INTRODUCTION TO STOCK EXCHANGE MARKET

A stock exchange, securities exchange or is a facility where stock

brokers and traders can buy and sell securities, such as shares of stock and bonds and
other financial instruments. Stock exchanges may also provide for facilities the issue
and redemption of such securities and instruments and capital events including the
payment of income and dividends. Securities traded on a stock exchange include stock
issued by listed companies, unit trusts, derivatives, pooled investment products
and bonds. Stock exchanges often function as "continuous auction" markets with
buyers and sellers consummating transactions at a central location such as the floor of
the exchange. Many stock exchanges today use electronic trading, in place of the
traditional floor trading.
To be able to trade a security on a certain stock exchange, the security must
be listed there. Usually, there is a central location at least for record keeping, but trade
is increasingly less linked to a physical place, as modern markets use electronic
networks, which give them advantages of increased speed and reduced cost of
transactions. Trade on an exchange is restricted to brokers who are members of the
exchange. In recent years, various other trading venues, such as electronic
communication networks, alternative trading systems and "dark pools" have taken
much of the trading activity away from traditional stock exchanges.
Initial public offerings of stocks and bonds to investors is done in
the primary market and subsequent trading is done in
the secondary market. A stock exchange is often the most
important component of a stock market. Supply and demand
in stock markets are driven by various factors that, as in all free
markets, affect the price of stocks.
There is usually no obligation for stock to be issued through the
stock exchange itself, nor must stock be subsequently traded on
an exchange. Such trading may be off exchange or over-the-
counter. This is the usual way that derivatives and bonds are
traded. Increasingly, stock exchanges are part of a global
securities market. Stock exchanges also serve an economic
function in providing liquidity to shareholders in providing an
efficient means of disposing of shares.
 IMPORTANCE OF STOCK EXCHNAGE MARKET
Stock market is an important part of the economy of a country. The stock market plays a play a
pivotal role in the growth of the industry and commerce of the country that eventually affects
the economy of the country to a great extent. That is reason that the government, industry and
even the central banks of the country keep a close watch on the happenings of the stock market.
The stock market is important from both the industry’s point of view as well as the investor’s
point of view.
Whenever a company wants to raise funds for further expansion or settling up a new business
venture, they have to either take a loan from a financial organization or they have to issue
shares through the stock market. In fact the stock market is the primary source for any company
to raise funds for business expansions. If a company wants to raise some capital for the business
it can issue shares of the company that is basically part ownership of the company. To issue
shares for the investors to invest in the stocks a company needs to get listed to a stocks
exchange and through the primary market of the stock exchange they can issue the shares and
get the funds for business requirements. There are certain rules and regulations for getting listed
at a stock exchange and they need to fulfill some criteria to issue stocks and go public. The stock
market is primarily the place where these companies get listed to issue the shares and raise the
fund. In case of an already listed public company, they issue more shares to the market for
collecting more funds for business expansion. For the companies which are going public for the
first time, they need to start with the Initial Public Offering or the IPO. In both the cases these
companies have to go through the stock market.
This is the primary function of the stock exchange and thus they play the most important role of
supporting the growth of the industry and commerce in the country. That is the reason that a
rising stock market is the sign of a developing industrial sector and a growing economy of the
country. Of course this is just the primary function of the stock market and just an half of the
role that the stock market plays.
The secondary function of the stock market is that the market plays the role of a common
platform for the buyers and sellers of these stocks that are listed at the stock market. It is the
secondary market of the stock exchange where retail investors and institutional investors buy
and sell the stocks. In fact it is these stock market traders who raise the fund for the
businesses by investing in the stocks.
For investing in the stocks or to trade in the stock the investors have to go through the brokers
of the stock market. Brokers actually execute the buy and sell orders of the investors and
settle the deals to keep the stock trading alive. The brokers basically act as a middle man
between the buyers and sellers. Once the buyer places a buy order in the stock market the
brokers finds a seller of the stock and thus the deal is closed. All these take place at the stock
market and it is the demand and supply of the stock of a company that determines the price
of the stock of that particular company.
So the stock market is not only providing the much required funds for boosting the business,
but also providing a common place for stock trading. It is the stock market that makes the
stocks a liquid asset unlike the real estate investment. It is the stock market that makes it
possible to sell the stocks at any point of time and get back the investment along with the
profit. This makes the stocks much more liquid in nature and thereby attracting investors to
invest in the stock market.
DEVELOPMENT OF STOCK EXCHANGE MARKET
Indian stock market marks to be one of the oldest stock market in Asia.
It dates back to the close of 18th century when the East India Company
used to transact loan securities. In the 1830s, trading on corporate
stocks and shares in Bank and Cotton presses took place in Bombay.
Though the trading was broad but the brokers were hardly half dozen
during 1840 and 1850. An informal group of 22 stockbrokers began
trading under a banyan tree opposite the Town Hall of Bombay from the
mid-1850s, each investing a (then) princely amount of Rupee 1. This
banyan tree still stands in the Horniman Circle Park, Mumbai. In 1860,
the exchange flourished with 60 brokers. In fact the 'Share Mania' in
India began with the American Civil War broke and the cotton supply
from the US to Europe stopped. Further the brokers increased to 250.
The informal group of stockbrokers organized themselves as the The
Native Share and Stockbrokers Association which, in 1875, was formally
organized as the Bombay Stock Exchange (BSE). BSE was shifted to an
old building near the Town Hall.
In 1928, the plot of land on which the BSE building now stands (at the intersection
of Dalal Street, Bombay Samachar Marg and Hammam Street in downtown
Mumbai) was acquired, and a building was constructed and occupied in 1930.
Premchand Roychand was a leading stockbroker of that time, and he assisted in
setting out traditions, conventions, and procedures for the trading of stocks 14 at
Bombay Stock Exchange and they are still being followed. Several stock broking
firms in Mumbai were family run enterprises, and were named after the heads of
the family. The following is the list of some of the initial members of the exchange,
and who are still running their respective business: • D.S. Prabhudas & Company
(now known as DSP, and a joint venture partner with Merrill Lynch) • Jamnadas
Morarjee (now known as JM) • Champaklal Devidas (now called Cifco Finance) •
Brijmohan Laxminarayan In 1956, the Government of India recognized the
Bombay Stock Exchange as the first stock exchange in the country under the
Securities Contracts (Regulation) Act. The most decisive period in the history of
the BSE took place after 1992. In the aftermath of a major scandal with market
manipulation involving a BSE member named Harshad Mehta, BSE responded to
calls for reform with intransigence.
The foot-dragging by the BSE helped radicalise the position of the
government, which encouraged the creation of the National Stock
Exchange (NSE), which created an electronic marketplace. NSE started
trading on 4 November 1994. Within less than a year, NSE turnover
exceeded the BSE. BSE rapidly automated, but it never caught up with
NSE spot market turnover. The second strategic failure at BSE came in
the following two years. NSE embarked on the launch of equity
derivatives trading. BSE responded by political effort, with a friendly
SEBI chairman (D. R. Mehta) aimed at blocking equity derivatives
trading. The BSE and D. R. Mehta succeeded in delaying the onset of
equity derivatives trading by roughly five years. But this trading, and
the accompanying shift of the spot market to rolling settlement, did
come along in 2000 and 2001 - helped by another major scandal at BSE
involving the then President Mr. Anand Rathi. NSE scored nearly 100%
market share in the runaway success of equity derivatives trading, thus
consigning BSE into clearly second place. Today, NSE has roughly 66%
of equity spot turnover and roughly 100% of equity derivatives
turnover.
 STOCK MARKET INDICES
The major stock indices page
summarizes the performance of major
groupings of stock, classified by the
exchange on which they trade, by
region or any number of classification
that allow investors to benchmark the
overall performance of major
groupings at stock.
 TRADING PROCEDURE
1. Get a PAN Card:
PAN or Permanent Account Number is a primary requirement for entering any
financial transactions in our country. It is unique 10 digit Alpha-Numeric number
assigned to an individual by the Tax Authorities for assessing their tax liabilities. PAN is
however required for opening a bank account, investing in mutual funds, filling Income
Tax returns etc. Also the first thing you will need to be able to invest in shares in
India is a PAN card, so get it first.

