INTRODUCTION STOCK MARKET

A stock market is a market where securities that is shares, debentures and government securities are bought and sold. The securities contracts (regulation) Act , 1956 defines a Stock Exchange as “ an association, oragnisation, or body of individuals, whether in corporated or not, established for the purpose of assisting regulating and controlling of business in buying, selling and dealing in securities. “ A share market exists because certain owners of securities wish to sell them, others wish to buy them and the titles to the securities are transferable. A securities exchange does not itself engage in the purchase of sale of securities. Rather , its function is to make such trading as smooth and efficient as possible. A stock market / share market is a public market (a loose network of economic transactions not a physical facility or discrete entity) for the trading of company stock 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 US at the beginning of October 2008.[1] 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 (i.e., a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring.). 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 stock market in the United States is NYSE while in Canada, it is the Toronto Stock Exchange. Major European examples of stock exchanges include the London Stock Exchange, Paris Bourse, and the Deutsche Börse. Asian examples include the Tokyo Stock Exchange, the Exchange, the Bombay Stock Exchange and the Karachi Stock Exchange. In Latin America, there are such exchanges as the BM&F Bovespa and the BMV.

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CONCEPT OF STOCK MARKET
The Securities Contracts (Regulation) Act, 1956, has defined Stock Exchange as an "association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business of buying, selling and dealing in Securities". Stock exchange as an organized security market provides marketability and price continuity for shares and helps in a fair evaluation of securities in terms of their intrinsic worth. Thus it helps orderly flow and distribution of savings between different types of investments. This institution performs an important part in the economic life of a country, acting as a free market for securities where prices are determined by the forces of supply and demand. Apart from the above basic function it also assists in mobilizing funds for the Government and the Industry and to supply a channel for the investment of savings in the performance of its functions. The Stock Exchanges in India as elsewhere have a vital role to play in the development of the country in general and industrial growth of companies in the private sector in particular and helps the Government to raise internal resources for the implementation of various development programmes in the public sector. As a segment of the capital market it performs an important function in mobilizing and channelising resources which remain otherwise scattered. Thus the Stock Exchanges tap the new resources and stimulate a broad based investment in the capital structure of industries. A well developed and healthy stock exchange can be and should be an important institution in building up a property base along with a socialist in India with broader distribution of wealth and income. Thus Stock Exchange is a vital organ in a modern society. Without a stock exchange a modern democratic economy cannot exist. The system of joint stock companies financed through the public investment as emerged has put the vast means of finances almost to enterpreneurs' needs. Finance from external sources mainly from the investing public can become possible only when an institute like Stock Exchange provides opportunities for the conversion of scattered savings into profitable investments with the promises of a reasonable yield and minimum element of risk. Such a mechanism as provided by Stock Exchanges is not merely a source of capital but also a conduit which channelises the savings into investment along with a free movement of capital. With the probable exception of a totalitarian state no Government will be able to mobilize resources from the public if the money market in the form of stock exchange does not exist. The Stock Exchange benefits the entire community in a variety of way. It enables the producers to raise capital which directly and indirectly gives gainful employment to millions of people on the one hand and helps consumers to get ;the variety of goods needed by them on the other. It provides opportunities to savers to store the value either as temporary abode of purchasing power or as a permanent abode of purchasing power in the form of financial assets. It also helps the segments of the savers who put their savings in commercial firms and non-banking financial intermediaries because these institutions avail themselves of the services of Stock Exchange to invest the money thus collected.

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The Stock Exchange comes close enough to a perfectly competitive market allowing the forces of demand and supply a reasonable degree of freedom to operate as compared to other markets specially the commodity markets. This segment of the factor market can be considered as a perfect or a nearly perfect market. Apart from providing a mechanism for transacting business in stock and shares it generates genuine potential for a new entrepreneur to take up initiative in the private sector enterprises and allows the expansion of investing community by offering gainful development of their otherwise sluggish or shy capital. The Stock Exchange must assume the responsibility of protecting the rights of investors specially the small investors in the Joint Stock Companies.

FUNCTIONS
 Provide a ready market for buying and selling of securities.  Performs an act of magic as it enables long term investments to be financed by funds provided by individuals who are otherwise interested in short term or medium term investment.  Directs the flow of capitals in the most profitable channels.  Induces corporate enterprises to raise their standards of performance.  Offers an easily understood evaluation of the financial conditions and prospects of listed firms. 3

It is the citadel of capital and the pivot of the money market. the stock market enables companies to undertake expansion and modernization schemes. Stock markets encourage several closely held companies to go public. It is indispensable for the proper functioning of an corporate enterprise. The recent boom in shares market has created financial awareness among the middle class. The stock market has become a central factor in household financial planning. Companies with a proven track record are considered to be blue chip companies and their shares and debentures are brisky traded in the share markets. It provides necessary mobility to the capital and directs the flow of capital into profitable and successful enterprise. 4. Hero Honda Motors was offered Rs. the stock exchange is regarded as an essential eoncitant of the capitalist system of economy. The stock markets is an Alibaba Cave from which business community can draw unlimited money.  Promotes the habit of saving and investment among the general public and thereby helps capital formation. Every company talks in terms of hundreds of crores of rupees of investments in new projects these days. It brings together large amount of capital necessary for the economic progress of a country. The role of share bazaars is no less in the unbelievable response. the stock market helps capital formation which is an essential ingredients fir quicker industrial development. there is a tremendous response from investors. By encouraging people to save and invest. This means that ownership is broad-based management is diffused and more scrips are offered to the public for trading. Through capital formation. 4 . Superior performance of companies is reflected through stock market. A sort of record was established by Kinetic Honda when its issue was over subscribed by 150 times.8 crore for an offer of just Rs. Stock market acts as a mirror which the general economic condition is clearly reflected.46 crore. Stock market provides a market for the government to sell its securities order to raise funds for meeting developmental activities. Facilitates speculation. BENEFITS  Benefits to the community:Stock exchange encourages people to save and invest their savings in shares and debentures. - - - When an efficiently run company issues shares or debentures the to public for subscription. It is the barometer of general economic progress in a country and exercise a powerful and significant influence as a depressant or stimulant of business activity. 46. Because of its functions.  Promotes industrial growth and economic development of the country by encouraging industrial investments rather than hoarding or investing in gold.

