesale Debt Market
• Currency futures
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BOMBAY STOCK
EXCHANGE (BSE)
 INTRODUCTION

• OLDEST STOCK MARKET IN ASIA

• ESTABLISHED AS “NATIVE SHARE & STOCK
BROKER ASSOCIATION”
• PERMANENT RECOGNISATION
• MAJORE ROLE
 FEATURES

• GROWTH OF INDIAN CORPORATE SECTOR

• LINKED WITH MAJORE CORPORATE
• NUMBER 1 EXCHANGE IN TERMS OF LISTED
COMPANY
• WORLDS 5TH IN HANDLING TRANSACTION
THROUGH ELECTRONIC TRADING SYSTEM
• MARKET CAPITALIZATION- $1.6 TRILLION
• POPULAR STOCK MARKET INDEX- SENSEX
 INNOVATION

• 1ST NATIONAL LEVEL STOCK EXCHANGE TO

LAUNCH WEBSITE IN VARIOUS LANGUAGE
• SUCCESSFULLY LAUNCHED A REPORTING
PLATFORM FOR CORPORATE BOND
• IN 2006 LAUNCHED DIRECTORS DATABASE
AND ICERS TO FACILITATE INFORMATION AND
INCREASE TRANSPARENCY
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NIFTY
 INTRODUCTION

• The S&P CNX Nifty, or simply Nifty, is the

leading index for large companies on the
National Stock Exchange of India. It consists of
50 companies representing 24 sectors of the
economy, and representing approximately
47% of the traded value of all stocks on the
National Stock Exchange of India. "
 FEATURES

• The average total traded value for the last six months of all Nifty
stocks is approximately 77% of the traded value of all stocks on the
NSE
 
• Nifty stocks represent about 61% of the total market capitalisation
as on August 31, 2004.
 
• Impact cost of the S&P CNX Nifty for a portfolio size of Rs.5 million is
0.10%
 
• S&P CNX Nifty is professionally maintained and is ideal for
derivatives trading.
 
 DOW JONES INDEX

• World's most popular stock market indices.

• It tracks the performances of 30 important ant
stocks in America.
• Most famous international American
companies included are Bank of America,
Dupont, Cococola,Microsoft, Pfizer etc
• There are companies from every important
sectors like Information technology,
Computers, Banking, Pharmaceuticals etc.
 FTSE Index

• FTSE index is managed by FTSE Group,

• There are various indices in FTSE like FTSE100,
FTSE 30etc.
• These indices primarily reflect the performance
of London Stock Exchange
• FTSE 100 is an index which tracks the
performance of top 100 companies.
• It reflect 80 percent market capitalisation of
LSE.
Aditya

Nikhil Kurle
M-3025
LOGO

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 SENSEX-The Barometer of Indian
Capital Market
 Launched in the year 1986.

 BSE Sensex is a value-weighted

• index composed of 30 stocks.

 SENSEX is a basket of 30
• constituent stocks.
 Cont……

 The base period of SENSEX

is 1978- 79 and the base
value is 100 index points.

 SENSEX is calculated every

15 seconds.

 SENSEX is calculated using the

"Free-float Market
Capitalization" methodology.
 SENSEX Milestone

 25th July 1990

 15th Jan 1992

 29th Feb 1992

 11th Feb 2000

 7th Feb 2006

 30th Oct 2006

 Cont….

 6th July 2007

 9th Oct 2007

 15th Oct 2007

 29th Oct 2007

 21th Jan 2008

 02th March 2010

 BSE INDEX FAMILY
BSE 100 BSE 200 BSE 500 BSE Mid cap BSE PSU
and BSE small cap

Base Year 1983-84 1989-90 Feb. 1, 1999 2002-2003 February 1,

1999
Base Index 100 100 100 1000 1000
Value
Date of Jan. 3, May 27, Aug. 9, 1999 April 11, 2005 June 4, 2001
Launch 1989 1994
Number of 100 200 500 Variable to The BSE is a
scrips represent 15% sub set of
and 5% market 500
capitalisation index. BSE-
500
index
Index Real Real Time Real Time Real Time Real Time
calculation Time
frequency
Aditya

Aditya Bhujbal
M-3005
 NSE INDEX FAMILY

• S & P CNX Nifty

• CNX Nifty Junior
• CNX 100
• S & P CNX 500
• CNX Midcap
• Nifty Midcap 50
• S & P CNX Defty
 What is Stock?

