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BSE Investors Awareness Programme

Empowering Investors Through Education


A presentation by Dillip Khuntia

Indian Economy
An Emerging Economy. Over a Trillion Dollar Economy in Size. Average GDP Growth Rate of 8% over last 5 years despite Global Meltdown.

A Well Developed Formal Financial System.

Indian Financial System


A Strongly Developed Network of

Financial Markets
Financial Institutions Financial Services Financial Instruments An Important Component of IFS Network.
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Capital Market
A Meeting Ground for Savers & Users

Promotes Economic Efficiency by Channelling


Capital to Productive ventures. Government & Corporate firms Raise Long Term Finance. India Enjoys A Buoyant Domestic Savings Rate Savings Seeks Efficient Allocation for Investments
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Capital Market

Primary Market

Derivatives Market

Secondary Market

Capital Market : Engine of Economic Growth


Positive Correlation Exists between Capital Market & Eco Growth [However Skewed Be the Relationship]

Economy cannot Grow without Capital Market getting Developed in the process Development of Capital Market augments Eco Growth
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Primary Market
Deals with issuance of New Securities.

Companies, Government can Obtain Fund


through the sale of New Stock or Bond.

Market for Long-term Capital.


Securities are Issued to the Investors directly.

Subsequently these Securities get Listed and


Traded on the Stock Exchanges.
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Initial Public Offering (IPO)


Refers to simply as a "public offering It is the first sale of stock by a private company to the public. Often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.
Money

Share

Book Building
Price of the Issue is not fixed by the Company. The floor price is, however, fixed by the issuer Company depending on the bidding for the shares. Book Building is a process of discovering price for issue of Securities to Investors. Bidding is done at or above the floor price. Price Band also specified by the company.
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IPO-APPLICATION >ASBA-the new investor friendly way to apply for IPOs

SEBI

vide

its

circular

no.

EBI/CFD/DIL/DIP/31/2008/30/7 July 30, 2008 introduced a supplementary process of applying in public issues, viz., the Applications Supported by

Blocked Amount.
Ensures investor's funds leave his bank account only upon allocation of shares in public issues. In this mechanism, the need for refunds is completely obviated.
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Secondary Market
Market where Previously Issued Stocks & Financial Instruments are Traded. Transfer of Securities between the Investors. Refers to the Stock Exchanges.

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SE

CC / CH

TM

CM

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Regulators
Securities and Exchange Board of India (SEBI) Reserve Bank of India (RBI) Department of Company Affairs (DCA) Department of Economic Affairs (DEA) Stock Exchanges
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Regulatory Framework
The SEBI Act, 1992 (Amended in 2002)

The Companies Act, 1956


The Securities Contract (Regulation) Act, 1956 The Depository Act, 1996 Bye-laws of Stock Exchanges
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Exchange
A Platform, where trading of Securities is done A facilitator Small investors can Invest.

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Functions of Exchange
Raising Capital for Business

Facilitating Company Growth


Helps in Price Discovery. Barometer of the Economy.

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Trading
Sale Order Trade Id

Broker

Stock Exchange

Buy Order Trade Id

Broker

Sale Instruction Contract Note

Buy Instruction

Contract Note

Seller

Clearing House Clearing Corporation

Buyer

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Types of Orders
Limit Price/ Order Market Price/ Order Stop Loss Price / Order Day Order (Day)

Immediate or Cancel Order (IOC)


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Trading & Settlement


Trading Session: 9:15 a.m. to 3:30 p.m. from Monday to Friday Scrips traded in Exchange classified as;
A: B: Z: Non-Compliant Companies T: Settled on T2T. S: Indo Next Securities TS: Indo Next & Settled on T2T F: Fixed Income Securities G: Government securities
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Trading & Settlement Cycle


Day Activity

Trading

Downloading of Provisional securities and funds Obligation Statements by Trading Members Give-up entry by the TM/ Confirmation by custodian
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Day Activity Modify the unconfirmed give-up entry upto 11:00 a.m.

T+1

Confirmation of give-up data by the Custodian upto 11:00 a.m. Downloading of Final Securities and Funds Obligation Statements
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Day

Activity Pay-in by 11:00 a.m. Pay-out by 1:30 p.m.

