INDIAN STOCK

MARKET
SPECIAL THANKS :
ANJU MAMM .
Overview
• With this presentation we are trying to through some light
towards our stock market.

•
INTRODUCTION
The working of stock exchanges in India started in
1875. BSE is the oldest stock market in India. The
history of Indian stock trading starts with 318 persons
taking membership in Native Share and Stock Brokers
Association, which we now know by the name Bombay
Stock Exchange or BSE in short. In 1965, BSE got
permanent recognition from the Government of India.
National Stock Exchange comes second to BSE in
t e r m s o f p o p u l a r i t y. To d a y, B S E i s t h e w o r l d ' s n u m b e r
one exchange in terms of the number of listed
companies and the world's 5th in transaction
numbers. The market capitalization as on December
31, 2007 stood at USD 1.79 trillion . An investor can
choose from more than 4,700 listed companies,
which for easy reference, are classified into A, B, S,
T & Z groups. BSE has two of world's best exchanges,
Deutsche Börse & Singapore Exchange, as its
strategic partners.
FACILITIES
BSE provides an efficient and transparent market for
t r a d i n g i n e q u i t y, d e b t i n s t r u m e n t s a n d d e r i v a t i v e s . I t
has a nation-wide reach with a presence in more than
359 cities and towns of India. BSE has always been at
par with the international standards. The systems and
processes are designed to safeguard market integrity
and enhance transparency in operations. Over the
past 133 years, BSE has facilitated the growth of the
Indian corporate sector by providing it with an
efficient access to resources. There is perhaps no
major corporate in India which has not sourced BSE's
services in raising resources from the capital market.
 ACHIVEMENTS
• BSE is the first exchange in India and the second in
the world to obtain an ISO 9001:2000 certification.

• It is also the first exchange in the country and second

in the world to receive Information Security
Management System Standard BS 7799-2-2002
certification for its BSE O n-line Trading System
( B O LT ) .

• It has become the first national level stock exchange

to launch its website in Gujarati and Hindi to reach
out to a larger number of investors.
• It has successfully launched a reporting platform for
corporate bonds in India christened the ICDM or
Indian Corporate Debt Market and a unique ticker-
cum-screen aptly named 'BSE Broadcast' which
enables information dissemination to the common man
on the street.

• In 2006, BSE launched the Directors Database and

ICERS (Indian Corporate Electronic Reporting System)
to facilitate information flow and increase
transparency in the Indian capital market. While the
Directors Database provides a single-point access to
information on the boards of directors of listed
companies, the ICERS facilitates the corporate in
sharing with BSE their corporate announcements.
 SERVICES
• Investor Services.

• BSE On-line Trading (BOLT).

• Surveillance.

• BSE Training Institute.

• BSEWEBX.com
 AWARDS
• The World Council of Corporate Governance has
awarded the Golden Peacock Global CSR Award for
BSE's initiatives in Corporate Social Responsibility
(CSR).

• The Annual Reports and Accounts of BSE for the year

ended March 31, 2006 and March 31 2007 have been
awarded the ICAI awards for excellence in financial
reporting.

• The Human Resource Management at BSE has won

the Asia - Pacific HRM awards for its efforts in
employer branding through talent management at
work, health management at work and excellence in
HR through technology
 SENSEX
• B a s e Ye a r : - 1 9 7 8 - 7 9

• B a s e I n d e x Va l u e : - 1 0 0

• Date of Launch:- 01-01-1986

• Method of calculation:-Launched on full market

capitalization method and effective September 01,
2003, calculation method shifted to free-float market
capitalization.

• Number of scrips:- 30
SENSEX Calculation
Methodology

SENSEX is calculated using the "Free-float Market

C a p i t a l i z a t i o n " m e t h o d o l o g y, w h e r e i n , t h e l e v e l o f
index at any point of time reflects the free-float
market value of 30 component stocks relative to a
base period.

