DESIGN OF STUDY

Objectives
 To study importance of Bse & Nse in today’s world.
 To find out investors preference regarding the same.
 To find out market capitalization of both Bse & Nse.

Sources of Data
The data was collected by visiting various websites which helped me in
collecting data regarding BSE & NSE and its comparison thereby
leading to successful completion of my project.

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Introduction
A stock market or equity market is a public (a loose network of
economic transactions, not a physical facility or discrete entity) for the trading
of company stock (shares) and derivatives at an agreed price; these are
securities listed on a stock exchange as well as those only traded privately.
The size of the world stock market was estimated at about $36.6 trillion
at the start of October 2008. The total world derivatives market has been
estimated at about $791 trillion face or nominal value, 11 times the size of the
entire world economy. The value of the derivatives market, because it is stated
in terms of notional values, cannot be directly compared to a stock or a fixed
income security, which traditionally refers to an actual value. Moreover, the
vast majority of derivatives 'cancel' each other out. Many such relatively
illiquid securities are valued as marked to model, rather than an actual market
price.
The stocks are listed and traded on stock exchanges which are entities
of 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. The largest stock market in the United States, by market cap, is the
New York Stock Exchange, NYSE. Major European examples of stock
exchanges include the London Stock Exchange, Paris Bourse,etc. Asian
examples include the Tokyo Stock Exchange, the Hong Kong Stock
Exchange, the Shanghai Stock Exchange, and the Bombay Stock Exchange.
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In Latin America, there are such exchanges as the BM&F Bovespa and the
BMV.

History of Stock Market
In 12th century France the courratiers de change were concerned with
managing and regulating the debts of agricultural communities on behalf of
the banks. Because these men also traded with debts, they could be called the
first brokers. A common misbelief is that in late 13th century Bruges
commodity traders gathered inside the house of a man called Van der Beurze,
and in 1309 they became the "Brugse Beurse", institutionalizing what had
been, until then, an informal meeting, but actually, the family Van der Beurze
had a building in Antwerp where those gatherings occurred; the Van der
Beurze had Antwerp, as most of the merchants of that period, as their primary
place for trading. The idea quickly spread around Flanders and neighboring
counties and "Beurzen" soon opened in Ghent and Amsterdam.
In the middle of the 13th century, Venetian bankers began to trade in
government securities. In 1351 the Venetian government outlawed spreading
rumors intended to lower the price of government funds. Bankers in Pisa,
Verona, Genoa and Florence also began trading in government securities
during the 14th century. This was only possible because these were
independent city states not ruled by a duke but a council of influential
citizens. The Dutch later started joint stock companies, which let shareholders
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invest in business ventures and get a share of their profits – or losses. In 1602,
the Dutch East India Company issued the first share on the Amsterdam Stock
Exchange. It was the first company to issue stocks and bonds.

The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to
have been the first stock exchange to introduce continuous trade in the early
17th century. The Dutch "pioneered short selling, option trading, debt-equity
swaps, merchant banking, unit trusts and other speculative instruments, much
as we know them". There are now stock markets in virtually every developed
and most developing economies, with the world's biggest market being in the
United States, United Kingdom, Japan, India, China, Canada, Germany,
France, South Korea and the Netherlands.

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Market participants
A few decades ago, worldwide, buyers and sellers were individual
investors, such as wealthy businessmen, usually with long family histories to
particular

corporations.

Over

time,

markets

have

become

more

"institutionalized"; buyers and sellers are largely institutions.
The rise of the institutional investor has brought with it some
improvements in market operations. Thus, the government was responsible
for "fixed" (and exorbitant) fees being markedly reduced for the 'small'
investor, but only after the large institutions had managed to break the
brokers' solid front on fees. (They then went to 'negotiated' fees, but only for
large institution.)
However, corporate governance (at least in the West) has been very
much adversely affected by the rise of (largely 'absentee') institutional
'owners'.

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An economy where the stock market is on the rise is considered to be an up-and-coming economy. In fact. History has shown that the price of shares and other assets is an important part of the dynamics of economic activity. compared to other less liquid investments such as real estate.Importance of stock market Function and purpose The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded. and can influence or be an indicator of social mood. the stock market 6 . or raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks.

is often considered the primary indicator of a country's economic strength and development. Share prices also affect the wealth of households and their consumption. 7 . and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. Financial stability is the raison d'être of central banks. One feature of this development is disintermediation. Relation of the stock market to the modern financial system The financial system in most western countries has undergone a remarkable transformation. Exchanges also act as the clearinghouse for each transaction. In this way the financial system contributes to increased prosperity. tend to be associated with increased business investment and vice versa. in general. Rising share prices. meaning that they collect and deliver the shares. The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. Therefore. for instance. central banks tend to keep an eye on the control and behavior of the stock market and. A portion of the funds involved in saving and financing. on the smooth operation of financial system functions.