T+2

T+3 T+4

Auction between 11:00 a.m. to 12 noon Download of Auction Report by 12:30 p.m. Auction pay-in by 12 noon Auction Pay-out by 1:30 p.m.
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Circuit & Filters


Used to Stop Adverse Movement in either way. Applied at 3 stages Before 1 p.m. 1 2:30 p.m. After 2:30 p.m. 10% 1 hr Halt of Trade hr Halt 20% Halt for Remainder of Day 2 hr Halt Remainder of Day Remainder Remainder of Day of Day
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15% 2 hr Halt

No Halt

Scrip-wise Circuit
Individual scrip-wise band of 20% on either side will be the circuit for any Scrip

Scrips for which derivative products are

available are excluded from circuit limits


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Demat
Refers to a Dematerialised account

Hold securities in Electronic form; physical securities carry the risk of being fake, forgotten or stolen.
NDSL and CDSL are the two depositories. Most banks are also depository participants as are brokers.
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Investors Protection Fund


BSE July 10, 1987. Members Contribute Re. 0.15 per Rs. 1 lakh of Gross Turnover. Exchange Contributes 2.5% of Listing fees on a Quarterly basis. Interest Earned by Exchange on 1% Security Deposits kept with it by the Companies making Public/Right Issues.
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Auction Proceeding in Certain Cases (Price

Manipulation/Rigging)

have

been

Impounded and Transferred to the Fund.

Surplus lying in the Account of Defaulters,


after meeting their Liabilities is Released to

them, after Transferring 5% of the Surplus


amount to the Fund.
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Principles of Safe Investments


Diversification Systematic Investment Know your risk profile Check the Fundamental Dont be Panicky or Greedy Have Faith and Patience

Investigate Thoroughly
Monitor Regularly
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What makes a great Investor? Constant reading and follow up of the Companies Look for Margin of Safety in valuation terms Compounding (Start early, invest wisely) Investment is 24X7 job Have long term view of the market
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Rights to Investors
To receive material information from the company Prompt services from company such as transfers, sub-divisions and consolidations of holdings in

the company.
Equity holders have a right to subscribe to further issues of capital by the company. Brokerage not to exceed 2.5 percent of the contract price.
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Receipt of the contract note from the broker in the

specified format showing transaction price and


brokerage separately. Investors can expect delivery of shares purchased /

value of shares sold within 15 days from the end of


settlement period. Access to the Exchange arbitration facilities in case of dispute with broker.
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Dos and Donts for Investors


Deal with only SEBI Registered Brokers or SubBrokers. Give clear & unambiguous instructions to the Broker/ Sub-Broker with regard to the Price, Qty, Buy/Sell, Order Type. Keep a record of all instructions issued to your broker / Sub-Broker. Confirm whether the delivery is in Physical form or Demat form before buying / selling shares. Verify your trades on www.bseindia.com.
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Clearly mark your option to receive order confirmations, Contract Notes in digital or physical form.

Make sure that you receive contract notes for all


your trades within 24 hours.

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Enter into in proper Client Broker agreement with your broker and keep a signed copy of the same for your records.

Furnish Know your Client (KYC) form to broker.


Dont fall prey to unrealistic / guaranteed returns.

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Bombay Stock Exchange Limited.


Offers Trading facilities for trading in: Equities Debt Instruments Derivatives Government Securities 5000 + Listed Companies (7335 Scrips) BSE SENSEX most popular barometer of Indian Capital Markets.
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BSE Web Site : www.bseindia.com

Most popular web site of Capital Market : 5.7 million hits on budget day. Average daily of 5 million hits.

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Features on www.bseindia.com
Compare with Peers Pre-defined & Technical charts

Historical High/Low

LTP

Market Depth

Latest 5

Alerts

Key Pointers
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SEBI Kolkata office

SEBI Eastern Regional Office 3rd Floor, L & T Chamber 16 Camac Street Kolkata 700 017 Ph # 033-22801213 / 1220 / 1614 / Fax # 033- 22874307 email # sebiero@sebi.gov.in

website @ www.sebi.gov.in

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Thank You
Kindly E-mail your suggestions, if any, with regards to the Programme to

dilip.khuntia@bseindia.com
or write to :

Bombay Stock Exchange Ltd


2nd Floor, Horizon 57,J.N. Nehru Road, Kolkata - 71 Ph-033-22821375/76/60/61

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