the premier share market registers dealings worth several hundreds crore a day. The market rates of shares and debentures will be higher because of daily dealings on the stock markets. 92. The stock exchange provides information about the scrips dealt therein and the prices at which they are quoted. The Bombay stock exchange . Benefits of Investors:Stock exchange is a money spinners an EI Dorado for millions of investors across the country . The interest of investors is safeguard by the strict enforcement of rules and regulations. jains initial investment of Rs. and the number of listed stocks increased from 3697 to 9642. Quicker response from the investors to the listed securities. 1. - - - -  Benefits to Companies:Wide market for shares and debentures. number of investors. Dealings on the floor of any market 5 . 46000 is now wroth Rs.56 lakh in barely a year. Investors become overnight rich thanks to the stock market “Bimal jain ” a new Delhi housewife writes India today bought 500 debentures of reliance textiles as year ago at the then market price of Rs. which are ruling at record levels. More important is the fact that the stock market is a powerful hedge against inflation. All newspaper and periodicals carry columns on the stock markets. big or small. the company then offered to convert these into shares. the number of listed companies went up from 2265 from 1980 to 6480 in 1992. DEALINGS Stock market dealings are subject to the rules and regulations of the market and the provisions of the securities contracts Act. This enhances the bargaining position of a company in the event of its merger with some other company. Stock market offers a ready markets for buying and selling the securities. Every share market has its own by laws besides complying with the provisions of the securities contracts Act 1956. This enables investors in making a sound investment choice. By-laws and provisions of the legislation protect the interests of investors . the number of exchange has gone up from nine to 23 . Between 1980 and today . Image of the company goes up once the shares are listed on a stock market. 1956. GROWTH There has been a phenomenal increase in the number of stock market. Share bazaar is the busiest market with crores of rupees being put a stake. the number of listed companies and market value of listed companies over a period of time.

As of today. are to be settled on the same day on which they are entered into. The buyers can carry transactions to another sometimes for years together. all the 23 stock exchange have been recognized by the government . Only an individuals can become a member. THE SECURITIES CONTRACT (REGULATION) ACT. The grant of recognition of the stock market shall be published in the gazette of India and will come into effect from the date of publication in the gazette. like ACC . 6 . Any exchange which is desirous of getting recognition should apply to the central government in a prescribed form. Regulation of stock market Regulation of buying and selling of securities outside the limits of stock exchanges PROVISIONS OF THE ACT  Grant of recognition to the stock market:The act provides that only recognized stock exchange can function in the country . It may be noted that forward dealings were banned by the government in 1969 and were reintroduced later.permitted only in the listed securities through the members and their authorized clerks during fixed working hours. Two types of dealings are carried on the stock market : Ready delivery contracts and Forward Delivery contracts in two kinds of Scrips namely ‘A’ group and ‘B’ group securities. If the central government is satisfied that the information furnished is adequate and the stock exchange concerned is willing to comply with the necessary conditions and it will be in the interest of trade and public to grant recognition to the stock exchange. TISCO . reliance and century. is a legislation which empowers the government to regulate the functioning of stock exchange in the country. The application for membership should be sponsored at least by two existing members. To regulate dealings in securities. Forward transactions are settled on specified days which are fixed at fortnightly intervals . or within a period of seven days. then the central government shall grant recognition to the applicant exchange. Cash trading is allowed in B group scrips. A group securities are also known as specified securities and are big daddies of the market . Members is limited to Indian citizens. 1956 The securities contracts (Regulation) Act. The act applies to the whole of India and has the following features:To prevent undesirable transaction in securities. Ready delivery contacts also known as cash contacts or cash trading. 1956. Forward dealings are allowed in A group scrips . To become a member of a stock market one should be above 21 years of age.

Participants in the stock market range from small individual stock investors to large hedge fund traders. Submission of returns:Section 6 of the act lays down that every stock exchange shall furnish to the central government such periodical returns as may be prescribed relating to its affairs. Some exchanges are physical locations where transactions are carried out on a trading floor. Their orders usually end up with a professional at a stock exchange. who can be based anywhere. The central government will exercise its power to make bye. who executes the order. Section 10 of the Act empowers the central government to amend the bye-laws as framed under section 9 or to make bye-laws.  Power to make Amend Bye-Laws :Section 9 of the Act empowers the recognized stock exchange to make by laws for the regulation and control of contracts with the previous approvalof the central government. composed of a network of computers where trades are made electronically via traders.laws for a stock exchange that an employees has arisen and for the purpose of meeting the emergency the central government should suspend the business for a period not exceeding seven days. Trading The London Stock Exchange. This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously. The periodicals returns shall be filed by the recognized stock exchange before 31 st January each year along with the detailed information as laid down in the securities contracts (Regulation) rules. (Buying or selling 7 . Actual trades are based on an auction market model where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. 1957. by a method known as open outcry. The other type of stock exchange is a virtual kind.

The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers. and Credit Suisse Group. buyers and sellers are electronically matched. is an order-driven. In 1986. Prior to the 1980s. It was automated in the late 1980s.at market means you will accept any ask price or bid price for the stock. One or more NASDAQ market makers will always provide a bid and ask price at which they will always purchase or sell 'their' stock. thus providing a marketplace (virtual or real). according to data compiled by Boston-based Aite Group LLC. where all of the trading is done over a computer network. The NASDAQ is a virtual listed exchange. The specialist's job is to match buy and sell orders using open outcry.) When the bid and ask prices match. especially for so-called "program trading". electronic stock exchange. on a first-come-first-served basis if there are multiple bidders or askers at a given price.S. already steer 12 percent of U. it consisted of an open outcry exchange. a brokerage-industry consultant. led by UBS AG. Stockbrokers met on the trading floor or the Palais Brongniart. Although there is a significant amount of human contact in this process. The Paris Bourse. active trading (especially in large blocks of securities) have moved away from the 'active' exchanges. Once a trade has been made the details are reported on the "tape" and sent back to the brokerage firm. a sale takes place.[4]. the CATS trading system was introduced. Orders enter by way of exchange members and flow down to a floor broker. The New York Stock Exchange is a physical exchange. and the order matching process was fully automated. Securities firms. The process is similar to the New York Stock Exchange. That share probably will increase to 18 percent by 2010 as more investment banks bypass the NYSE and NASDAQ and pair buyers and sellers of securities themselves. If a spread exists. who goes to the floor trading post specialist for that stock to trade the order. Goldman Sachs Group Inc. From time to time. which then notifies the investor who placed the order. computers play an important role. now part of Euronext. The exchanges provide real-time trading information on the listed securities.[5] 8 . However. no trade immediately takes place--in this case the specialist should use his/her own resources (money or stock) to close the difference after his/her judged time. New York Stock Exchange. also referred to as a listed exchange — only stocks listed with the exchange may be traded. security trades away from the exchanges to their internal systems. respectively. facilitating price discovery.