The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance. pension funds. either directly or through mutual funds. In the 1970s. mutual funds.. hedge funds. Statistics show that in recent decades shares have made up an increasingly large proportion of households' financial assets in many countries. insurance investment of premiums. 8 . such as the European Union. Similar tendencies are to be found in other industrialized countries. e. the trend has been the same: saving has moved away from traditional (government insured) bank deposits to more risky securities of one sort or another. compared to less than 20 percent in the 2000s. the United States.flows directly to the financial markets instead of being routed via the traditional bank lending and deposit operations. The major part of this adjustment in financial portfolios has gone directly to shares but a good deal now takes the form of various kinds of institutional investment for groups of individuals. The general public's heightened interest in investing in the stock market. deposit accounts and other very liquid assets with little risk made up almost 60 percent of households' financial wealth.g. In all developed economic systems. etc. permitting a higher proportion of shares to bonds. has been an important component of this process. Japan and other developed nations. in Sweden.

in marked contrast to the stability of (government insured) bank deposits or bonds. but also the economy on a large scale. Stock prices skyrocket with little reason. Television commentators. and financial risk Riskier long-term saving requires that an individual possess the ability to manage the associated increased risks. the noise level in the stock market rises.e.The stock market. individual investors. This is something that could affect not only the individual investor or household. i. real estate and collectables). The following deals with some of the risks of the financial sector in general and the stock market in particular. At the same time. With each passing year. financial writers. immersed in chat rooms and message boards. and market strategists are all overtaking each other to get investors' attention. or have acquired other 'risky' investments (such as 'investment' property. investors find it increasingly difficult to profit. Buffett began his 9 . This is certainly more important now that so many newcomers have entered the stock market. individual investors. Sometimes there appears to be no rhyme or reason to the market. and people who have turned to investing for their children's education and their own retirement become frightened. analysts. This is a quote from the preface to a published biography about the long-term value-oriented stock investor Warren Buffett. Yet. Stock prices fluctuate widely. are exchanging questionable and often misleading tips. then plummet just as quickly. despite all this available information.. only folly.

profits or dividends. and $100. having priced in all public knowledge.) The 'hard' efficientmarket hypothesis is sorely tested by such events 10 . Economists continue to debate whether financial markets are 'generally' efficient.000 from seven limited partners consisting of Buffett's family and friends.career with $100. contrary to fact. The behavior of the stock market From experience we know that investors may 'temporarily' move financial prices away from their long term aggregate price 'trends'. Over the years he has built himself a multibillion-dollar fortune. negative or down trends are referred to as bear markets. since prices are already at or near equilibrium. only changes in fundamental factors. ought to affect share prices beyond the short term. According to one interpretation of the efficient-market hypothesis (EMH). (Positive or up trends are referred to as bull markets. such as the outlook for margins. (But this largely theoretic academic viewpoint—known as 'hard' EMH—also predicts that little or no trading should take place.) Over-reactions may occur—so that excessive optimism (euphoria) may drive prices unduly high or excessive pessimism may drive prices unduly low. The quote illustrates some of what has been happening in the stock market during the end of the 20th century and the beginning of the 21st century. where random 'noise' in the system may prevail.

) It seems also to be the case more generally that many price movements (beyond that which are predicted to occur 'randomly') are not occasioned by new information.. would not be strictly applicable). Moreover. and the use of certain strategies.as the stock market crash in 1987. However. a study of the fifty largest one-day share price movements in the United States in the postwar period seems to confirm this. But the best explanation seems to be that the distribution of stock market prices is non-Gaussian (in which case EMH. a 'soft' EMH has emerged which does not require that prices remain at or near equilibrium. (But note that such events are predicted to occur strictly by chance.e.6 percent—the largest-ever one-day fall in the United States. although very rarely. many studies have shown a marked tendency for the stock market to trend over time periods of weeks or longer. non-trending). some research has shown that changes in estimated risk. such as stop-loss limits and Value at Risk limits. but only that market participants not be able to systematically profit from any momentary market 'inefficiencies'. Various explanations for such large and apparently nonrandom price movements have been promulgated. to this day. For instance. it is impossible to fix a generally agreed upon definite cause: a thorough search failed to detect any 'reasonable' development that might have accounted for the crash. in any of its current forms. theoretically could cause financial markets to overreact. 11 . when the Dow Jones index plummeted 22. while EMH predicts that all price movement (in the absence of change in fundamental information) is random (i. This event demonstrated that share prices can fall dramatically even though.

