STOCK EXCHANGE

PRESENT BY :KRISHNA GOYAL VINEET SOGANI SAHIL AGARWAL SAHIL AGGARWAL

INTRODUCTION :
• There are 23 stock exchanges in the India. Mumbai's (earlier known as Bombay), Bombay Stock Exchange is the largest, with over 6,000 stocks listed. The BSE accounts for over two thirds of the total trading volume in the country. Established in 1875, the exchange is also the oldest in Asia. Among the twenty-two Stock Exchanges recognised by the Government of India under the Securities Contracts (Regulation) Act, 1956, it was the first one to be recognised and it is the only one that had the privilege of getting permanent recognition ab-initio.

Name of Indian stock exchange:
• • • • • • • • • • 1.Bombay stock exchange 2.national stock exchange(Mumbai) 3.Banglore stock exchange 4.Utter pradesh stock exchange(kanpur) 5.Magadh stock exchange(Patna) 6.Ahmedabad stock exchange 7.vadodara stock exchange(Baroda) 8.Bhubaneswar stock exchange 9.Calcutta stock exchange(kolkata) 10.madras stock exchange

Cont…….
• • • • • • • • • • 11.Cochin stock exchange 12.coimbatore stock exchange 13.Gauhati stock exchange 14.Hydrabad stock exchange 15.Madhya pradesh stock exchange(indore) 16.Jaipur stock exchange 17.Ludhina stock exchange 18.Mangalore stock exchange 19.Pune stock exchange 20.saurashtrakutch stock exchange

Cont…….
• • • • • • • • • • • Bombay stock exchange : it has 30 companies sripted. Name:1.ACC 2.BAJAJ 3.AIRTEL 4.BHEI 5.CIPLA 6.DLF 7.GRASIM 8.GUJRAT AMBUJA 9.HDFC 10.HDFC BANK

HERO HONDA 12.ONGC .HINDALCO 13.MARUTI 19.CONT…… • • • • • • • • • • 11.ITC 17.L&T 18.HUL 14.INFICYS 16.ICICI BANK 15.NTPC 20.

RELIANCE ENERGY 24.RELIANCE COMMUNICATION 23.SATYAM 26.TATA STEEL 30.WIPRO .SBI 27.RIL 25.RANBAXY 22.CONT…… • • • • • • • • • • 21.TCS 28.TATA MOTERS 29.

It was set up in 1993 to encourage stock exchange reform through system modernization and competition. The instruments traded are. located in Bombay. treasury bills. government security and bonds issued by public sector companies . It opened for trading in mid-1994. is India's first debt market.NSE • The National Stock Exchange (NSE). It was recently accorded recognition as a stock exchange by the Department of Company Affairs.

. 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.CONT………. • 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.

CONT…… • Based on the recommendations. 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 .

NSE. (NSDL) 5.Cont… • NSE Group: 1. India Index Services & Products Ltd. National Securities Clearing Corporation Ltd. National Securities Depository Ltd. (NSCCL) 3. (IISL) 2. 4. DotEx International Limited .IT Ltd.

OTC markets • electronic network of dealers all over the world • ECNs – electronic communication networks • more than one dealer per stock – not obligated to make a market .

but the largest • over 4000 companies listed – mkt.Nasdaq • not the only OTC system. value $2 trillion (2/28/03) • leader in daily share volume • over 500 dealers • listing requirements .

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shortterm selling of stocks.SPECULATION : • Definition : it involves the buying.commodities.holding.currencies.collectibles or any valuable financial instrument to profit from fluctuations in its price as opposed to buying it for use or for income via method like dividends or interest.selling. .bonds.

.Kinds of speculation • Bull Market (Tejiwala): In case of that they purchase the shares at current prices to sell at a higher price in the near future and makes a profit if his expectations come true.he is also called a long buyer. • Bear Market (Mandiwala) : He sells security in the hope that he will be able to buy them back at lesser price.It is also called “short selling”.

• Stag : He is that type of speculator who applies for a large number of a shares in a new issue with the intention of selling them at a premium. .they always struggling..He is bullish and very cautious.Cont….. • Lame duck : When a bear has made contracts to sell securities.find it difficult to meet his commitment due to non-availability of security.

40.M.160 .CurrencyIN . 4:30 P.Forex Market • • • • • • • • • • Mar 19.DOLLAR) Euro 63.4072 S'pore Dollar 29.20 Japanese Yen 0.48 GB Pound 81.45(US.