the balance of power in equity markets is shifting. which offer to individual investors a means of productively employing capital/savings suited to his/her needs and temperament. besides purchasing raw materials and employing labour. pension funds.a certificate issued under the seal of the company promising a refund of the loan on a specified date and payment of interest at prescribed intervals. however. Market participants A few decades ago. The rise of the institutional investor has brought with it some improvements in market operations. hedge funds. buyers and sellers were individual investors. Over time. investor groups. However. calls for raising vast amounts of financial resources for the purpose of acquiring land. buyers and sellers are largely institutions (e. that is. mutual funds. shares and bonds. but only for large institutions. where clients can move big blocks of stock anonymously.Now that computers have eliminated the need for trading floors like the Big Board's.g. markets have become more "institutionalized". buildings and equipments. insurance companies. brokers pay the exchanges less in fees and capture a bigger share of the $11 billion a year that institutional investors pay in trading commissions as well as the surplus of the century had taken place. No one individual or a small group of individuals is rich enough to provide all the capital required by modern business enterprise and savings of hundreds. EVOLUTION OF STOCK MARKET IN INDIA Any attempt at raising the standard of living of the masses must address itself to the task of producing the right quantity of the right types of goods and have them available for consumption at the right time. worldwide. corporate governance (at least in the West) has been very much adversely affected by the rise of (largely 'absentee') institutional 'owners'. such as wealthy businessmen. This. Thus. the government was responsible for "fixed" (and exorbitant) fees being markedly reduced for the 'small' investor. To them the corporation or company may offer debenture bonds. exchange-traded funds. with long family histories (and emotional ties) to particular corporations. index funds. of people must be mobilized. (They then went to 'negotiated' fees. banks and various other financial institutions). different types of securities. Some people may desire safety of the amount they have invested and a regular income from their investment. 9 . This requires large-scale production through coordination of activities of hundreds of people under the same roof even when the product is the simplest to make. but only after the large institutions had managed to break the brokers' solid front on fees. By bringing more orders in-house. The corporate form of organization is well adapted to the task of raising capital from many people. This is done by issuing or offering for sale at cash.. if not thousands. The need for offering for sale different types of securities is obvious.

To them the corporation will sell preference shares. NSE. either limited by guarantees or by shares. Hyderabad. As late as 1933 there were only three stock exchanges – one each at Ahmedabad. Madras and Gauhati were given permanent recognition by the Central Government at the time of setting up of these stock exchanges. obviously. that is. are non-profit making organizations. should the need arise. But no one will buy these securities unless there exists an organized market where the holders can dispose of them.D. and Vadodara. however. between the years 1790 and 1800 A. Madhya Pradesh. but trading in securities was in vogue much prior to that year. Ludhiana. Jaipur.Other investors may be willing to commit their savings for an indefinite period of time and to assume greater risk while still desiring safety of capital and stability of income. Bhubaneswar. Of course. As per SCRA Act any recognised stock exchange may. Delhi. and new investors can purchase them. Delhi. no need for stock exchange in Communist countries since in such countries all the productive organizations are owned by the government. it is generally agreed that business in securities had begun as early as the concluding years of the 18th century. the stock exchanges of Ahmedabad. Bombay and Calcutta. Managalore. Organised stock exchange in India are of recent origin. Powers that may be exercised by the Stock market The powers of the stock exchange are to be exercised as per provisions in its bye-law. such organized markets have come into existence in all democratic and capitalistic countries including India. Bangalore. 10 . Calcutta. Of these. Interconnected SE. could be segregated into two broad groups – 20 stock exchanges which were set up as companies. Coimbatore. Cochin. Existing structure of the stock market in India The Act recognizes stock exchanges with different legal structure. Apart from NSE. and the 3 stock exchanges which are functioning as associations of persons (AOP) viz. Gauhati. Such a market is called stock market or a stock exchange in English speaking countries and a 'brouse' in continental Europe. Still other investors may be willing to shoulder the business risk that goes along with the ownership of the business in the hope that the profit realized would be large enough to compensate the greater risk they are assuming. Ahmedabad Stock Exchange and Indore Stock Exchange. BSE. Uttar Pradesh. Presently the stock exchanges which are recognised under the Securities Contracts (Regulation) Act in India. The bye-laws can provide for the exercise of following powers by the stock exchange a. subject to the previous approval of the[Securities and Exchange Board of India make bye-laws for the regulation and control of contracts. all stock exchanges whether established as corporate bodies or Association of Persons (AOPs). Calcutta. The opening and closing of markets and the regulation of the hours of trade. The 20 stock exchanges which are companies are: the stock exchanges of Bangalore. Hyderabad. BSE. OTCEI. Over the years. Madras. There is. Pune. no one can tell when the first transaction took place. Saurashtra-Kutch. Magadh.

g. h. of contracts. 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. Ensuring equal access to investors all over the country through an appropriate communication 11 . e. f. Based on the recommendations. The listing of securities on the stock exchange. Fixing the obligation of members to supply such information or explanation and to produce such documents relating to the business as the governing body may require.  NSE's Mission 1. The regulation of taravani business including the placing of limitations thereon. whether as a result of pool or syndicated operations or cornering or otherwise) including the power to fix . and the suspension or prohibition of trading in any specified securities. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act. debt instruments and hybrids. and the forms of contracts in writing. The exercise of powers in emergencies in trade(which may arise. Establishing a nation-wide trading facility for equities. conditions and incidents of contracts.b. and conditions relating thereto. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. the consequences of a breach or omission by a seller or buyer. including contracts between members or between a member and his constituent or between a member and a person who is not a member. c. The limitations on the volume of trade done by any individual member in exceptional circumstances. if any. making. 2. the inclusion of any security for the purpose of dealings and the suspension or withdrawal of any such securities. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000. and the responsibility of members who are not parties to such contracts. 1956 in April 1993. rescission and termination. The regulation of the entering into. performance. and the consequences of default or insolvency on the part of a seller or buyer or intermediary. THE NATIONAL STOCK MARKET OF INDIA LIMITED The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. including the prescription of margin requirements. 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. d. The terms.