however. in fact. In times of market stress. it is not easy to stick to an opinion that differs markedly from that of a majority of the group. and often will perceive a pattern in what is.) In the present context this means that a succession of good news items about a company may lead investors to overreact positively (unjustifiably driving the price up). A period of good returns also boosts the investor's self-confidence. Psychological research has demonstrated that people are predisposed to 'seeing' patterns. As social animals. just noise. The players now must give heavy weight to the psychology of other investors and how they are likely to react psychologically. people generally prefer to have their opinion validated by those of others in the group.Other research has shown that psychological factors may result in exaggerated (statistically anomalous) stock price movements (contrary to EMH which assumes such behaviors 'cancel out'). reducing his (psychological) risk threshold. In one paper the authors draw an analogy with gambling. the probabilities are known and largely independent of the investment decisions of the different players. Another phenomenon—also from psychology—that works against an objective assessment is group thinking. In normal times the market behaves like a game of roulette. (Something like seeing familiar shapes in clouds or ink blots. 12 . the game becomes more like poker (herding behavior takes over). An example with which one may be familiar is the reluctance to enter a restaurant that is empty.

the stock market may be swayed in either direction by press releases. euphoria and mass panic. the average did not rise above 5 %%). Inexperienced investors rarely get the assistance and support they need. so that by summer of 2002. the media amplified the general euphoria. is quite unforgiving of amateurs. and a counterreaction may occur if the news is better (or worse) than expected. 13 . Therefore. even if that news is likely to have no real effect on the fundamental value of securities itself. (And later amplified the gloom which descended during the 2000 – 2002 bear market. but generally only briefly. as with any other business. In the run up to 2000. less than 1 percent of the analyst's recommendations had been to sell (and even during the 2000 – 2002 bear market. rumors. as more experienced investors (especially the hedge funds) quickly rally to take advantage of even the slightest. In the period running up to the 1987 crash.The stock market. But this may be more apparent than real. momentary hysteria.) Irrational behavior Sometimes the market seems to react irrationally to economic or financial news. with reports of rapidly rising share prices and the notion that large sums of money could be quickly earned in the so-called new economy stock market. predictions of a DOW average below 5000 were quite common. since often such news has been anticipated.

Stock market index The movements of the prices in a market or section of a market are captured in price indices called stock market indices. making the stock market behavior difficult to predict. Derivative instruments Financial innovation has brought many new financial instruments whose pay-offs or values depend on the prices of stocks. with the weights reflecting the contribution of the stock to the index. leaving the prices of stocks rationally determined. The constituents of the index are reviewed frequently to include/exclude stocks in order to reflect the changing business environment. the S&P.g. Behaviorists argue that investors often behave 'irrationally' when making investment decisions thereby incorrectly pricing securities. stocks and other securities can be battered or buoyed by any number of fast market-changing events. Emotions can drive prices up and down. Such indices are usually market capitalization weighted. the whole notion of EMH is that these non-rational reactions to information cancel out. Some examples are 14 . which.Over the short-term. and the reasons for buying and selling are generally obscure. people are generally not as rational as they think. of which there are many. the FTSE and the Euronext indices. However. e.. are opportunities to make money. which causes market inefficiencies. in turn.

Short selling In short selling. making money if the price fell in the meantime and losing money if it rose. equity swaps. These last two may be traded on futures exchanges (which are distinct from stock exchanges—their history traces back to commodities futures exchanges). the trader borrows stock (usually from his brokerage which holds its clients' shares or its own shares on account to lend to short sellers) then sells it on the market. As all of these products are only derived from stocks. Exiting a short position by buying back the stock is called "covering a short position. Leveraged strategies Stock that a trader does not actually own may be traded using short selling. and stock index futures. single-stock futures. they are sometimes considered to be traded in a (hypothetical) derivatives market. stock index and stock options. margin buying may be used to purchase stock with borrowed funds. or traded over-the-counter. or. hoping for the price to fall. derivatives may be used to control large blocks of stocks for a much smaller amount of money than would be required by outright purchase or sale.exchange-traded funds (ETFs)." This strategy may also be used 15 . The trader eventually buys back the stock. rather than the (hypothetical) stock market.

the margin requirements have been 50 %% for many years (that is. the trader borrows money (at interest) to buy a stock and hopes for it to rise. if you want to make a $1000 investment.by unscrupulous traders in illiquid or thinly traded markets to artificially lower the price of a stock. A margin call is made if the total value of the investor's account cannot support the loss of the trade. Hence most markets either prevent short selling or place restrictions on when and how a short sale can occur. The investor is responsible for any shortfall following such forced sales. Margin buying In margin buying. (Upon a decline in the value of the margined securities additional funds may be required to maintain the account's equity. The practice of naked shorting is illegal in most (but not all) stock markets. In the United States. and there is often a maintenance margin below the $500). you need to put up $500. it can be a maximum of a certain percentage of those other stocks' value.) 16 . and with or without notice the margined security or any others within the account may be sold by the brokerage to protect its loan position. Most industrialized countries have regulations that require that if the borrowing is based on collateral from other stocks the trader owns outright.

