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Equity Market

Manish Jadhav Mansi Kumar Akshita Salunkhe Sapna Pandey Suraj Gor Ralsha Ravindran Parika Chaudhary Abhirup Ubale Divya Nair Madhuri Sanghare Sushil Padhi

Definition
The market in which shares are issued and traded, either through exchanges or over-the-counter markets. It is also known as the stock It is convenient place where trading in securities is conducted in systematic manner i.e. as per certain rules and regulations. It is an investment intermediary and facilitates economic and industrial development of a country.

MARKET
Primary market
Whenever any company wants to raise money, it can done by floating its shares in the share market.

Secondary market
Once the shares are listed on the market, they can be traded on the exchange. the market where such trading takes place is called as secondary market.

When such shares are issued for the 1st time in the share market, it is called as IPO (Initial Public Offering)

Importance of stock market


Important sources for companies. Raise additional financial capital for expansion The liquidity that an exchange affords the investors gives them the ability to quickly and easily sell securities.

Features of Stock Market


Market for securities Deals in second hand securities Regulates trade in securities Allows dealings only in listed securities Recognition from Central Government

Need for equity market


Effective Mobilization of savings Promoting Capital formation Wider Avenues of investment Liquidity of investment Investment priorities Investment safety Wide Marketability to Securities Financial resources for public and private sectors Funds for Development Purpose Indicator of Industrial Development Barometer of National Economy

Introduction
Trade = Buy or Sell Trade means to buy and sell in the jargon of the financial markets Trade refers to buying and selling of goods and services for money or money's worth It involves transfer or exchange of goods and services for money or money's worth

Process of trading shares


Finding Stocks to Potentially Trade

Choosing one to buy (research)


Setting Objectives for the trade (strategizing) Buying the shares Selling the stock according your plan Following up and recording

Process of trading futures


Outlook
a) Time Span b) Price Target c) Direction

Planning
a) Choice of Options Strategy b) Capital Commitment

Entry

Exit

Process of Trading Options


Determining Your Outlook

Determining Your Risk Tolerance and Position Sizing


Determining Initial Margin Requirement Entry and Stop Loss Offsetting

INSTRUMENTS TRADED IN EQUITY MARKET

EQUITY SHARES
Equity shares are those shares which are ordinary in the course of company's business. They are also called as ordinary shares. No preference regarding payment of dividend and repayment of capital. Equity shareholders are paid dividend out of the profits made by a company.

FEATURES
Owned capital Nominal value Distinctive number Attached rights Return on shares Transfer of shares Benefit of bonus shares Irredeemable

TYPES
Blue Chip Shares Income Shares Growth shares Cyclical Shares Defensive shares Speculative shares

PREFERENCE SHARES
Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a company bankruptcy, preferred stock shareholders have a right to be paid company assets first. Preference shares typically pay a fixed dividend. Preference share shareholders usually do not have voting rights.

TYPES OF PREFERENCE SHARES


Cumulative & Non Cumulative shares Redeemable & Non-Redeemable Convertible & Non-Convertible shares Participating and Non-Participating

ADRs
A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction. This is an excellent way to buy shares in a foreign company while realizing any dividends and capital gains in U.S. dollars. However, ADRs do not eliminate the currency and economic risks for the underlying shares in another country. For example, dividend payments in euros would be converted to U.S. dollars, net of conversion expenses and foreign taxes and in accordance with the deposit agreement ADRs are listed on either the NYSE, AMEX or Nasdaq as well as OTC.

GDRs
A bank certificate issued in more than one country for shares in a foreign company. The shares are held by a foreign branch of an international bank. The shares trade as domestic shares, but are offered for sale globally through the various bank branches

WARRANTS
Warrant is a certificate giving the holder the right to purchase securities at a stipulated price within a specified time limit or perpetually. Sometimes a warrant is offered with securities as an inducement to buy. The warrant acts as a sweetener because the holder of the warrant has the right but not the obligation of investing in the equity at the indicated rate.

Financial Institutions in India


1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Investment banking houses Commercial banks Financial services corporations Savings and loan associations Mutual savings banks Credit unions Pension funds Life insurance companies Mutual funds Hedge funds

Stock Indices
A stock index or stock market index is a method of measuring the value of a section of the stock market. It is computed from the prices of selected stocks. It is a tool used by investors and financial managers to

describe the market, and to compare the return on


specific investments.

iShares MSCI EAFE Index (EFA) BBC Global 30 world stock market index of 30 of the largest companies by stock market value in Europe, Asia and the Americas. provides investment results generally equivalent to publicly traded securities in the European, Australasian and Far Eastern markets. Maintained by Morgan Stanley Capital International.