support and contribution of trading members in a variety of ways. The ownership and management of NSE have been totally delinked from the right of trading members. This pattern has been adopted. owned by the leading institutional investors in the country. It's that force which is guiding the industry towards new horizons and greater opportunities. The standards set by NSE in terms of market practices and technologies have become industry benchmarks and are being emulated by other market participants. "The NSE is different from most other stock exchanges in India where membership automatically implies ownership of the exchange. public representatives. efficient and transparent securities market to investors using electronic trading systems. who do not directly or indirectly trade on the Exchange. The NSE model however. does not preclude. enabling shorter settlement cycles and book entry settlements systems.the ownership. the public and the management. Distinctive Features of NSE NSC is able to radically transform the Indian Capital market during the decade of its existence. eminent professionals in the fields of law. where the ownership and management of the Exchange is completely divorced from the right to trade on it. Such committees includes representatives from trading members. but in fact accommodates involvement. Its Board comprises of senior executives from promoter institutions. taxation.3. etc.  Corporate Structure of NSE NSE is one of the first de-mutualised stock exchanges in the country. Though the impetus for its establishment came from policy makers in the country. While the Board deals with broad policy issues. 12 . NSE is owned by a set of leading financial institutions. NSE is more than a mere market facilitator. banks. From day one. it has been set up as a public limited company. Providing a fair. economics. This has completely eliminated any conflict of interest and helped NSE in aggressively pursuing policies and practices within a public interest framework. professionals. The day-to-day management of the Exchange is delegated to the Managing Director who is supported by a team of professional staff. NSE has adopted the form of a demutualised exchange . decisions relating to market operations are delegated by the Board to various committees constituted by it. finance. nominees of SEBI and one full time executive of the Exchange. insurance companies and other financial intermediaries and is managed by professionals. 5. accountancy. Meeting the current international standards of securities markets. management and trading is in the hands of three different sets of people. and 4. It has changed the mindset of all market players and has built investor confidence in the secondary markets.

and investor interests invariably take a back seat. It has the largest VSAT network in this part of the world with a huge and complex web of hardware and software. It is therefore recognized as one of "Top IT User" organizations.  Management Structure The NSE has tried to benefit from the long experience and expertise of its trading members in their advisory capacities. The automated Trading screens can match buy and sell orders without the intervention of brokers. The IT department of NSE employs 150 IT professionals forming a third of its total staff strength. which is visited daily by four Lakh persons  Stock Exchange Technology The modern stock exchange technology does not need the traditional type of brokers to match investors' orders as they used to do on the physical-trading floor. This is a structurally unstable model. The Executive Committee.400 Crores in computers. The exchange has invested close to Rs. NSE introduced a nation-wide VSAT driven screen based trading system. which is concerned with the management of the exchange. Securities industry professional and trading members man these committees and NSE staff concerned with respective areas of exchange operations also participate in them. In line with global trends NSE is structured and operates much like an information technology company. The day-tday management of NSE is delegated is delegated to the Managing Director who is supported by a team of professional staff. It has a detailed disaster recovery site that mirrors all operating systems.Since broker owned stock exchanges are also broker managed there is a clear conflict of interest. Today brokers are needed only for settlement responsibilities. But the exchange has appointed different committees to advise in areas such as best market practices. Introduction of Technology Initiatives Stock exchanges today have to rely increasingly on information technology to stay competitive in delivering services. 13 . It Board of Directors does not have any representative of brokers. settlement procedures and risk containment systems. as it inevitably leads to emergence of power groups. has four brokers nominated by the board to reflect different types of interests in the market. The NSE has set up its own Internet Webster. software and communication equipment. This is primarily because of newer trading channels used for communicating and transacting like Internet and On-line security trading.

The system conceals the identity of the parties to an order or trade. To conclude we can say that India has a long tradition of functioning capital markets. Counterparty risk is being guaranteed through the tight risk management system and an innovative method of on-line position monitoring and automatic disablement.  Nationwide Trading Facility Nationwide Trading system of NSE has immensely benefited investors in all places. NSE today offers investors trading facilities in over 280 cities and town through 4000 terminals. The process of reform of capital markets started in 1992 and aimed at removing direct government control and replacing it by a regulatory framework based on transparency and 14 . This means given the same set or orders. the low price. bringing with it unprecedented increases in liquidity and transparency. NSE has introduced the concept of a clearing corporation. the high price. as the orders and prices are visible and instantly available to all investors across the country. the last traded price and other related information. This limit is fixed in relation to the money he deposits with NSC or its clearing corporation. The trading system works in such a way that the broker gets warning messages after he crosses 70% of his trading limit and the moment he reaches 100% of his limit NSE computer disconnects all his terminals from the system so that he cannot trade further. representing a dramatic change in investor access and protection. Under this system each broker of NSC is given a limit up to which he can trade. which do not have a stock exchange nearby. The market screens at any point of time give the members complete information on the total order depth in a security. Currently the limit is 8. the orders that come first receive priority in matching. Earlier their orders took three days for confirmation.. by which the counterparty risk of each member is taken by NSCC and the financial settlement guaranteed by the Corporation. When an order does not find an immediate match in remains in the system and is displayed to the whole market. bringing enormous safety to fast growing and changing electronic market. The trading system operates on price time priority. For the first time NSE introduced in India screen based trading with automated matching. Risk Containment Measures -Investors freed from Counterparty Risks NSE introduced risk containment measures like mark to market margins.5 times the money deposited. This money can be cash or pledge of securities or Bank Guarantee. till a fresh order comes in or the earlier order is modified or cancelled. NSE introduced this system of automatic disablement to control grave risks.Operations commenced in Mumbai and rapidly spread all over India. exposure limits etc. He is allowed to trade again only when he brings additional deposits or authorise NSC to reduce his trades either by selling or buying on his behalf. This time lag is now a thing of the past. This help better functioning of the market as disclosures of identity would put most members at a disadvantage. This has served to unify the earlier fragmented market into a single national order book.