etc. New issuance Global issuance of equity and equity-related instruments totaled $505 billion in 2004. from $ 9 billion to $39 billion. general economic conditions. but then selling them (before the three-days are up) and using part of the proceeds to make the original payment (assuming that the value of the stocks has not declined in the interim). Other rules may include the prohibition of free-riding: putting in an order to buy stocks without paying initially (there is normally a three-day grace period for delivery of the stock). and IPOs in Europe. business trends.Regulation of margin requirements (by the Federal Reserve) was implemented after the Crash of 1929. a 29. Investment strategies One of the many things people always want to know about the stock market is. Fundamental analysis refers to analyzing companies by their financial statements found in SEC Filings. Technical analysis studies price actions in markets 17 . "How do I make money investing?" There are many different approaches. Before that. Middle East and Africa (EMEA) increased by 333 %%. two basic methods are classified as either fundamental analysis or technical analysis.8 %% increase over the $389 billion raised in 2003. Initial public offerings (IPOs) by US issuers increased 221 %% with 233 offerings that raised $45 billion. speculators typically only needed to put up as little as 10 percent (or even less) of the total investment represented by the stocks purchased.

has averaged nearly 10 % %/year.through the use of charts and quantitative techniques to attempt to forecast price trends regardless of the company's financial prospects. In this method. minimize taxes from too frequent trading. Additionally. used by John W. The price at which each buying and selling transaction takes is determined by the market forces (i. demand and supply for a particular stock). and ride the general trend of the stock market (which. one holds a weighted or unweighted portfolio consisting of the entire stock market or some segment of the stock market (such as the S&P 500 or Wilshire 5000). utilizes strict money management and is also rooted in risk control and diversification. Stock Markets in India-An Introduction Stock markets refer to a market place where investors can buy and sell stocks.e. since World War II). many choose to invest via the index method.S. Henry and Ed Seykota. 18 . which uses price patterns. The principal aim of this strategy is to maximize diversification. in the U. One example of a technical strategy is the Trend following method.. compounded annually.

19 .e. The Origin of The Indian Stock Market One of the oldest stock markets in Asia. enjoys high investor confidence and there is an anticipation of an upward movement in its stock price.Let us take an example for a better understanding of how market forces determine stock prices. high supply and low demand) for the stock of ABC Co. Ltd. buyers will have to bid a higher price for this stock to match the ask price from the seller which will increase the stock price of ABC Co. Therefore. less supply). In earlier times.e. if there are more sellers than buyers (i. Ltd. the Indian Stock Markets have a 200 years old history. in the market. More and more people would want to buy this stock (i. buyers and sellers used to assemble at stock exchanges to make a transaction but now with the dawn of IT. high demand) and very few people will want to sell this stock at current market price (i. its price will fall down. most of the operations are done electronically and the stock markets have become almost paperless. and can trade freely from their home or office over the phone or through Internet. On the contrary. ABC Co.e. Now investors don’t have to gather at the Exchanges.Ltd.

Trading list by the end of 1839 got broader 1840's Recognition from banks and merchants to about half a dozen brokers 1850's Rapid development of commercial enterprise saw brokerage business attracting more people into the business 1860's The number of brokers increased to 60 1860-61 The American Civil War broke out which caused a stoppage of cotton supply from United States of America. business in its loan securities gained full momentum 1830's Business on corporate stocks and shares in Bank and Cotton presses started in Bombay. Bank of Bombay Share which had touched Rs.Establishment of Different Stock Exchanges 20 .18th East India Company was the dominant institution and by end of Century the century. marking the 1862-63 beginning of the "Share Mania" in India The number of brokers increased to about 200 to 250 A disastrous slump began at the end of the American Civil War 1865 (as an example. 2850 could only be sold at Rs. 87) Pre-Independence Scenario .

Sharp increase in share prices of jute industries in 1870's was 90's followed by a boom in tea stocks and coal 1908 "The Calcutta Stock Exchange Association" was formed 1920 Madras witnessed boom and business at "The Madras Stock Exchange" was transacted with 100 brokers. number of brokers came down to 3 and the Exchange was closed down 1934 Establishment of the Lahore Stock Exchange 1936 Merger of the Lahore Stock Exchange with the Punjab Stock Exchange 1937 Re-organisation and set up of the Madras Stock Exchange 21 .1874 With the rapidly developing share trading business. 1875 "The Native Share and Stock Brokers' Association" (also known as "The Bombay Stock Exchange") was established in Bombay 1880's Development of cotton mills industry and set up of many others 1894 Establishment of "The Ahmedabad Share and Stock Brokers' Association" 1880 . brokers used to gather at a street (now well known as "Dalal Street") for the purpose of transacting business. 1923 When recession followed.