A stock is a small share that represents a partial

ownership of a company.

Stocks are issued by companies in order to raise capital.

Stock is also referred to as equity, & it is limited to

particular number of shares.
 How Stocks are priced?

Latest Change         52 Weeks        

symbol
  price net % time high low volume high low

BCE 31.15 -0.5 -1.5 16:57 31.75 31.1 3,643,000 33 27.2

BGM 17.06 -0.3 -1.6 15:54 17.3 17 207,400 26.9 17.1

IBM 79.82 -0.3 -0.4 16:01 80.68 79.6 4,999,200 99.1 71.9

MSFT 24.67 -0.3 -1.2 16:00 25.05 24.7 73,696,700 27.9 23.8
Stock Quote Table
First Column indicates abbreviation of name of company.

Latest Price indicates current price or closing price of the day (if in newspaper)

Change (net) is difference between the previous day closing price & current stock quote.
 How Stocks are priced?
Latest Change         52 Weeks        
symbol
  price net % time high low volume high low

BCE 31.15 -0.5 -1.5 16:57 31.75 31.1 3,643,000 33 27.2

BGM 17.06 -0.3 -1.6 15:54 17.3 17 207,400 26.9 17.1

IBM 79.82 -0.3 -0.4 16:01 80.68 79.6 4,999,200 99.1 71.9

MSFT 24.67 -0.3 -1.2 16:00 25.05 24.7 73,696,700 27.9 23.8
Stock Quote Table
High indicates the highest price while low indicates lowest price of the stock sold.

Volume describes the no. of shares traded for that day.

The 52- week high & low shows the highest & lowest prices in the previous year.
How Stocks are priced?

PE – Price to Earning ratio. Price per share

divided by earning per share.
 What is P/E Ratio?

• Definition –
“ Price/Earnings ratio. The most common
measure of how expensive a stock is. The P/E
ratio is equal to a stock's market capitalization
divided by its after-tax earnings over a 12-
month period.”
 P/E Ratio is calculated as:

eg. If a company is currently trading at $43

a share and earnings over the last 12 months
were $1.95 per share.
$43 ..= $ 22.05
$1.95
Security Name Close (Rs.) EPS PE

20 MICRONS 40.55 0.93 43.42

3I INFOTECH 73.65 9.40 7.83

3M INDIA 2,041.20 57.66 35.40

AARTI DRUG 90.35 12.43 7.27

AARTI INDS 44.50 11.01 4.04

AARVE DENIM 56.65 1.05 53.85

ABAN OFFSHOR 1,183.10 59.69 19.82

Security Name Close (Rs.) EPS PE

ABAN OFFSHOR 1,180.50 59.69 19.78

ABB 794.75 16.74 47.49

ACC 922.95 85.58 10.78

ADANI ENTER 486.00 6.60 73.65

ADITYA BIRLA 840.85 13.34 63.03

AKRUTI CITY 484.95 37.15 13.05

ALLAHA.BANK 132.65 17.21 7.71

Sushant Gawali
M-3010
 Role of Stock Exchange in economy

1. Raising capital for businesses

2. Mobilizing savings for investment
3. Facilitating company growth
4. Redistribution of wealth
5. Corporate governance
6. Creating investment opportunities for small
investors
7. Government capital-raising for development
projects
8. Barometer of the economy
9. Regulation of companies
10. Employment Opportunities
Growing job
opportunities
 Two basic analytical methodology

• Fundamental analysis maintains that markets

may misprice a security in the short run but
that the "correct" price will eventually be
reached. Profits can be made by trading the
mispriced security and then waiting for the
market to recognize its "mistake" and reprice
the security.
• Technical analysis maintains that all information
is reflected already in the stock price, so
fundamental analysis is a waste of time. Trends
'are your friend' and sentiment changes predate
and predict trend changes. Investors' emotional
responses to price movements lead to
recognizable price chart patterns. Technical
analysis does not care what the 'value' of a stock
is. Their price predictions are only extrapolations
from historical price patterns.
6 Steps of Investment in Share Market

Step 6

Step 5 • Start Early

Step 4 • Passions

Step 3 •Consistency in Investment

•Tips and Hot stocks are risky

Step 2
•Simplicity
Step 1
• Developing the vision
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