the stock market is increasingly perceived as an electronic marketplace for buyers and sellers of securities to transact their business. BOMBAY STOCK EXCHANGE Established in 1875. which in a few short years completely revolutionized the Indian capital market. especially in technology driven stock exchanges encourages participation in economic activity and enhances the efficient utilization of resources. For instance. under the full view of observers.disclosure. namely an essential financial infrastructure for any economy. A number of significant reforms have been implemented in the spot equity and related exchange traded derivatives markets since the early 1990s. trading volumes in the derivatives market exceed those in spot markets and market practices such as speed of settlement and dematerialization are close to international best practices. FII registrations in the country have gone up significantly over the years. FIIs had made $10. 15 .181 crore) in calendar 2005. An important policy initiative in 1993 was the opening of capital markets for foreign institutional investors and allowing Indian companies to raise capital abroad. The depository and share dematerialization systems have been introduced to enhance the efficiency of the transaction cycle. the Bombay Stock Exchange is Asia's first stock exchange. In addition. The first step was taken in 1992 when SEBI was elevated to a full-fledged capital market regulator. As we can see that the stock exchange is now seen increasingly for what it really is. spot prices are mostly market-determined. The transparency of the price discovery process which results. The number of registered FIIs has gone up from 823 in December 2005 to 972 in October 2006. It is this view of the exchange as infrastructure that motivated the Indian government to encourage the establishment of the National Stock Exchange of India at Mumbai. The FIIs have been rewarded well by attractive valuations and increasing returns.7 billion worth of investment (Rs 47.

which let shareholders invest in business ventures and get a share of their profits . much as we know them". The Dutch later started joint stock companies. Genoa and Florence also began trading in government securities during the 14th century. Because these men also traded with debts. China.or losses. institutionalizing what had been. as their primary place for trading. until then. In 1351 the Venetian government outlawed spreading rumors intended to lower the price of government funds. with the world's biggest markets being in the United States. Japan. France. option trading. In 1602. the Dutch East India Company issued the first share on the Amsterdam Stock Exchange. There are now stock markets in virtually every developed and most developing economies. Importance of stock market 16 . Germany. an informal meeting. as most of the merchants of that period. India. unit trusts and other speculative instruments. debt-equity swaps. South Korea and the Netherlands. It was the first company to issue stocks and bonds.In 12th century France the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. Bankers in Pisa. The Dutch "pioneered short selling. merchant banking. United Kingdom. but actually. 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. In the middle of the 13th century. Verona. A common misbelief is that in late 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurze. they could be called the first brokers. Canada. the family Van der Beurze had a building in Antwerp where those gatherings occurred. Venetian bankers began to trade in government securities. the Van der Beurze had Antwerp. and in 1309 they became the "Brugse Beurse". The idea quickly spread around Flanders and neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam. This was only possible because these were independent city states not ruled by a duke but a council of influential citizens.

For example. as they reap large commissions from the placement. the stock market is often considered the primary indicator of a country's economic strength and development. meaning that they collect and deliver the shares. when the foreign company has a presence in the new market. For example. This discretion has insulated Canada to some degree to worldwide financial conditions. History has shown that the price of shares and other assets is an important part of the dynamics of economic activity. An important aspect of modern financial markets. where trading is currently completed through computers. including the stock markets. but rather only short-term profits to American business men and the Chinese. Chinese firms that possess little or no perceived value to American society profit American bankers on Wall Street. central banks tend to keep an eye on the control and behavior of the stock market and. great attention must be given to the foreign participants being allowed in. in general. for instance. A portion of the funds involved in saving and financing flows directly to the financial markets instead of being routed via the traditional bank lending and deposit operations. there are very few large foreign corporations listed on the Toronto Stock Exchange TSX. In fact. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. compared to other less liquid investments such as real estate. 17 . however. is absolute discretion. Rising share prices. on the smooth operation of financial system functions. American stock markets see more unrestrained acceptance of any firm than in smaller markets. as well as the Chinese company which yields funds to invest in China. or raise additional capital for expansion by selling shares of ownership of the company in a public market. The stock market is one of the most important sources for companies to raise money. has been an important component of this process. Therefore. This allows businesses to be publicly traded. 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. either directly or through mutual funds. In this way the financial system contributes to increased prosperity. In order for the stock markets to truly facilitate economic growth via lower costs and better employment. this can benefit the market's citizens. Financial stability is the raison d'être of central banks. Relation of the stock market to the modern financial system The financial systems in most western countries has undergone a remarkable transformation. One feature of this development is disintermediation. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. Share prices also affect the wealth of households and their consumption. and can influence or be an indicator of social mood. tend to be associated with increased business investment and vice versa. The general public's heightened interest in investing in the stock market. However.The main trading room of the Tokyo Stock Exchange. although. An economy where the stock market is on the rise is considered to be an up and coming economy. Conversely. and guarantee payment to the seller of a security. Canada's largest stock exchange. This is an attractive feature of investing in stocks. these companies accrue no intrinsic value to the long-term stability of the American economy. Exchanges also act as the clearinghouse for each transaction.

on a Total Return Basis. mutual funds. for year ended 2009. In all developed economic systems. 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.. individual investors.2%. Buffett began his career with $100. Sometimes there appears to be no rhyme or reason to the market. such as the European Union. despite all this available information. Stock prices fluctuate widely. immersed in chat rooms and message boards. permitting a higher proportion of shares to bonds. individual investors. With each passing year. or have acquired other 'risky' investments (such as 'investment' property. insurance investment of premiums.e. The following deals with some of the risks of the financial sector in general and the stock market in particular. Japan and other developed nations. United States Stock Market Returns Over a sixty-year period. i. only folly. on a compounded basis an average annualized rate of 5.6%. etc. are exchanging questionable and often misleading tips. and people who have turned to investing for their children's education and their own retirement become frightened. Yet. and market strategists are all overtaking each other to get investors' attention. 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. then plummet just as quickly. Television commentators. e. This is a quote from the preface to a published biography about the long-term valueoriented stock investor Warren Buffett. In the 1970s. analysts. but also the economy on a large scale. At the same time. and financial risk Riskier long-term saving requires that an individual possess the ability to manage the associated increased risks. compared to less than 20 percent in the 2000s. and $100. This is certainly more important now that so many newcomers have entered the stock market. Stock prices skyrocket with little reason.. in Sweden.000 from seven limited partners consisting of Buffett's family and friends. in marked contrast to the stability of (government insured) bank deposits or bonds. the United States. 18 . 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. hedge funds. investors find it increasingly difficult to profit.g. the S&P 500 Index year-to-year grew at an average annualized rate of 9.Statistics show that in recent decades shares have made up an increasingly large proportion of households' financial assets in many countries. real estate and collectables). deposit accounts and other very liquid assets with little risk made up almost 60 percent of households' financial wealth. This is something that could affect not only the individual investor or household. Similar tendencies are to be found in other industrialized countries. The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance. Over the years he has built himself a multi-billion-dollar fortune. pension funds. the noise level in the stock market rises. The stock market. financial writers.