Lahore Estock Exchange was closed down after the 22 . 1956.) Limited led by improvement in stock market activities in South India with establishment of new textile mills and plantation companies 1940 Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was established 1944 Establishment of "The Hyderabad Stock Exchange Limited" 1947 "Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and Shares Exchange Limited" were established and later on merged into "The Delhi Stock Exchange Association Limited" Post Independence Scenario Regulations Act. The Exchanges that were recognized under the Act The depression witnessed after the Independance led to closure of a lot of exchanges in the country.Limited (Pvt.

Indore Many more stock exchanges were established during 1980's. Delhi 6. Hyderabad 7. Bombay 2. Calcutta 3. Cochin Stock Exchange (1980) 2. Bnagalore Stock Exchange Limited was registered in 1957 and got recognition only by 1963. Madras 4. 1982) 3. Ahmedabad 5.partition of India. Most of the other Exchanges were in a miserable state till 1957 when they applied for recognition under Securities Contracts were: 1. Ludhiana Stock Exchange Association Limited (1983) 23 . Bangalore 8. namely: 1. and later on merged with the Delhi Stock Exchange. Uttar Pradesh Stock Exchange Association Limited (at Kanpur. Pune Stock Exchange Limited (1982) 4.

Meerut Stock Exchange At present. Bhubaneswar Stock Exchange Association Limited (1989) 10. listed companies as well as their capital. Gauhati Stock Exchange Limited (1984) 6. There was a sharp increase in number of Exchanges.Vadodara Stock Exchange Limited (at Baroda. Government policies during 1980's also played a vital role in the development of the Indian Stock Markets.Coimbatore Stock Exchange 13. Kanara Stock Exchange Limited (at Mangalore. Jaipur Stock Exchange Limited (1989) 9. 24 . 1985) 7. 1990) 12. 1986) 8.Saurashtra Kutch Stock Exchange Limited (at Rajkot.5. there are twenty one recognized stock exchanges in India which does not include the Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL). Magadh Stock Exchange Association (at Patna. 1989) 11.

the brokers found a permanent place. but they always overflowed to the streets. and one that they could. where Horniman Circle is now situated. this time under banyan trees at the junction of Meadows Street and what is now called Mahatma Gandhi Road. quite literally.under banyan trees . call their own. they had to shift from place to place. aptly.BOMBAY STOCK EXCHANGE The oldest stock exchange in Asia (established in 1875) and the first in the country to be granted permanent recognition under the Securities Contract Regulation Act. 25 . The new place was. 1956. called Dalal Street ( Brokers' Street). in 1874. At last. the brokers moved their venue to another set of foliage. As the number of brokers increased. A decade later. it was not always so.in front of the Town Hall. While BSE is now synonymous with Dalal Street. Bombay Stock Exchange Limited (BSE) has had an interesting rise to prominence over the past 135 years. The first venues of the earliest stock broker meetings in the 1850s were in rather natural environs .

In 2002. BSE has played a pioneering role in the development of the Indian securities market. BSE had formulated a comprehensive set of Rules and Regulations for the securities market. It is surely BSE's pride that almost every leading corporate in India has sourced BSE's services in capital raising and is listed with BSE. replaced its open outcry system of trading in 1995. It had also laid down best practices which were adopted subsequently by 23 stock exchanges which were set up after India gained its independence. 26 . The BOLT network was expanded nationwide in 1997. Prominent Position The journey of BSE is as eventful and interesting as the history of India's securities market. Mumbai" was changed to Bombay Stock Exchange. much before the actual legislations were enacted. in terms of listed companies and market capitalisation. which had introduced securities trading in India. In fact. BSE. the exchange turned into a corporate entity from an Association of Persons (AoP) and renamed as Bombay Stock Exchange Limited. 2005. Even in terms of an orderly growth. Subsequently on August 19. the name "The Stock Exchange. with the totally automated trading through the BSE Online trading (BOLT) system. as India's biggest bourse.

It has several firsts to its credit even in an intensely competitive environment.BSE. BSE has in fact been a pioneer in several areas.  First in India to introduce Equity Derivatives  First in India to launch a Free Float Index     First in India to launch US$ version of BSE SENSEX First in India to launch Exchange Enabled Internet Trading Platform First in India to obtain ISO certification for a stock exchange 'BSE On-Line Trading System’ (BOLT) has been awarded the globally recognised the Information Security Management System standard BS7799-2:2002. Its SENSEX is the benchmark equity index that reflects the health of the Indian economy.  First to have an exclusive facility for financial training  First in India in the financial services sector to launch its website in Hindi and Gujarati  Shifted from Open Outcry to Electronic Trading within just 50 days First bell-ringing ceremony in the history of the Indian capital markets (listing ceremony of Bharti Televentures Ltd.2002) . Several Firsts At par with the international standards. on Investor Education 27 February 18. has been and is synonymous with the capital market in India. as a brand.