BENEFITS OF STOCK EXCHANGE • FROM THE POINT OF VIEW OF COMMUNITY: • 1.it uploads the position of superior enterprises and assist them in raising further funds.It encourages capital formation • 4.Government can undertake projects of national importance and social value raising funds through the sale of its securities on the stock exchange.It is the stock exchanges that central bank of a country can control credit by undertaking open market operations (purchase and sale of securities) .It assist the economis development by providing a body of interested investors. • 5. • 2. • 3.

A company whose shares quoted on stock exchange they enjoy better reputation and credit.This raises the bargaining power of the company in the event of a takeover. .The market price of securities is likely to be higher in relation to its earnings. • 3.dividends and property values. • 2.The market for the shares of such a company is naturally widened.FROM THE COMPANY POINT OF VIEW • 1.merger or amalgamation.

.The securities dealt on a stock exchange are good collateral security for loans.The stock exchange safeguards interests of investors through strict enforcement of rules and regulations.Liquidity of the investment is increased • 2. • 4.The present net worth of investments can be easily known by the daily quotations.FROM THE INVESTORS POINT OF VIEW • 1. • 3. • 5.His risk is considerably less when he holds or purchases listed securities.

DEBENTURE HOLDER .SHAREHOLDER • 2.ROLE PLAYER • EXTERNAL:---• 1.

SHAREHOLDER • Shareholders are divided into two parts • 1.Preference shareholder: Preference shareholder are those which have preferential right to the payment of dividend during the life time of the company.and a preferential right to the return of the capital when the company is wound up. .

At the time of winding up of the company. • 3. .CHARACTERISTICS OF PREF.They get their fixed rate of dividend before any dividend is distributed among the other class of shareholders. • 2. the preference shareholder must be paid back their capital before anything is paid to the ordinary shareholders.SHAREHOLDER • 1.The dividend on them is fixed by the articles of the company.

• 2.If profits are not sufficient to pay in a particular year then that will pay on next year. .SHAREHOLDER • 1.Comulative shareholder: These shares are entitled to fixed dividends whether there are profits or loss.Non comulative pref.share: These shares cannot claim arrears of dividends of any year (if not paid due to insufficiency of pfofits ) out of rofits of subsequent year.KINDS OF PREF.

• 4.The company researves its rights to call back or purchased these shares at any time .Conti… • 3.Redeemable pref. .the right to participate in balance of profits in an agreed proportion together with ordinary shares.Participating pref.shares: These are shares which can be purchased back by the company. Shares: These shares receives a fixed rate of dividend in priority to ordinary shares and further.

they are always irredeemable and their holders have normal voting rights.EQUITY SHARES • All shares which are not preference shares are equity shares. • They are also the owners of the company.These shares do not have a fixed rate of dividend. • They take dividend .

.DEBENTURES • A document under the company seal which provides for the payment of a principal sum and interest there on at regular intervals which is usually secured by a fixed or floating charge on the company’s property or undertaking which acknowledges a loan to the company.

.BUY BACK SHARES • In simple term when company re-purchase of its own shares that is called buy back shares.

.He purchase and sells securities in his own name. He is not allowed to deal with nonmembers directly.Broker: He is a commission agent who transacts business in securities on behalf of nonmembers. • B.INTERNAL PLAYERS • The members of the stock exchange can be divided into two parts: • A.Jobber: He is an independent dealer securities.They may have number of sub-brokers to canvass and secure business for them.He works for profit.

They buy or sell on the behalf of employers. . • Remisers: They are the sub-brokers.They can not transact business on their own account. • Authorized clerks: They are the assistant or agents.• Non-members : The following categories of non members are also permitted to enter trading hall and transact business on the behalf of members. He is also called the half commission men.

DAMAND AND SUPPLY 2. BANK RATE 3. FINANCIAL POSITION OF THE COMPANY . SPECULATIVE PRESSURE 4.CAUSES OF PRICE FLUCTUATION • • • • 1. CHANGE IN COMPANY’S BOARD OF DIRECTORS • 6. ACTIONS OF UNDERWRITERS AND OTHER FINANCIAL INSTITUTIONS • 5.

SYMPATHETIC FLUCTUATIONS 10. TRADE CYCLE 8. POLITICAL FACTORS 9.CONT… • • • • • • 7. . OIL PRICES IN THE INTERNATIONAL MARKET. EXPECTED MONSOON B. PERSONAL HEALTH OF HEAD OF GOVERNMENT OR CHAIRMAN OF THE COMPANY • C. OTHER FACTORS: A.