a study of the fifty largest oneday share price movements in the United States in the post-war period seems to confirm this. contrary to fact. having priced in all public knowledge.) Over-reactions may occur—so that excessive optimism (euphoria) may drive prices unduly high or excessive pessimism may drive prices unduly low. (But this largely theoretic academic viewpoint—known as 'hard' EMH—also predicts that little or no trading should take place. 19 . 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. ought to affect share prices beyond the short term. negative or down trends are referred to as bear markets.The behavior of the stock market NASDAQ in Times Square. From experience we know that investors may 'temporarily' move financial prices away from their long term aggregate price 'trends'.) The 'hard' efficient-market hypothesis is sorely tested by such events as the stock market crash in 1987.6 percent—the largest-ever one-day fall in the United States. According to one interpretation of the efficient market hypothesis (EMH). when the Dow Jones index plummeted 22. although very rarely. to this day. (Positive or up trends are referred to as bull markets. (But note that such events are predicted to occur strictly by chance . since prices are already at or near equilibrium. 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. This event demonstrated that share prices can fall dramatically even though. New York City. only changes in fundamental factors. such as the outlook for margins. Economists continue to debate whether financial markets are 'generally' efficient. profits or dividends.

the media amplified the general euphoria. while EMH predicts that all price movement (in the absence of change in fundamental information) is random (i. predictions of a DOW average below 5000 were quite common. For instance. the game becomes more like poker (herding behavior takes over). so that by summer of 2002.e. a 'soft' EMH has emerged which does not require that prices remain at or near equilibrium. it is not easy to stick to an opinion that differs markedly from that of a majority of the group. In the run up to 2000. just noise. (And later amplified the gloom which descended during the 2000 2002 bear market. the probabilities are known and largely independent of the investment decisions of the different players. but only that market participants not be able to systematically profit from any momentary market 'inefficiencies'. (Something like seeing familiar shapes in clouds or ink blots. Psychological research has demonstrated that people are predisposed to 'seeing' patterns. Moreover. many studies have shown a marked tendency for the stock market to trend over time periods of weeks or longer. in any of its current forms. and often will perceive a pattern in what is. and the use of certain strategies.) 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). as any other business. 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. In times of market stress. however. in fact. As social animals. A period of good returns also boosts the investor's selfconfidence. An example with which one may be familiar is the reluctance to enter a restaurant that is empty. The players now must give heavy weight to the psychology of other investors and how they are likely to react psychologically. theoretically could cause financial markets to overreact. But the best explanation seems to be that the distribution of stock market prices is non-Gaussian (in which case EMH. 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'). In one paper the authors draw an analogy with gambling. In the period running up to the 1987 crash. such as stop-loss limits and Value at Risk limits. some research has shown that changes in estimated risk. non-trending). Various explanations for such large and apparently non-random price movements have been promulgated. The stock market. the average did not rise above 5%). would not be strictly applicable). Inexperienced investors rarely get the assistance and support they need..) 20 . reducing his (psychological) risk threshold. In normal times the market behaves like a game of roulette. is quite unforgiving of amateurs. less than 1 percent of the analyst's recommendations had been to sell (and even during the 2000 . Another phenomenon—also from psychology—that works against an objective assessment is group thinking.However. people generally prefer to have their opinion validated by those of others in the group.2002 bear market.

Therefore. stocks and other securities can be battered or buoyed by any number of fast market-changing events. But this may be more apparent than real. are opportunities to make money. which. People still place too much confidence in the markets and have too 21 . in the mid-20s. far higher than the historical average. this occurred on October 13. momentary hysteria. people are generally not as rational as they think. at this writing [2005]. . Dividends. but generally only briefly. and the reasons for buying and selling are generally obscure. since often such news has been anticipated. in turn. rumors.42 points or 11 percent. . the stock market may be swayed in either direction by press releases. Shiller warns. from Irrational Exuberance. However. and a counterreaction may occur if the news is better (or worse) than expected. 2d ed. . making the stock market behavior difficult to predict. euphoria and mass panic. leaving the prices of stocks rationally determined. "The stock market has not come down to historical levels: the price-earnings ratio as I define it in this book is still. which causes market inefficiencies. Emotions can drive prices up and down. as more experienced investors (especially the hedge funds) quickly rally to take advantage of even the slightest. The Dow Jones Industrial Average biggest gain in one day was 936. Earnings.Irrational behavior Sometimes the market seems to react irrationally to economic or financial news. Behaviorists argue that investors often behave 'irrationally' when making investment decisions thereby incorrectly pricing securities. the whole notion of EMH is that these non-rational reactions to information cancel out. In the preface to this edition. even if that news is likely to have no real effect on the technical value of securities itself. 2008. and Interest Rates. Over the short-term. Crashes Robert Shiller's plot of the S&P Composite Real Price Index.

There have been famous stock market crashes that have ended in the loss of billions of dollars and wealth destruction on a massive scale. as it has been recently. to lower their exposure to the stock market when it is high. and get into the market when it is low. See also ten-year returns. and selling twenty years later. reinvesting dividends. especially since the social security and retirement plans are being increasingly privatized and linked to stocks and bonds and other elements of the market. individually. Often. The horizontal axis shows the real price-earnings ratio of the S&P Composite Stock Price Index as computed in Irrational Exuberance (inflation adjusted price divided by the prior ten-year mean of inflation-adjusted earnings). and so they do not make conservative preparations for possible bad outcomes." A stock market crash is often defined as a sharp dip in share prices of equities listed on the stock exchanges. Shiller states that this plot "confirms that long-term investors—investors who commit their money to an investment for ten full years—did do well when prices were low relative to earnings at the beginning of the ten years. a reason for stock market crashes is also due to panic and investing public's loss of confidence. There have been a number of famous stock market crashes like the Wall Street 22 .strong a belief that paying attention to the gyrations in their investments will someday make them rich. Data from different twenty year periods is color-coded as shown in the key. In parallel with various economic factors." Price-Earnings ratios as a predictor of twenty-year returns based upon the plot by Robert Shiller . Long-term investors would be well advised. An increasing number of people are involved in the stock market. The vertical axis shows the geometric average real annual return on investing in the S&P Composite Stock Price Index. stock market crashes end speculative economic bubbles.