"Safe Investing in the Stock Market" .under which awareness campaigns and dissemination of information through print and electronic medium is undertaken across the country. BSE also actively promotes the securities market awareness campaign of the Securities and Exchange Board of India.(CDSL) set up with other 1999 11th Oct 1999 9th Jun 2000 SENSEX closed above 5000 Equity Derivatives introduced 2nd Jan 1986 28 . country's first equity index launched (Base Year:1978-79 =100) Investor's Protection Fund (IPF) introduced BSE Training Institute (BTI) inaugurated SENSEX closes above 1000 SEBI Act established 14th Mar 1995 1997 22nd Mar ( An Act to protect. develop and regulate the securities market) BSE On-Line Trading (BOLT) system introduced BSE On-Line Trading (BOLT) system expanded nation-wide Central Depository Services Ltd.An equally important accomplishment of BSE is its nationwide investor awareness campaign . Milestones of BSE Date 9th Jul 1875 31st Aug 1957 10th Jul 1987 3rd Jan 1989 25th Jul 1990 1st May 1992 Milestone Achieved The Native Share & Stock Broker's Association formed BSE granted permanent recognition under Securities Contracts (Regulation) Act (SCRA) SENSEX.

Sensex The BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1.m. It 29 .3. 1986.30 p.1st Apr 2003 8th Aug 2005 7th Feb 2006 4th Jan 2010 T+2 settlement Introduced Incorporation of Bombay Stock Exchange Limited SENSEX closed above 10000 Market time changed to 9. The Sensex is regarded as the pulse of the domestic stock markets in India. .m.0 a.

the index was calculated based on the ‘full market capitalization’ method. the free float market capitalization is regarded as the industry best practice. These companies account for around fifty per cent of the market capitalisation of the BSE. 1979. the Bombay Stock Exchange (BSE) authorities review and modify its composition to be sure it reflects current market conditions. This Market 30 . on the Bombay Stock Exchange. 2003.consists of the 30 largest and most actively traded stocks. such as those held by promoters. therefore. The Market Capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. The base value of the sensex is 100 on April 1. Globally. a variation of the market cap method. However this was shifted to the free float method with effect from September 1. or shares that are readily available for trading. the level of index at any point of time reflects the free float market value of 30 component stocks relative to a base period. and the base year of BSESENSEX is 1978-79. government and strategic investors. At regular intervals. Initially. The free-float method. As per free float capitalization methodology. The index is calculated based on a free-float capitalization method. representative of various sectors. Instead of using a company's outstanding shares it uses its float. does not include restricted stocks.

Free float factor represent the percentage of shares that are readily available for trading.The Divisor is the only link to original base period value of the Sensex. It keeps the index comparable over time and is the adjustment point for all Index adjustments arising out of corporate actions. Using information from April 1979 onwards. which translates to roughly 9% per annum after compensating for inflation. The Calculation of Sensex involves dividing the free float market capitalization of 30 companies in the index by a number called Index divisor.6% per annum. 31 . the long-run rate of return on the BSE Sensex works out to be 18. replacement of scrips. The index has increased by over ten times from June 1990 to the present. etc. Free float factor is also referred as adjustment factor.capitalization is multiplied by a free float factor to determine the free float market capitalization.

As of 2006. known as the NSE NIFTY (National Stock Exchange Fifty). Though a number of other exchanges exist. The NSE's key index is the S&P CNX Nifty. India. In October 2007. banks.59 billion) (October 2010) and was expected to become the biggest stock exchange in India in terms of market capitalization by 2009 end. NSE has a market capitalization of around 7. although this has not yet occurred.648. NSE is mutually-owned by a set of leading financial institutions. insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities.507 crore (US$ 1. NSE is the third largest Stock Exchange in the world in terms of the number of trades in 32 . for both equities and derivative trading. the NSE VSAT terminals.NATIONAL STOCK EXCHANGE The National Stock Exchange (NSE) is a stock exchange located at Mumbai. making it the second largest stock exchange in South Asia. It is the largest stock exchange in India in terms of daily turnover and number of trades. and between them are responsible for the vast majority of share transactions.46 trillion. There are at least 2 foreign investors NYSE Euronext and Goldman Sachs who have taken a stake in the NSE. NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India. an index of fifty major stocks weighted by market capitalisation. cover more than 1500 cities across India. 2799 in total.262. the equity market capitalization of the companies listed on the NSE was US$ 1.

electronic limit order book (LOB) exchange to trade securities in India. Origins The National Stock Exchange of India was promoted by leading Financial institutions at the behest of the Government of India. existent market and new market structures have followed the "NSE" model. The Capital market (Equities) segment of the NSE commenced operations in November 1994. and its pioneering efforts include:  Being the first national. In April 1993. and was incorporated in November 1992 as a tax-paying company. Since the success of the NSE.6%. 33 . NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994.equities. It is the second fastest growing stock exchange in the world with a recorded growth of 16. Innovations NSE has remained in the forefront of modernization of India's capital and financial markets. while operations in the Derivatives segment commenced in June 2000. it was recognized as a stock exchange under the Securities Contracts (Regulation) Act. anonymous. 1956.