Stock Market Indices


MSCI World free-float weighted equity index. Index includes stocks of all the developed markets. Common benchmark for world stock funds. S&P Global 1200 global stocks index covering 31 countries and around 70 percent of global market capitalization.

United States
AMEX Composite Dow Jones Indexes Dow Jones Industrial Average Dow Jones Wilshire 5000 NASDAQ Composite NYSE Composite Russell Indexes Russell 3000 Index S&P 500

Asia and Pacific


S&P ASIA 50 Australia All Ordinaries S&P/ASX 200 China-SSE Composite Hong Kong-Hang Seng Indexes India-BSE SENSEX 30 , S&P CNX Nifty Indonesia-JSX Composite Japan-Nikkei 225 Malaysia-FTSE Bursa Malaysia Index New Zealand -NZX 50 Pakistan-KSE 100 Philippines-PSEi Index Singapore-ST Index South Korea-KOSPI Taiwan-TSEC

Africa
Egypt-Case 30 Morocco - MASI Index South Africa - Johannesburg All Share Index

Canada
S&P/TSX Composite

Europe
Dow Jones Euro Stoxx 50 Middle East FTSEurofirst 300 Index Israel-TA-25 OMX Baltic Index JordanASE Market Capitalization Weighted Index OMX Nordic 40 OmanMSM 30 S&P Europe 350 Belgium-BEL20 Czech Republic-PX Index South America Denmark-OMX Copenhagen 20 iShares S&P Latin America 40 Index (ILF) Finland-OMX Helsinki 25 Argentina-MERVAL France-CAC 40 Brazil-Bovespa Index Germany-DAX Mexico-Indice de Precios y Cotizaciones (IPC) Ireland-ISEQ 20 ItalyS&P/MIB Index NetherlandsAEX Index PolandWarsaw Stock Exchange WIG Index PortugalPSI-20 RussiaMICEX Index RTS Index SpainIBEX 35 SwedenOMX Stockholm 30 Index SwitzerlandSwiss Market Index (SMI) United KingdomFTSE 100 Index (Financial Times Stock Exchange Index)

Types Of Indices
A 'world' or 'global' stock market index. MSCI world S&P global 100. A 'national' index. American S&P 500 Japanese Nikkei 225 Brazilian Ibovespa Russian RTSI Indian SENSEX British FTSE 100 Specialised indices Wilshire US REIT (American Real Estate Investment Trusts) Morgan Stanley biotech index ( Biotechnology Industry ) Linux weekly news ( Linux Operating Environment )

Index Versions
Versions can differ based on how the index components are weighted and on how dividends are accounted for. S&p 500, have 3 multiple versions. Price return, Total return, Net total return. Wilshire 4500 and wilshire 5000 Full capitalization total return, Full capitalization price, Float-adjusted total return, Float-adjusted price, Equal weight. The difference between the full capitalization, float-adjusted, and equal weight versions is in how index components are weighted.

Weighting
Price-weighted index: Dow jones industrial average, Amex major market index, NYSE ARCA tech 100 index.

Market-value weighted or capitalization-weighted: Hang seng index.

Market-share weighted index:Modified capitalization-weighted index:Attribute-weighted :-

S&P pure growth style index S&P pure value style index

Country
Netherlands Australia Greece Belgium Bulgaria Hungary France Croatia Germany Ecuador Egypt

Index
AEX S&P/ASX 200 ASE BEL20 SOFIX BUX CAC Croatia Stock Market DAX Ecuador Stock Market EGX30

Last Weekly Chg Monthly Chg 12 Months Chg YTD Chg


335 4390 743 2469 321 18382 3582 1693 7412 905 5662 0 0.0115 0.0666 0.0151 0 0 0.0178 0 0.012 0 0.0268 -0.0039 0.0015 0.1396 0.034 -0.0039 0.0398 0.0191 -0.0027 0.0436 -0.016 0.0853 0.1761 0.0725 -0.1641 0.143 -0.1052 0.0872 0.1803 -0.1385 0.2669 -0.0328 0.217 0.0708 0.0822 0.092 0.1851 -0.0047 0.083 0.1335 -0.027 0.2566 -0.0332 0.5631