2:30PM half-hour halt after 2:30PM market stays open 23 . This event raised questions about many important assumptions of modern economics. Spain 31%. and Canada 22. In the United States the SEC introduced several new measures of control into the stock market in an attempt to prevent a re-occurrence of the events of Black Monday. The SEC modified the margin requirements in an attempt to lower the volatility of common stocks. • New York Stock Exchange (NYSE) circuit breakers time of drop close trading for % drop 10% drop 10% drop 10% before 2PM one hour halt 2PM . The crash in 1987 raised some puzzles-–main news and events did not predict the catastrophe and visible reasons for the collapse were not identified. stock markets in Hong Kong had fallen 45. This halt in trading allowed the Federal Reserve system and central banks of other countries to take measures to control the spreading of worldwide financial crisis. the Dot-com bubble of 2000. the stock market crash of 1973–4. Black Monday itself was the largest one-day percentage decline in stock market history the Dow Jones fell by 22. One of the most famous stock market crashes started October 24. The names “Black Monday” and “Black Tuesday” are also used for October 28-29. Computer systems were upgraded in the stock exchanges to handle larger trading volumes in a more accurate and controlled manner. 1987 – Black Monday. It was the beginning of the Great Depression. The circuit breaker halts trading if the Dow declines a prescribed number of points for a prescribed amount of time.Crash of 1929. which followed Terrible Thursday--the starting day of the stock market crash in 1929. namely. 1929 on Black Thursday. and the Stock Market Crash of 2008. The crash began in Hong Kong and quickly spread around the world. the theory of market equilibrium and the hypothesis of market efficiency. trading in stock exchanges worldwide was halted. the Black Monday of 1987. The Dow Jones Industrial lost 50% during this stock market crash. since the exchange computers did not perform well owing to enormous quantity of trades being received at one time. For some time after the crash. stock options and the futures market. 1929.68%. By the end of October. Australia 41.4%. The New York Stock Exchange and the Chicago Mercantile Exchange introduced the concept of a circuit breaker. the theory of rational human conduct. Another famous crash took place on October 19. the United Kingdom 26. the United States 22.5%.8%.6% in a day.5%.

stock index and stock options..drop 20% drop 20% drop 20% drop 30% drop before 1PM halt for two hours 1PM . The constituents of the index are reviewed frequently to include/exclude stocks in order to reflect the changing business environment.2PM halt for one hour after 2PM close for the day any time during day close for the day 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. of which there are many. Derivative instruments Financial innovation has brought many new financial instruments whose pay-offs or values depend on the prices of stocks. they are sometimes considered to be traded in a (hypothetical) derivatives market. As all of these products are only derived from stocks. the FTSE and the Euronext indices. Leveraged strategies 24 . and stock index futures. e.g. rather than the (hypothetical) stock market. These last two may be traded on futures exchanges (which are distinct from stock exchanges— their history traces back to commodities futures exchanges). with the weights reflecting the contribution of the stock to the index. Some examples are exchange-traded funds (ETFs). or traded over-the-counter. single-stock futures. Such indices are usually market capitalization weighted. equity swaps. the S&P.

making money if the price fell in the meantime or losing money if it rose.8% increase over the $389 billion raised in 2003. A margin call is made if the total value of the investor's account cannot support the loss of the trade. margin buying may be used to purchase stock with borrowed funds. from $ 9 billion to $39 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. The investor is responsible for any shortfall following such forced sales. Most industrialized countries have regulations that require that if the borrowing is based on collateral from other stocks the trader owns outright. and IPOs in Europe. 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). the trader borrows money (at interest) to buy a stock and hopes for it to rise. 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. if you want to make a $1000 investment. 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.Stock that a trader does not actually own may be traded using short selling. In the United States. Initial public offerings (IPOs) by US issuers increased 221% with 233 offerings that raised $45 billion. you need to put up $500. Investment strategies 25 . Middle East and Africa (EMEA) increased by 333%. Hence most markets either prevent short selling or place restrictions on when and how a short sale can occur. The practice of naked shorting is illegal in most (but not all) stock markets. Exiting a short position by buying back the stock is called "covering a short position. (Upon a decline in the value of the margined securities additional funds may be required to maintain the account's equity. and there is often a maintenance margin below the $500). it can be a maximum of a certain percentage of those other stocks' value. hoping for the price to fall.) Regulation of margin requirements (by the Federal Reserve) was implemented after the Crash of 1929. or. 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). 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. New issuance Global issuance of equity and equity-related instruments totaled $505 billion in 2004. Margin buying In margin buying. the margin requirements have been 50% for many years (that is." This strategy may also be used by unscrupulous traders to artificially lower the price of a stock. a 29. The trader eventually buys back the stock. Before that. Short selling In short selling.

The principal aim of this strategy is to maximize diversification. general economic conditions. or that tax free stock market operations are useful to boost economic growth. "How do I make money investing?" There are many different approaches. in particular in the stock exchanges. a large array of fiscal obligations are taxed for capital gains. has averaged nearly 10%/year. which uses price patterns. it needs to get money from somewhere. dividends and capital gains on the stock market. One example of a technical strategy is the Trend following method. in the U. compounded annually. business trends. However. Taxes are charged by the state over the transactions. but if they don't have enough. used by John W. United Kingdom and western Europe as the governments of those countries started allowing anyone to create corporations. Henry and Ed Seykota. These entrepreneurs may commit some of their own money.One of the many things people always want to know about the stock market is. since World War II). among other reasons. HOW STOCK MARKET WORKS In order to understand what stocks are and how stock markets work. one or more people contribute an initial investment to get the company off the ground. and ride the general trend of the stock market (which. Typically. etc. Taxation According to much national or state legislation. but these were generally what we might think of today as a public corporation owned by the government. minimize taxes from too frequent trading. like the postal service. Technical analysis studies price actions in markets through the use of charts and quantitative techniques to attempt to forecast price trends regardless of the company's financial prospects. the history of what has come to be known as the corporation. 26 . In order for a corporation to do business. Privately owned corporations came into being gradually during the early 19th century in the United States . Corporations in one form or another have been around ever since one guy convinced a few others to pool their resources for mutual benefit The first corporate charters were created in Britain as early as the sixteenth century. it could be assumed that taxation is already incorporated into the stock price through the different taxes companies pay to the state.. or sometimes the limited liability company (LLC).S. utilizes strict money management and is also rooted in risk control and diversification. many choose to invest via the index method. In this method. Additionally. Fundamental analysis refers to analyzing companies by their financial statements found in SEC Filings. we need to dive into history--specifically. two basic methods are classified as either fundamental analysis or technical analysis. these fiscal obligations may vary from jurisdiction to jurisdiction because. 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).