The market capitalization of a company is determined

by multiplying the price of its stock by the number
of shares issued by the company. This market
capitalization is further multiplied by the free-float
factor to determine the free-float market
capitalization.
Understanding Free-float
Methodology
Free-float methodology refers to an index
construction methodology that takes into
consideration only the free-float market capitalization
of a company for the purpose of index calculation and
assigning weight to stocks in the index. Free-float
market capitalization takes into consideration only
those shares issued by the company that are
readily available for trading in the market. It
generally excludes promoters' holding, government
holding, strategic holding and other locked-in
shares that will not come to the market for trading
in the normal course. In other words, the market
capitalization of each company in a free-float index is
reduced to the extent of its readily available shares in
the market.
 ADVANTAGES
• A Free-float index reflects the market trends more
rationally as it takes into consideration only those
shares that are available for trading in the market.
• Free-float Methodology makes the index more broad-
based by reducing the concentration of top few
companies in Index.
• A Free-float index aids both active and passive
investing styles. It aids active managers by enabling
them to benchmark their fund returns vis-à-vis an
investible index. This enables an apple-to-apple
comparison thereby facilitating better evaluation of
performance of active managers. Being a perfectly
replicable portfolio of stocks, a Free-float adjusted
index is best suited for the passive managers as it
enables them to track the index with the least
tracking error
• Free-float Methodology improves index flexibility in
terms of including any stock from the universe of
listed stocks. This improves market coverage and
sector coverage of the index.

• G l o b a l l y, the Free-float Methodology of index

construction is considered to be an industry best
practice and all major index providers like MSCI,
FTSE, S&P and STOXX have adopted the same.
DIFFRENCE BETWEEN BULL
AND BEAR RUN
BULL RUN BEAR RUN
• Rise in stock prices. • Fall in stock prices.

• High economic growth. • Economic growth is

l o w.
• Strong investor
confidence in the • Investor's confidence
e c o n o m y. in the market is week.

• Represents uptrend or • Represents downtrend

buying sentiment in or selling sentiment in
market. market.
De m a t e r i a l i z e d A/c :
MEANING :
D e m a t e r i a l i z e d a c c o u n t p o p u l a r l y k n o w n a s DEMAT
A/c. A D e m a t A / c i s a p e r s o n a l A / c f o r p u r c h a s i n g a n d
selling stocks. It is similar to a savings account that
you open with a bank. A savings account holds your
money electronically and a dmat account holds your
s t o c k s e l e c t r o n i c a l l y.

PURPOSE :
The idea of Demat A/c is to avoid the need to hold
physical shares. The shares are virtually being
bought and sold through the banking A/c.
HOW TO OPEN IT:

All private banks like ICICI, HDFC, Centurion Bank

o f P u n j a b h a v e D e m a t d i v i s i o n . Yo u n e e d t o f i l l u p a
Demat A/c opening form, two photographs, address
p r o o f & a P a n c a r d . PA N C A R D i s m a n d a t o r y f o r
opening a Demat A/c.

MAINTANENCE COST :
Yo u d o n o t h a v e t o m a i n t a i n a n y m i n i m u m b a l a n c e
f o r t h i s . Yo u w i l l b e c h a r g e d a n n u a l l y f r o m R s 3 5 0 / -
to Rs 1000/- varies from bank to bank. However this
will be linked to your savings bank A/c.
STEPS one should Follow TO
earn PROFIT
• Fix a profit goal.

• Tr a d e i n g r o w i n g s t o c k .

• Tr a d e i n b o t h w a y s i n t r a d a y a n d d e l i v e r y.

• Before purchasing stock you visit the company

s i t e a n d s e e t h e c o m p a n y p o l i c y.

• If you have risk taking venture then go for

intraday trading but, if not, then buy those
shares where you can wait a long so that you
get return.
 MUTUAL FUND
• U n i t Tr u s t o f I n d i a w a s t h e f i r s t m u t u a l f u n d s e t
up in India in the year 1963.

• Mutual funds are bunch of shares. One unit of

mutual fund contains fractional unit of many
companies shares. If price of a share increases,
its percentage in unit of MF will increase. If price
of a share decreases, its percentage in unit of MF
will decrease. A mutual fund is a professionally-
managed form of collective investments that pools
money from many investors and invests it in
stocks, bonds, short-term money market
instruments, and other securities.
 DEBENTURE
• A debenture is a long-term debt instrument used by
governments and large companies to obtain funds.
It is similar to a bond except the securitization
conditions are different. A debenture is usually
unsecured in the sense that there are no liens or
pledges on specific assets.

• A debenture is a loan secured on specific assets

owned by a company and is repaid if a company
runs into difficulties. They usually have a fixed
rate of interest and a fixed maturity date
More Information
• Useful Web sites
• Related reading