Ashish Project Final Aa
-
Upload
anurag-maurya -
Category
Documents
-
view
224 -
download
0
Transcript of Ashish Project Final Aa
-
7/28/2019 Ashish Project Final Aa
1/139
Summer Training Project Report
On
ANALYSIS AND INVESTMENT MANAGEMENT AT
INDIAINFOLINE
Submitted for the partial fulfillment of the award
of
Master of Business Administration
DEGREE(Session : 2011 - 2013)
SUBMITTED BY*Ashish Kesarwani
*1103270037
UNDER THE GUIDANCE OFInternal Guide : Mrs. Tanu Shrivastav
School Of Management
ABES ENGINEERING COLLEGE ,
GHAZIABAD
AFFILIATED TO
1
-
7/28/2019 Ashish Project Final Aa
2/139
MAHAMAYA TECHNICAL UNIVERSITY , NOIDA
DECLARATION
I ASHISH KESARWANI hereby declare that the work which is being presented in this report entitled
SECURITY ANALYSIS AND INVESTMENT MANAGEMENT AT INDIAINFOLINE is an authentic
record of my own work carried out under the supervision of Mrs. TANU SHRIVASTAV.
The matter embodied in this report has not been submitted by me for the award of any other degree .
Dated : Ashish Kesarwani
MBA Department
This is to certify that the above statements made by the candidate are correct to the best of my knowledge
Prof. Rakesh Passi Tanu Shrivastav
Head of department Designation :Asstt. professor
Department : MBA
2
-
7/28/2019 Ashish Project Final Aa
3/139
ACKNOWLEDGEMENT
Any purpose and its fulfillment require deep routed efforts for its completion. Many characters play a
vital role. This is more when a project undertaken is directly to a cause.
. My sincere gratitude goes to Mr. Rajesh Shah (Branch manager) my organizational guide
without whose help this project would have seemed impossible.
I would like to thankProf. RakeshPassi (Head of Department) andProf.Tanu shrivastava,
our Project guide , not only for giving me the opportunity to work on this project, but also for providing us
with sound guidance and the necessary facilities to carry out the project.
Finally we would like to thank all those who were directly and indirectly (
Supporting staff of IIFL. and my friends)concerned in making my project
successful. To put it in a nutshell a difficult and arduous journey was made simple
and quiet enjoyable due to their support.
It has been of great learning to be on the job-training and doing the project simultaneously, whic
enriched my knowledge and developed my outlook for becoming a better professional. I feel great pleasur
in submitting this project report to India Info line Securities Pvt. Ltd(Ghaziabad)
3
-
7/28/2019 Ashish Project Final Aa
4/139
TABLE OF CONTENTS
Chapter 1
1. Introduction
2. Need of the study
3. Scope of study
4. Objective of study
Chapter 2
1. Research methodology
2. limitations
Chapter 3
1. Descriptive work on subtopic of study
Chapter 4
1. Data analysis and interpretation
Chapter 5
1. Conclusions and suggestions
4
-
7/28/2019 Ashish Project Final Aa
5/139
Chapter 6
1. Bibliography
Chapter 7
1. Appendices
PART I
5
-
7/28/2019 Ashish Project Final Aa
6/139
CHAPTER-16
-
7/28/2019 Ashish Project Final Aa
7/139
Introduction:
This summer project which is on how to create and manage portfolio, and know the investor perceptio
about investment in capital market which is most useful for me. This project Increase my knowledge an
ability to understand external forces of environment.
Have you ever wondered how the rich got their wealth and then kept it growing? Do you dream of retirin
early (or of being able to retire at all)? Do you know that you should invest, but don't know where to start?
The act of committing money or capital to an endeavor with the expectation of obtaining an additiona
income or profit.
7
-
7/28/2019 Ashish Project Final Aa
8/139
It's actually pretty simple: investing means putting your money to work for you. Essentially, it's a differen
way to think about how to make money. Growing up, most of us were taught that you can earn an incom
only by getting a job and working. And that's exactly what most of us do. There's one big problem wit
this: if you want more money, you have to work more hours. However, there is a limit to how many hours
day we can work, not to mention the fact that having a bunch of money is no fun if we don't have th
leisure time to enjoy it .
You can't create a duplicate of yourself to increase your working time, so instead, you need to send a
extension of yourself - your money - to work. That way, while you are putting in hours for your employer
or even mowing your lawn, sleeping, reading the paper or socializing with friends, you can also be earning
money elsewhere. Quite simply, making your money work for you maximizes your earning potentia
whether or not you receive a raise, decide to work overtime or look for a higher-paying job.
There are many different ways you can go about making an investment. This includes putting money int
stocks,bonds,mutual funds, or real estate (among many other things), or starting your own business. Sometime
people refer to these options as "investment vehicles," which is just another way of saying "a way to invest." Each o
these vehicles has positives and negatives, which we'll discuss in a later section of this tutorial. The point is that
doesn't matter which method you choose for investing your money, the goal is always to put your money to work so
earns you an additional profit. Even though this is a simple idea, it's the most important concept for you t
understand.
