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What is a Stock?

Stock is a share in the ownership of a company.

It represents a claim on the company's assets and earnings


Whether you say shares, equity or stock, it all means

the same thing.

What is a stock market?


Place where business of

buying and selling stock takes place


The stock market is not a

specific place, though some people use the term "Dalaal Street

Types of stocks
Equity Preference

Market Segments
Primary market

-Channel for creation of new securities


Secondary market

-The new securities issued in the primary market are traded the secondary market

Market Timings
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: Pre Opening : 9.00 to 9.15
Normal market open : 09:15 hours Normal market close : 15:30 hours The closing session is held between 15.50 hours and 16.00 hours in NSE and 15.40 hours and 16.00 hours in BSE

Trading on BSE and NSE


To provide Transparency, Efficiency and Depth to

market, BSE and NSE provide Screen Based Trading on Trading Platforms called BOLT and NEAT(National Exchange for Automated Trading )
These platforms provide Trading Facility to Brokers,

Sub-brokers and their clients through thousands of trading terminals spread throughout the nation.

Trading on BSE and NSE


BSE and NSE provide trading facility on

two segments ,which are - Cash Segment and - Derivative Segment NSE also has another segment called WDM, Wholesale Debt Market.

NEAT-F&O

NEAT- Cash

BOLT

Index
Number which measures the change in a set of values

over a period of time. Stock index represents the change in value of a set of stocks which constitute the index A good stock market index is one which captures the behavior of the overall equity market It has to be well diversified yet highly liquid

Importance of a Market Index


A market index is very important for its use as
a barometer for market behavior

as a benchmark portfolio performance


a passive fund management in index funds an underlying for index futures and options

Stock Market Indices


SENSEX : It is the index for BSE.

- It is representative of 30 large and most liquid companies on BSE. - Its base year is 1978-1979 and base value is 100.
NIFTY : It is the index for NSE.

- It is representative of 50 companies of 23 sectors of economy. - Its base year is 1995 and base value is 1000.
Other indices are DJIA , S&P

500, Nasdaq composite, Nikkei index, Hang Sang index, DAX etc

Major Indices in India


S&P CNX Nifty
Sensex

Legal Framework
Securities Contract (Regulation) Act,1956
Securities Contracts (Regulation) Rules,1957 SEBI Act 1992

SEBI (Stock Broker and Sub-Brokers) Rules and

Regulations,1992 The Depositories Act,1996 Indian Contracts Act,1872 Indian Companies Act,1956

Circuit Breakers
An index based market-wide circuit breaker system

applies at three stages of the index movement either way at 10%, 15% and 20%.
The breakers are triggered by movement of either S&P

CNX Nifty or Sensex, whichever is breached earlier

Circuit Breakers
As an additional measure of safety, individual scrip-wise price bands has been fixed as below: Daily price bands of 2% (either way) on a set of specified securities Daily price bands of 5% (either way) on a set of specified securities Daily price bands of 10% (either way) on another set of specified securities

Circuit Breakers
Price bands of 20% (either way) on all remaining

securities (including debentures,warrants, preference shares etc. which are traded on CM segment of NSE), No price bands are applicable on scrips on which derivative products are available or on scrips included in indices

Market Segments
Rolling Settlemennt
Limited physical market Institutional Segment

Trade for Trade Segment

Clearing and Settlement


Stock Markets follow a system of settling trades on T+2

basis,which means transactions done on Monday,are to be settled by Wednesday by way of giving securities or funds.

Providing of securities or funds to

Exchange / Clearing Corporation is called Pay-In.


Receiving securities or funds from

Exchange / Clearing corporation is called Pay-Out.

Sometimes trades dont get settled because of short or

bad delivery or company objection. In such cases ,trade is settled through auction of securities. If a trade remains unsettled even after auction,then Exchange carries Close Out

Margins and Risk Management


It is of paramount importance that investors have faith

smooth functioning of stock Markets. Exchanges achieve this by putting in place a comprehensive Risk Management system and margin requirements.

Margin Requirement
MTM- Mark to Market margin Volatility Margin

Gross Exposure Margin

Risk Management
Capital Adequacy requirement.
Additional Base Capital Intra-Day Trading and Exposure limits

On-line Exposure monitoring


Settlement Guarantee Fund Inspection of Books Penalties

Thank You