BORDER TENSION • F. NEW BUDGET PROPOSALS • I. • H.CONT… • D. STRIKES AND LOCK-OUT OF THE COMPANY. LOBERLIZATION AND PRIVATIZATION OF THE COMPANY. . STOCK BROKERS SCAM LIKE HARSHAD MEHTA AND KETHAN PAREKH • G. CHANGES IN EXCHANGE RATE • E.

in respect of regulation of stock exchanges were transferred to the SEBI ( SECURITIES EXCHANGE BOARD OF INDIA). some of the powers and function exercised by the central government.SEBI • It was constituted and made a statutory body by SEBI act 1992. .With the coming into effect of SEBI.

Registring and regulating the working of stock brokers. • 3.sub-brokers. .who may be associated securities market in any manner.Registering and regulating the working of collective investment scheme including mutual funds. • 4.Regulating substantial acquisition of shares and takeovers of companies. • 2.share transfer agents.Prohibiting insider trading in securities.OBJECTIVES OF SEBI • 1.underwriters……….

undertaking inspection. .Calling for information from.as may be delegated to it by the central government.Performing such other functions as may be prescribed. • 7. • 6.CONTI… • 5.conducting inquiries and audits of stock exchanges and intermediaries and self regulatory organizations in the securities market.Performing such function and exercising such powers under the provisins of the capital issues(control) act 1947 and SCRA 1956.

Open market repurchase: company makes an announcement regarding the repurchase of a specified number of shares.MODESS OF REPURCHASE • BASICALLY THERE ARE TWO MODES OF REPURCHASE: • 1.a maximum number of shares that it will commit to buy and an expiration date for the offer.The offer price is premium over the market price to encourage the shareholder.tender offers: this is basically two types • A. • 2.The purchases are made anonymously through a broker from the secondary market over a specified period of time. .Fixed price tender offers: company announces a fixed price at which it is willing to buy its shares.

the company announces the maximum number of shares it wishes to buy and a range of prices at which it will entertain offers. .Shareholders who choose to participate must then select a single price in this range at which to tender their shares.Cont… • Dutch auction tender offers : In a dutch auction.

In case of purchase through the stock exchange an offer for buy back will not remain open for more than 30 days. . the details under the buy back scheme shall be made available to the stock exchange on daily basis:the details in turn shall be made available to public regularly. • 3. • 4. spot transactions or private arrangements is not permitted.Regulations cover only the listed securities of the company • 2.In the purchases made through stock exchange.RULES FOR REPURCHASE UNDER SEBI ACT 1988 • 1.Buy back through negotiated deals.

Rating is not fixed.auditors quality.accounting accuracy. The rating grades are: • AAA: HIGHEST SAFTY • AA: HIGH SAFTY • A: ADEQUATE SAFTY • BBB: MODERATE SAFTY • BB: IN ADEQUATE SAFTY • BC&D: HIGH RISK AND DEFAULT . it may be change.HOW RATING IS GIVEN TO THE COMPANY? • Basically rating is given after see the company 'image.management quality.assets quality.

ICRA 3.CRISIL 2.DPCR .CREDIT RATING AGENCY IN INDIA • • • • 1.CARE 4.

Institutional trading • vs. retail trades – institutional trades are larger – special execution – over 50% of NYSE share volume .

block trades • large # shares in one stock • executed in “upstairs” market – other firms directly take other side of trade • remainder executed on trading floor or Nasdaq (downstairs) .

different stocks • used by mutual funds for asset allocation • want – low commissions – prevent frontrunning .program trades • large # shares.

get highest price for sell order .Types of orders • instructions from investors to brokers • market order – buy/sell order to be executed at best price -.get lowest price for buy order -.

• market order (cont.price could rise/fall from time order is placed to time it is executed .) – market orders given priority in trading – no guarantee of execution price -.

• limit order – – – – buy/sell order where investor specifies price range “buy at $50 or less” “sell at $52 or more” specialist records orders in limit order book .

– investor sets reservation price BUT – no guarantee that limit order will be executed .

• stop order – order lies dormant – turns into market order when certain price (“the stop”) is reached – “buy if price rises to $60” – “sell if price falls to $58” -.stop loss order .

end up trading unnecessarily .• investor does not have to watch market – but in a volatile market stop could be triggered prematurely -.

but only is executed at $65 or less” .• stop limit order – turns into limit order when stop is reached – “buy if price rises to $60.

• market if touched order – turns into market order if certain price is reached – “buy if price falls to $55” – “sell if price rises to $62” .

or canceled • good until canceled/open order – is good indefinitely .how long is an order good? • fill or kill order – executed when reaches trading floor.

order size • round lots – lots of 100 shares • odd lots – less than 100 shares – more difficult to trade • block trades – 10.000 value .000 shares or $200.

• THE STOCK EXCHANGE IS CONSIDERED TO BE THE BAROMETER OF ECONOMIC ACTIVITY. .