2. Get a Broker:
You and I cannot directly go the stock exchange and buy or sell stocks/shares like we
would buy or sell any other thing. People are authorized to buy and sell on the
markets and they are called brokers. Brokers can be individuals or companies and even
online agencies that are registered and licensed by SEBI or Securities and Exchanges
Board of India, who regulates the share markets. Get a broker, they can be individuals
you know and are reliable, or you can approach various companies that are licensed to
trade and deal in securities in the markets.
If you are comfortable with internet and online stuff, you can even have online broking
through companies like ICICI Direct, Sharekhan, Kotak Securities, IndiaBulls etc.
3. Get a Demat and Trading Account:
Once you have a broker, whether in form of a person, company or
online, you will now need a Demat and Trading account. Demat
account will hold the stocks or shares in your name and the same will
reflect in your stock portfolio. You cannot hold shares in physical form
or store them physically. They have to in Dematerialized state or
Demat state. A Demat account does that for you. It will store the
shares you buy from the markets through your brokers in your account
in your name. The selling will also be from here and it will reflect in
your Demat statements that you receive from time to time. You will
never have a physical share certificate in your hands; it will be
reflected in your Demat Account Statement.The buying and selling of
shares you wish to have or want to sell will however require a Trading
account. Trading account will be like an intermediary who facilitates
the buying and selling. Usually your broker takes care of all this.
Whether you approach an individual broker, a broking firm or online
agencies, the Demat and Trading accounts will be opened
simultaneously as it is one without the other is useless for investing in
4. Depository Participant:
There is also a Depositary Participant that you need to be aware of. There are
two depositories in India: NSDL and CDSL which stands for National Securities
Depository Limited and Central Depository Services Limited. These two have
their agents in the form of Depository Participants who will provide an account
to store the shares you hold. It is not the same as Demat and Trading account as
in Demat it shows the number shares you hold and the Trading reflects the
buying and selling that has taken place in your account. Depository Participants
will hold those shares you bought and release the shares you sold. However, it is
usually taken care of by the broker who will also guide you through the Demat,
Trading account opening process as well as register with a Depository. But you
need to be aware of it none-the-less.