to invest in their business. or by issuing stock. Each share is a small piece of ownership. the corporation now has money. while the NASDAQ (National Association of Securities Dealers Automated Quotation) and the TSE (Toronto Stock Exchange) are for-profit businesses. Long ago stock owners realized that it would be convenient if there were a central place they could go to trade stock with one another. It also exposes the corporation to stricter regulatory control by government regulators. So a corporation creates some shares. Most companies that go public have been around for at least a little while. In return. the investor has a degree of ownership in the corporation. The NYSE (New York Stock Exchange) is a non-profit corporation. When all the shares in the IPO are sold. depending on your perspective). shares in the ownership of the company. and the more control you have over the company's operations. 27 . the company can use the proceeds to invest in the business. and can exercise some control over it. that is. since millions of investors can now easily purchase shares. today's stock markets grew out of these public places. earning money by providing trading services. it makes an initial public offering (IPO). as long as it can persuade people to buy them. such as venture capital investors or banks. Going public gives the company an opportunity for a potentially huge capital infusion. which are basically a way of selling debt (or taking out a loan. If the company makes a profit. The company will decide how many shares to issue on the public market and the price it wants to sell them for. They can do this in two ways: by issuing bonds. Companies sometimes issue different classes of shares. it may decide to plow the money back into the business or use some of it to pay dividends on the shares.  Public Markets How each stock market works is dependent on its internal organization and government regulation. Eventually. and the public stock exchange was born. which have different privileges associated with them.they will need to persuade other people. after filing the necessary paperwork with the government and with the exchange it has chosen. The more shares you own. and sells them to an investor for an agreed upon price.  Stocks A corporation is generally entitled to create as many shares as it pleases. The corporation can continue to issue new shares. When a corporation decides to go public. the more of the company you own.

28 . Advantages of Stock Market is that when we invest money we get profits. skills about the share market. this profit when you have knowledge .CONCLUSION In Stock Market . we get profit or loss. Disadvantage of Stock Market is that sometimes we face losses in this. When we invest more money in stock market . without experienced or knowledge we can’t go further.

com Book References :Himalaya Publishing house.Ask.Com WWW.yahoo.Google. London Review of Books XXIII. 2001 Tversky. Essentials of Business Environment .BIBLIOGRAPHY / REFERENCES Web Sites :WWW. & Kahneman. Murray Sayle. Eighth Edition K. "Japan Goes Dutch". "Judgement under uncertainty: heuristics and biases 29 . D. A.Aswathappa . (1974).Com WWW.7. April 5.

These statistics include monthly information on key statistics such as browser trends (e. 30 . weekly. Firefox market share). units produced or some other measure that competitors in the market generally recognise as valid.ANNEXUER iPad tracking to being on April 2nd! This data provides valuable insight into significant trends for internet usage. MSN vs. Linux market share or even the iPhone market share vs.� This would answering questions such as which products to include. Additional estimates about the website population: • • • • • 76% participate in pay per click programs to drive traffic to their sites.g. The site unique visitor and referral information is summarized on a monthly. profits..The availability of reliable. We use a unique methodology for collecting this data.A satisfactory definition of the market. Google traffic market share) and operating system share (Windows vs. The statistics for search engines include both organic and sponsored referrals.) Measuring Market Share An accurate measure of market share is dependent on several factors: .� For example. top ISPs and operating systems trends. top search engine referrals. Yahoo vs. search engine marketers etc. which means of distribution? . An upgraded version is available that provides reports by geolocation.g. screen resolutions. We collect data from the browsers of site visitors to our exclusive on-demand network of live stats customers. daily and hourly basis. we classify 430+ referral sources identified as search engines. which geographical areas. 43% are commerce sites 18% are corporate sites 10% are content sites 29% classify themselves as other (includes gov. The information published is an aggregate of the data from this network of hosted website statistics.. search engine referral data (e. The data is made available free of charge on a monthly basis that includes monthly browser market share trends. The data is compiled from approximately 160 million visitors per month. up-to-date information . org. In addition. Aggregate traffic referrals from these engines are summarized and reported on. Windows Mobile). Internet Explorer vs. should market share be calculated on the basis of sales revenues. Mac vs.Agreement on which measures of share are most relevant.

083 100. Worked example of Market Share Based on Sales Revenues In this example.6%.369 12.000 households in the UK. implying a reduction in its relative market strength.8 percentage points from 50.� It measures the relative sales performance of the major grocery chains using what it calls the "Till Roll" measure.6 Total Market 13. Palm continues to lead the PDA market with a market share of 38.4% in 2000 reflecting the aggressive marketing of new and strong players in the market such as Compaq and Hewlett-Packard.4 Casio (Microsoft) 529 4. most tend to be based on one or both of the following: .� The TNS data is sourced via a continuous interview of 15.� However. Palm was four times the size of the next largest competitor (Handspring).0 Sales Growth % -9.884 29.3 As can be seen from the table.9 18. a 18% increase from sales in 2000 The breakdown of these 13. we take figures for the global sale of personal digital assistants ("PDA@s") in 2001. market shares are calculated in a myriad of ways.283 9.� By 2001.� 31 .0 2.Sales volumes (units) Worked Example of Market Shares based on Sales Volumes In this example. global sales of PDA's totaled 13. In 2000. According to research by Dataquest.4 466 4.4 39.4 175. Palm was just three times the size of Handspring.588 50.1 11.5 20.056 38.8 Hewlett-Packard (Microsoft) 711 5.1 million units. its market share fell by 11.0 440 4.2 442 4. This analysis is based upon data collected by the leading market research company Taylor Nelson Sofres ("TNS").0 Source: Gartner Dataquest February 2002 2000 Sales2000 Units Market Share % 5.Sale revenues .9 20.6 Handspring (Palm) 1. we look at the retail sales figures of the major UK grocery chains.648 12. in just one year.0 Others 3.4 1.In reality.6 Compaq (Microsoft) 1.4 60.� However.111 100.1 million units by major PDA manufacturer is shown in the table below: Company System) (Operating2001 Sales2001 Units Market Share % Palm (Palm) 5.777 25.

Based on the Till Roll measure.The Till Roll measures by retailer the total amount spent by each household in the grocery store as captured by the total printed on the till receipt.� This is then adjusted to exclude items such as petrol purchases. kiosk sales and amounts spent in the coffee shop or restaurant. the monthly market shares of the leading grocery chains in August 2002 were as follows: 32 .

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