" in India.  NSE has also launched the NSE-CNBC-TV18 media centre in association with CNBC-TV18.  Co-promoting and setting up of National Securities Depository Limited. particularly on an equity index. NSCCL was a landmark in providing innovation on all spot equity market (and later.  Being the first exchange that. proposed exchange traded derivatives. Setting up the first clearing corporation "National Securities Clearing Corporation Ltd. first depository in India  Setting up of S&P CNX Nifty. which led to the wide popularization of the NSE in the broker community. 34 .  NSE pioneered commencement of Internet Trading in February 2000. the NSE was permitted to start trading equity derivatives  Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in India. derivatives market) trades in India. in 1996. in India. After four years of policy and regulatory debate and formulation.

solutions and services. Markets Currently. A Vertical Specialist Enterprise. NSE. NSE.IT Limited. setup in 1999 . NSE has the following major segments of the capital market:  Equity  Futures and Options  Retail Debt Market  Wholesale Debt Market  Currency futures  Mutual fund  Stocks lending & borrowing 35 . is a 100% subsidiary of the National Stock Exchange of India.IT offers end-to-end Information Technology (IT) products.

August 2008 Currency derivatives were introduced in India with the launch of Currency Futures in USD INR by NSE. exactly after one year of the launch of Currency Futures. on 31 August 2009. Interest Rate Futures was introduced for the first time in India by NSE on 31 August 2009. Currently it has also launched currency futures in EURO. NSE became the first stock exchange to get approval for Interest rate futures as recommended by SEBI-RBI committee. 36 . a futures contract based on 7% 10 Year GOI bond (NOTIONAL) was launched with quarterly maturities. POUND & YEN.

the first Clearing Corporation October 1995 Became largest stock exchange in the country April 1996 Commencement of clearing and settlement by NSCCL April 1996 Launch of S&P CNX Nifty November 1996 Setting up of National Securities Depository Limited.Milestones of NSE           November 1992 Incorporation April 1993 Recognition as a stock exchange May 1993 Formulation of business plan June 1994 Wholesale Debt Market segment goes live November 1994 Capital Market (Equities) segment goes live April 1995 Establishment of NSCCL. co-promoted by NSE  December 1996 Commencement of trading/settlement in dematerialised securities  July 1998 Launch of NSE's Certification Programme in Financial Market  August 1998 CYBER CORPORATE OF THE YEAR 1998 award  February 1999 Launch of Automated Lending and Borrowing       Mechanism January 2000 Launch of NSE Research Initiative February 2000 Commencement of Internet Trading June 2000 Commencement of Derivatives Trading (Index Futures) December 2000 Commencement of WAP trading June 2001 Commencement of trading in Index Options July 2001 Commencement of trading in Options on Individual Securities 37 . first depository in India.

 November 2001 Commencement of trading in Futures on Individual         Securities January 2002 Launch of Exchange Traded Funds (ETFs) October 2002 Launch of NSE Government Securities Index January 2003 Commencement of trading in Retail Debt Market June 2003 Launch of Interest Rate Futures August 2003 Launch of Futures & options in CNXIT Index August 2008 Launch of Currency Derivatives November 2009 Launch of Mutual Fund Service System October 2010 Launch of 5-minute special pre-open trading session. a mechanism under which investors can bid for stocks before the market opens. 38 .

 ensuring equal access to investors all over the country through an appropriate communication network. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The NSE was set-up with the main objectives of:  establishing a nation-wide trading facility for equities.THE ORGANISATION The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. debt instruments and hybrids. 1956 in April 1993. NSE was promoted by leading 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. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000. which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Mission NSE's mission is setting the agenda for change in the securities markets in India. Based on the recommendations. 39 .

NSE is more than a mere market facilitator.. It's that force which is guiding the industry towards new horizons and greater opportunities. The logo symbolises use of state of the art information technology and satellite connectivity to bring about the change within the securities industry. Logo The logo of the NSE symbolises a single nationwide securities trading facility ensuring equal and fair access to investors. The standards set by NSE in terms of market practices and technology have become industry benchmarks and are being emulated by other market participants. providing a fair. efficient and transparent securities market to investors using electronic trading systems. The initials of the Exchange viz. N. and  meeting the current international standards of securities markets.  enabling shorter settlement cycles and book entry settlements systems. The logo symbolises vibrancy 40 . trading members and issuers all over the country. S and E have been etched on the logo and are distinctly visible.