5. UIN if you want to invest BIG:

UIN or Unique Identification Number is required in case you trade for Rs.
1,00,000 or more at a single time. If you plan to go BIG in share markets, UIN is
needed. Otherwise, for regular investors it is not required.
6. Buying and Selling:
For buying or selling shares, you need to inform your broker about which share in
what quantity you wish to buy at which price. For example if you wish to buy 10
shares of Reliance Industries Ltd when it reaches a price of Rs. 885, you have to
inform the same to you broker; Share: Reliance Industries Ltd. Quantity: 10, Price:
885. In case of online broker too, they usually have customer care numbers where
you can place your order if you do not have access to the internet at that point.
When the share reaches that price, transaction will be made on your behalf. Same
is done in case of selling, for example Sell: Reliance Industries Ltd, Quantity: 3,
Price: 895. The sell order will be processed when the share reaches that price.
However the buy and sell orders remain valid only up to a certain time, usually the
same day or the next. Your broker will inform you of the same. If during that time
frame the buy or sell price is not reached, the order is cancelled and you need to
place a new order.
The buying and selling takes place in two exchanges: BSE and NSE namely Bombay
Stock Exchange and National Stock Exchange. These are the only two exchanges in
India where buying and selling of shares and commodities take place. You need to
mention the exchange to your broker too, as there is usually a slight difference in
price of shares at the two exchanges. However your broker can guide you here in
case you do not understand where to trade.
 INTERESTING FACTS OF STOCK
EXCHANGE MARKET IN INDIA
1. Bombay Stock Exchange (BSE) is the biggest stock exchange in the world in terms of the
number of listed companies on an exchange. BSE has over 5,500 listed companies.
2. BSE is also the oldest stock exchange in Asia. It was established in 1875.
3. The participation of the common people in Indian share market is below a satisfactory level.
Less than 2.5% population of India invest in the market.
4. When master blaster used to play international cricket, his dismissal adversely affected the
Indian stock market.
5. The costliest share in the Indian share market is MRF. It costs Rs 69,290 to buy 1 share of MRF.
6. There is total of 23 stock exchanges in India.
7. Nifty has given a return of 11.32 percent p.a. since its inception [till Nov’2017]: The base
value of nifty was 1,000 in 1995. Recently nifty crosses 10k mark and it is currently at 10,360
points.
 DAYS AND TIMINGS OF STOCK
EXCHANGE MARKET IN INDIA
Trading on the equities segment takes place on all days of the week (except Saturdays and
Sundays and holidays declared by the Exchange in advance). The market timings of the
equities segment are:
A) Pre-open session
Order entry & modification Open : 09:00 hrs
Order entry & modification Close : 09:08 hrs*
*with random closure in last one minute. Pre-open order matching starts immediately after
close of pre-open order entry.
B) Regular trading session
Normal / Limited Physical Market Open : 09:15 hrs
Normal / Limited Physical Market Close : 15:30 hrs
Block Deal Session Timings:
Morning Block Deal Window: This window shall operate between 08:45 AM to 09:00 AM.
Afternoon Block Deal Window: This window shall operate between 02:05 PM to 2:20 PM.
C) The Closing Session is held between 15.40 hrs and 16.00 hrs
 The stock market in India are closed on weekends i.e. Saturday and Sunday. It is also
closed on the national holidays. 
 MAHURAT TRADING
THIS YEAR DIWALI IS OBSERVED
ON 7 NOVEMBER,2018 WEDNESDAY.
ON THIS DAY, MAHURAT TRADING
SHOULD BE DONE BY THE EXCHANGE.