The world of finance can be extremely intimidating, but we firmly believe that the stock market and greate
financial world won't seem so complicated once you learn some of the language and major concepts.
COMPANY PROFILE
History:
8
http://www.investopedia.com/terms/s/stock.asphttp://www.investopedia.com/terms/b/bond.asphttp://www.investopedia.com/terms/b/bond.asphttp://www.investopedia.com/terms/m/mutualfund.asphttp://www.investopedia.com/terms/m/mutualfund.asphttp://www.investopedia.com/terms/s/stock.asphttp://www.investopedia.com/terms/b/bond.asphttp://www.investopedia.com/terms/m/mutualfund.asp -
7/28/2019 Ashish Project Final Aa
9/139
India Infoline Ltd., was founded in 1995 by a group of professional with impeccable educationa
qualifications and professional credentials. Its institutional investors include Intel Capital (world's) leadin
technology company, CDC (promoted by UK government), ICICI, TDA and Reeshanar.
India Infoline group offers the entire gamut of investment products including stock broking, Commoditie
broking, Mutual Funds, Fixed Deposits, GOI Relief bonds, Post office savings and life Insurance. Indi
Infoline is the leading corporate agent of ICICI Prudential Life Insurance Co. Ltd., which is India' No.
Private sector life insurance company.
Www.indiainfoline.com has been the only India Website to have been listed by none other tha
Forbes in it's 'Best of the Web' survey of global website, not just once but three times in a row an
counting... A must read for investors in south Asia is how they choose to describe India Infoline. It ha
been rated as No.l the category of Business News in Asia by Alexia rating.
Stock and Commodities broking is offered under the trade name 5paisa. India Infoline Commoditie
pvt Ltd., a wholly owned subsidiary of India Infoline Ltd., holds membership of MCX and NCDEX
Main Objects of the Company:
Main objects as contained in its Memorandum or Association are:
1. To engage or undertake software and internet based services, data processing IT enabled service
software development services, selling advertisement space on the site, web consulting and relate
9
-
7/28/2019 Ashish Project Final Aa
10/139
services including web designing and web maintenance, software product development an
marketing, software supply services, computer consultancy services, E-Commerce of all type
including electronic financial intermediation business and E-broking, market research, business an
management consultancy.
2. To undertake, conduct, study, carry on, help, promote any kind of research, probe, investigation
survey, developmental work on economy, industries, corporate business houses, agricultural an
mineral, financial institutions, foreign financial institutions, capital market on matters related t
investment decisions primary equity market, secondary equity market, debentures, bond, venture
capital funding proposals, competitive analysis, preparations of corporate / industry profile etc. an
trade / invest in researched securities
VISION STATEMENT OF THE COMPANY:
Our vision is to be the most respected company in the financial services space In India.
Products: the India Infoline pvt ltd offers the following products
A. E-broking.
B. Distribution
C. Insurance
D. PMS
E. Mortgages
A. E-Broking:
It refers to Electronic Broking of Equities, Derivatives and Commodities under the brand name of 5paisa
1. Equities
2. Derivatives
10
-
7/28/2019 Ashish Project Final Aa
11/139
3. Commodities
B. Distribution:
1. Mutual funds
2. Govt of India bonds.
3. Fixed depositsC. Insurance:
1. Life insurance policies
2. General Insurance
3. Health Insurance Policies.
THE CORPORATE STRUCTURE
The India Infoline group comprises the holding company, India Infoline Ltd, which has 5 wholly
owned subsidiaries, engaged in distinct yet complementary businesses which together offer a who
bouquet of products and services to make your money grow.
The corporate structure has evolved to comply with oddities of the regulatory framework but sti
beautifully help attain synergy and allow flexibility to adapt to dynamics of different businesses.
The parent company, India Infoline Ltd owns and managers the web properties www.Indiainfoline.com an
www.5paisa.com. It also undertakes research Customized and off-the-shelf.
Indian Infoline Securities Pvt. Ltd. is a member of BSE, NSE and DP with NSDL. Its busines
encompasses securities broking Portfolio Management services.
India Infoline.com Distribution Co. Ltd., Mobilizes Mutual Funds and other personal investment product
such as bonds, fixed deposits, etc.
India Infoline Insurance Services Ltd. is the corporate agent of ICICI Prudential Life Insurance, engaged i
selling Life Insurance, General Insurance and Health Insurance products.
India Infoline Commodities Pvt. Ltd. is a registered commodities broker MCX and offers futures trading incommodities.
India Infoline Investment Services Pvt Ltd., is proving margin funding and NBFC services to the customer
of India Infoline Ltd.,
11
-
7/28/2019 Ashish Project Final Aa
12/139
12
-
7/28/2019 Ashish Project Final Aa
13/139
Pictorial Representation of India Infoline Ltd
Management of India Infoline Ltd.,:
India Infoline is a professionally managed Company. The promoters who run the company/s day
to-day affairs as executive directors have impeccable academic professional track records.