Estonia
Singapore Italy Finland Hong Kong Spain Brazil Venezuela Iceland

OMX Tallin
STI FTSEMIB HEX25 HSI IBEX IBOV IBVC ICEXI

667
3070 16624 5600 20630 8155 62277 295801 650

0
0.0138 0.0207 0 0.0282 0.0314 0.0051 0.0199 0.0089

-0.0232
0.0015 0.0778 0.018 0.0257 0.0748 0.0539 0.0619 0.0059

0.1747
0.0907 0.1507 0.0372 0.0875 -0.0068 0.1011 0.6604 0.1201

0.2555
0.1602 0.1017 0.0458 0.1191 -0.0481 0.0973 1.5274 0.12

Colombia
Peru Chile

IGBC
IGBVL IGPA

14496
21952 20486

0.0171
0.0664 0.007

0.0173
0.0841 -0.0045

0.0422
0.0628 0.0497

0.1445
0.1273 0.0177

Russia United States

MICEX INDU

1535 13323

0.0396 0

0.0527 0.009

0.0183 0.165

0.095 0.0905

Ireland
South Africa Indonesia Denmark Malaysia South Korea Pakistan Latvia Luxembourg Argentina Mexico Morocco Japan New Zealand Norway Sweden

ISEQ
JALSH JCI KAX KLCI KOSPI KSE100 OMX Riga LUXXX MERVAL MEXBOL MASI NKY NZSE50FG OBX OMX

3303
36550 4257 400 1643 2008 15450 390 1204 2549 40727 9829 9159 3792 417 1115

0.0147
0.022 0.0212 -0.0077 0.0089 0.0283 0.0127 0 0 0.0158 0.0018 -0.0088 0.0179 0.0017 0 0.0293

0.0274
0.0274 0.0227 -0.0013 -0.0042 0.0321 0.0291 0.0307 -0.0255 0.0423 0.0155 -0.0022 0.0003 0.0276 0.0204 0.0268

0.2599
0.1504 0.1314 0.2563 0.1363 0.0764 0.2651 0.0171 0.0812 -0.0322 0.1647 -0.1704 0.0457 0.1275 0.1927 0.1871

0.1383
0.1427 0.1138 0.2292 0.0733 0.0996 0.3615 0.0498 0.0605 0.0351 0.0984 -0.1087 0.0833 0.1581 0.167 0.1287

Philippines
Portugal Czech Republic Qatar Romania Saudi Arabia Slovenia

PSEi
PSI20 PX QE General BET TASI SBITOP

5186
5334 978 8563 4906 7157 537

0
0 0.0097 0.0132 0 0.0072 0.0391

-0.004
0.0682 0.0305 0.0089 0.0085 0.0214 0.0426

0.1893
-0.1429 0.028 0.0077 0.0907 0.1418 -0.1605

0.1862
-0.0292 0.0733 -0.0246 0.1312 0.1152 -0.089

India

SENSEX

18464

0.0247

0.0314

0.0758

0.1947

Thailand
China Slovakia Switzerland Canada Sri Lanka Euro Area Israel Taiwan Tunisia United Arab Emirates Ukraine United Kingdom Austria Poland Turkey

SET

1248

0
0 0 0.0117 0.0222 0.0936 0.0165 0 0 -0.0155 0 0.0486 0.0237 0 0 0

0.0128
-0.0037 -0.0009 0.0062 0.0314 0.1656 0.0402 0.0183 -0.0029 -0.0171 0.0071 -0.036 0.0098 0.0165 0.0213 0.0345

0.1752
-0.1908 -0.1704 0.1652 0.0444 -0.1461 0.1912 0.0376 -0.0068 0.0992 -0.0032 -0.5157 0.106 0.0415 0.088 0.1069

0.2175
-0.0405 -0.1157 0.1049 0.0464 -0.0243 0.12 0.0119 0.0584 0.0852 0.0735 -0.2798 0.0616 0.0995 0.144 0.3284

Shanghai SE Composite 2110 SAX SMI S&P/TSX CSE All Share EURO STOXX 50 TA-25 TWSE TUNINDEX UANBGENL PFTS FTSE 100 WBI WIG XU100 191 6559 12510 5927 2595 1012 7485 5124 2682 385 5916 841 43011 68105

No 1 2 3 4

STOCK EXCHANGE New York Stock Exchange(NYSE) NASDAQ Tokyo stock Exchange London stock exchange

HEADQUARTERS MARKET CAP TRADE VALUE New york City New york City Tokyo London 14242 4687 3325 3266 20161 13552 3972 2871

5
6 7 8 9 10

Shangai stock exchange


Hong kong stock exchange Tornoto Stock Exchange BM&F Bovesna

Shangai
Hong kong Tornoto Sao Paulo

2357
2258 1912 1229 1198 1185

3658
1447 1542 931 1197 1758

Australian securities exchange Sydney Deutsche Borse Frankfurt

INDIAN STOCK EXCHANGES


Bombay Commodity Exchange Bombay Stock Exchange (BSE) Calcutta Stock Exchange (CSE) Cochin Stock Exchange Inter-Connected Stock Exchange of India (ISE) Multi Commodity Exchange of India (MCX) National Commodity & Derivatives Exchange (NCDEX) National Stock Exchange of India (NCE) OTC Exchange of India (Exchange for Technology and Growth Stocks) Pune Stock Exchange (PSE)