Life Insurance Corporation of India 4. Stock Holding Corporation of India Limited 8. SBI Capital Markets Limited 9. Industrial Finance Corporation of India Limited 3. ICICI Bank Limited 6. banks. State Bank of India 5. Industrial Development Bank of India Limited 2.and unleashing of creative energy to constantly bring about change through innovation PROMOTERS NSE has been promoted by leading financial institutions. The Administrator of the Specified Undertaking of Unit Trust of India 41 . insurance companies and other financial intermediaries: 1. IL & FS Trust Company Limited 7.

United India Insurance Company Limited 17.The Oriental Insurance Company Limited 16.Corporation Bank 20.Oriental Bank of Commerce 19. where the ownership and management of the Exchange is completely divorced from the right to trade on it.National Insurance Company Limited 14.Canara Bank 12.Indian Bank 21. it has been set up as a 42 .10.Punjab National Bank 18.Bank of Baroda 11. Though the impetus for its establishment came from policy makers in the country.Union Bank of India CORPORATE STRUCTURE NSE is one of the first de-mutualised stock exchanges in the country.General Insurance Corporation of India 13.The New India Assurance Company Limited 15.

nominees of SEBI and one full time executive of the Exchange. insurance companies and other financial intermediaries and is managed by professionals. public representatives. eminent professionals in the fields of law. owned by the leading institutional investors in the country. taxation. RESEARCH METHODOLOGY 43 . etc. Its Board comprises of senior executives from promoter institutions. management and trading is in the hands of three different sets of people. but in fact accommodates involvement. decisions relating to market operations are delegated by the Board to various committees constituted by it. the public and the management. accountancy. support and contribution of trading members in a variety of ways. While the Board deals with broad policy issues. banks.public limited company. Such committees include representatives from trading members. professionals. The day-to-day management of the Exchange is delegated to the Managing Director who is supported by a team of professional staff. who do not directly or indirectly trade on the Exchange. NSE is owned by a set of leading financial institutions. The NSE model however. does not preclude. finance. economics. From day one. NSE has adopted the form of a demutualised exchange the ownership.

The methodology used for the implementation of the project is based on secondary data & with the help of custom type pie explosion chart. The data was obtained on the basis of research & findings conducted by various stock market experts. 44 . 1) Comparison of Trade Value of NSE & BSE 264 BSE NSE 809 Interpretations: It was found out that trade value of nse is far better than bse on account of more customer preference.

2) Comparison of Market Capitalisation at NSE & BSE BSE 1588 1627 NSE Interpretations: On the basis of data obtained it was found out that both bse & nse have equal market capitalization. 36% BSE Others NSE. 5% NSE BSE. 59% 45 . 3) Investors Stock Exchange Preference Others.

5) Investor’s preference for analyzing market 46 .Interpretations: Nse occupies more stock exchange preference followed by bse & other stock exchanges. 4) Reasons for Preferring NSE the most 50 40 30 20 10 0 Liquidity Brand Value Trust Divesified services Interpretations: Investors prefer nse because it provides diversified list of services to its investors followed by its prime service of liquidity. brand value & trust.

36% Sensex Nifty 44% Both of them Others also 14% 6% Interpretations: Investors prefer analyzing of sensex more easy as compared to nifty and other stock exchanges. 6) Client Satisfaction 25 20 15 10 5 0 NSE BSE Equal in both Interpretations: On the basis of data obtained it was found that most people were of the opinion that nse provides them with better services 47 .

You should also be acquainted with the concept of NSE and BSE. 48 . So. 7) Investor’s Selection for most secured investment 18% Bank Stock Market 40% 38% Real Estate Others 4% Interpretations: Although stock markets have created a huge impact on our economy researchers say that people prefer investment in real estate the most secured as compared to banks.while others firmly believe in bse while the rest are happy with both nse & bse. Conclusion Stock market is something which you cannot predict what is going to happen in the market tomorrow without proper analyzes of market. it is always preferable to go for some professional help if you wish to invest in the Indian stock market. stock markets & other investments.

But you should be aware that it requires a lot of patience.org http://www.com www.answers. Investors put their money in the stock market in order to reap huge benefits from their investment.Bombay Stock Exchange and National Stock Exchange are both major stock exchange in India. But nobody can predict the market as we have already discussed. But there is a difference between NSE and BSE.com http://wiki.wikipedia. Also the growth of these two stock exchanges are decided by our country’s growth.bseindia.com www.com 49 .sharetipsinfo.nseindia. BIBLIOGRAPHY      www.

com  www.yahoo.gov.sebi. http://in.in 50 .answers.