American Stock Exchange (AMEX) Boston Options Exchange (BOX) Boston Stock Exchange Chicago Board Options Exchange (CBOE) Chicago Board of Trade (CBOT) Chicago Climate Exchange Chicago Mercantile Exchange (CME) Chicago Stock Exchange (CHX) Currenex (currency exchange) ICE (IntercontinentalExchange) ICE Futures US International Securities Exchange Iowa Electronic Markets

US STOCK EXCHANGES

Minneapolis Grain Exchange (MGEX) Kansas City Board of Trade NASDAQ OMX NASDAQ Stock Market National Stock Exchange New York Mercantile Exchange (NYMEX) New York Stock Exchange (NYSE) OneChicago (OCX) OTC Bulletin Board Philadelphia Stock Exchange (PHLX) Pink Sheets San Diego Stock Exchange U.S. Futures Exchange (USFE

AFRICAN STOCK EXCHANGES


Egyptian Exchange (EGX) Ghana Stock Exchange (GSE) Nairobi Stock Exchange (NSE) Malawi Stock Exchange (MSE) Stock Exchange of Mauritius(SEM) Casablanca Stock Exchange(Bourse de Casablanca) Namibian Stock Exchange (NSX) Nigerian Stock Exchange

Johannesburg Stock Exchange(JSE) Khartoum Stock Exchange (KSE) Swaziland Stock Exchange(SSX) Dar-Es-Salaam Stock Exchange(DSE) Bourse de Tunis (Tunis Stock Exchange) Uganda Securities Exchange(USE) Lusaka Stock Exchange (LuSE)

AUSTRALIAN STOCK EXCHANGES


1. 2. 3. 4. 5. 6. 7. Australian Securities Exchange (ASX) Bendigo Stock Exchange (BSX) NSX National Stock Exchange of Australia Capital Markets Development Authority South Pacific Stock Exchange (SPSE) NZX (New Zealand Futures & Options) Port Moresby Stock Exchange (PoMSOX)

CANADIAN STOCK EXCHANGES


CNQ ICE Futures Canada Montreal Exchange (Bourse de Montral) NASDAQ Canada NGX (Natural Gas Exchange) Toronto Stock Exchange (TSX)

MIDDLE EAST STOCK EXCHANGES


Bahrain Stock Exchange Tehran Stock Exchange Iraq Stock Exchange Tel Aviv Stock Exchange Amman Stock Exchange Kuwait Stock Exchange Beirut Stock Exchange Muscat Securities Market Palestine Securities Exchange Doha Securities Market Saudi Stock Exchange (Tadawul) Dhabi Securities Exchange Dubai Financial Market Dubai Mercantile Exchange

COUNTRYWISE EQUITY MARKET REGULATORY AUTHORITIES

1.
Regulator for security market in INDIA. Formed by Govt. of INDIA by SEBI ACT 1992, passed by INDIAN PARLIAMENT Headquartered in Bandra Kurla Complex in Mumbai. Upendra Kumar Sinha is appointed Chairman of SEBI on 18th Feb, 2011. SEBI has to be responsive to the needs of three groups, which constitute the market: the issuers of securities the investors the market intermediaries. SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity

An institution of the State Council of the People's Republic of China (PRC), with ministry-level rank. Main securities regulator of the PRC. Headquartered in Beijing. CSRC "authority to implement a centralized and unified regulation of the nationwide securities market in order to ensure their lawful operation.

Among its responsibilities include: Formulating policies, laws and regulations concerning markets in securities and futures contracts. Overseeing issuing, trading, custody and settlement of equity shares, bonds, investment funds. Supervising listing, trading and settlement of futures contracts; futures exchanges; securities and futures firms.

Japanese commission which comes under the authority of the Financial Services Agency. SESC was formally established on July 20, 1992 Responsible for ensuring fair transactions in both securities and financial futures markets. The SESC has five objectives, and a division to handle each one: Market Surveillance Compliance Inspection Disclosure Document Inspection Administrative Civil Monetary Penalties Investigation Enforcement-Investigation and Filing Criminal Charges

4.
MAS was set up in 1971 Singapore's central bank and financial regulatory authority.

Administers the various statutes pertaining to money, banking, insurance, securities and the financial sector in general, as well as currency issuance.
MAS : Insurance Industry : April 1977, Security Market : September 1984, regulations laid under Securities Industry Act (1973). The MAS has been given powers to act as a banker to and financial agent of the Government. It has also been entrusted to promote monetary stability, and credit and exchange policies conducive to the growth of the economy. MAS does not regulate the monetary system via interest rates to influence the liquidity in the system. Instead it chooses via FX mechanism, so does by intervening SGD market.

5.
Headquartered in Moscow, the FFMS is a part of the Russian Government.

Russian federal executive body regulates, Russian financial markets including Securities issuance and trading Supervision of exchanges, Issuers, Professional market participants and their Self-Regulatory Organisations; The Russian Federation Pension Fund; The State management company.
Major social role of FFMS is to promote public understanding of the Securities laws and their practical application.

6.

Financial regulatory authority for Germany


An independent federal institution with headquarters in Bonn and Frankfurt and falls under the supervision of the Federal Ministry of Finance (Germany). Supervises about 2,700 banks, 800 financial services institutions and over 700 insurance undertakings. The main task of BaFin is the supervision of banks, insurance companies and the trading of securities and ensure the viability, integrity and stability of the German financial system.

It has the right, when it discovers a crime or even the suspicion of a crime, in particular insider trading, market manipulation, illegal operation of banking, financial fraud, incitement to establish stock exchange speculation to forward them to law enforcement authorities. BaFin is in effect a law enforcement agency and can initiate legal action.

7.
Established by the Financial Security Act of 1 August 2003 Stock market regulators in France AMF is an independent public body that is responsible for safeguarding investments in financial instruments and in all other savings and investment as well as maintaining orderly financial markets. The AMF is an independent public body with legal personality and financial autonomy with the duty of: Safeguard investments in financial instruments and in all other savings and investment vehicles Ensure that investors receive material information Maintain orderly financial market

8.
Quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom.
It is structured as a company limited by guarantee and is funded entirely by fees charged to the financial services industry. Main office : Canary Wharf, London and it is referred to as the UK Listing Authority (UKLA). Chairman and CEO are currently Lord Turner of Ecchinswell and Hector Sants The Financial Services and Markets Act 2000 imposed four statutory objectives upon the FSA: Market confidence Financial stability Consumer protection Reduction of financial crime

9.
SEC is a federal agency , was established by United States President Franklin D. Roosevelt in 1934
SEC headquartered in Washington D.C.

Primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States
The SEC's five main divisions are: Corporation Finance Trading and Markets Investment Management Enforcement Risk, Strategy, and Financial Innovation

Why Do We Need Regulators In Stock Market


Ensures perfect competition in stock market.

Aim at protecting the interest of investors and market participants


Ensures that the market participants behave in a desired manner so that securities market continues to be a major source of finance for government and corporate houses. Plays important role by setting Rules and Regulations. Protects investors by enforcing applicable financial laws.

Prevent sharp market practices such as Insider trading.


Maintains confidence in financial system of the Country.

GDP TO TURNOVER RATIO


Turnover ratio is the total value of shares traded during the period divided by the average market capitalization for the period Average market capitalization is calculated as the average of the end-of-period values for the current period and the previous period

STOCKS TRADED;TURNOVER RATIO (%) IN INDIA


YEAR TURNOVER RATIO (%)

2010

75.62

2009

119.35

2008

85.19

STOCKS TRADED;TURNOVER RATIO (%) IN THE UNITED STATES


YEAR TURNOVER RATIO (%)

2010

189.06

2009

348.58

2008

230.19

STOCKS TRADED;TURNOVER RATIO (%) IN JAPAN


YEAR TURNOVER RATIO (%)

2010

114.49

2009

127.08

2008

153.23

INVESTMENT IN % OF GDP
40 37.84

Year 2010 %

35
30 25 20

21.69 18.61 15.91

20.21

15

10
5 0 India United states Europian Union South Africa Japan

GROSS NATIONAL SAVINGS IN % OF GDP


40 35 34.69 30 25

YEAR 2010 %

23.77
20 18.48 15 19.95

10 5
0 India

11.58

United states Europian Union South Africa

Japan

How Interest Rates Affect The Stock Market prices


The Interest Rate Effects of an Increase Stock Price Effects Investment Effects

Interest Rates Affect but Don't Determine the Stock Market


Commonly bandied about by the media The amount of money in circulation Borrowing money more expensive Lowering earnings Stock market a slightly less attractive Not the only determinant of stock prices Interest rate hike by the Fed will have an overall negative effect on stock prices

Thank You