Nirmal Jain, chairman and Managing Director, is a Chartered Accountant, (All India Rank 2); Co
Account, (All India Rank l) and has a post-graduate management degree from IIM Ahmedabad. He had
successful career with Hindustan Lever, where he inter alia handled Commodities trading and expor
business. Later he was CEO of an equity research organization.
R. Venkataraman, Director, is armed with a post- graduate management degree from IIM
Bangalore, and an Electronics Engineering degree from IIT, Kharagpur. He spent eight fruitful years i
13
-
7/28/2019 Ashish Project Final Aa
14/139
equity research sales and private equity with the cream of financial houses such as ICICI group, Barclay
de Zoette and G.E. Capital
The non-executive directors on the board bring a wealth of experience and expertise. Satpal khatta
Reeshanar investments, Singapore The key management team comprises seasoned and qualifie
professionals.
Mukesh Sing- Director, India Infoline Securities Pvt Ltd.
Seshadri Bharathan- Director, India Infoline. Com Distribution Co Ltd
S Sriram- Vice President, Technology
Sandeepa Vig Arora- Vice President, Portfolio Management Services
Dharmesh Pandya- Vice President, Alternate Channel
Toral Munshi- Vice President, Research
Anil Mascarenhas- Chief Editor
14
-
7/28/2019 Ashish Project Final Aa
15/139
INTRODUCTION:
The India infoline was founded by a group of professionals in 1995, a seemingly distant past in the Interne
age. Our meticulous research was published and distributed in printed form to a client base comprising th
who's who of Indian business including leading MNCs, investment banks and consulting firms. The qualit
of research was highly acclaimed and soon became the industry benchmark. Over the last few years, ou
research coverage has grown to cover practically all companies, economy and financial markets. Th
breadth and depth of our content is unmatched - stock markets, mutual funds, personal finance, taxatio
and economy.
We saw an opportunity to expand our client base, from a few hundreds to several millions and als
to complete the value chain. In early 1999, when Internet penetration in India was at its infancy and th
future unknown, we took the hard decision of killing our earlier business model and embracing the Interne
We discontinued delivery of reports in printed form and made available quality research at the click of
mouse. Thus, was born www.indiainfoline.com? The site has emerged as the most popular website o
Indian business and finance. A publication, no less than Forbes has chosen us in their Best of the Web
under the Asian Investing category.
The India Info line group, comprising the holding company, Angel Broking Ltd and its wholl
owned subsidiaries offers the entire gamut of investment products ranging from Equities and derivative
trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixe
deposits, GoI bonds and other small savings instruments. Angel Broking also owns and manages th
websites, www.indiainfoline.com and www.5paisa.com. Angel Broking Ltd is a company listed on bot
15
http://www.forbes.com/bow/http://www.forbes.com/bow/ -
7/28/2019 Ashish Project Final Aa
16/139
the leading stock exchanges in India namely the Stock Exchange, Mumbai stock exchange (BSE) and th
National Stock Exchange (NSE). Angel Broking is a forerunner in the field of equity research. Ange
Brokings research is acknowledged by none other than Forbes as Best of the Web and a must read fo
investors in Asia.
India Info lines research is available not just over the internet but also on international wire services lik
Bloomberg (Code: IILL), Thomson First Call and Internet Securities where it is amongst the most rea
Indian brokers. The Angel Broking group has a significant presence across the country owing to its 12
offices across 45 cities across India. All these offices are networked and are connected with the corporat
office in Mumbai. The group has invested significantly in technology and research, the results of which ar
there for everyone to see. The 5paisa trading interface is one of the most advanced platforms available t
retail investor in India.
The group has memberships on BSE and NSE for equities trading and on MCX and NCDEX fo
commodities trading. It has a SEBI license for Portfolio Management under which, various schemes ar
offered which have been consistently beating the benchmark indices since inception. Angel Broking is th
one-stop shop for all investment needs for the Indian retail investor, from advice to execution, from east t
west, online or offline.
To be the premier provider of investment advisory and financial planning services in India
To be a leading investment intermediary for transactions through both online and offline medium.
5PAISA PRODUCTS &CHARGES
16
-
7/28/2019 Ashish Project Final Aa
17/139
Main Products
Investor Terminal
Trader Terminal 2005
Diet ODIN
Investor/Trader & Diet ODIN Terminal
On all the terminals, investors get facility to buy and sell Stocks in NSE and BSE and Futures an
Options through NSE
InvestorTerminal
Investor Terminal is recommended for infrequent investors, who fall into the "Buy and Hold
school of investing, made very popular by Warren Buffet - the Oracle of Omaha.
Its a trading interface which works behind proxy and firewalls as they access the Internet and th
stock markets from their work place, where a direct connection is difficult because of corporate IT
security policies.
17
-
7/28/2019 Ashish Project Final Aa
18/139
Trader Terminal 2005
Trader Terminal is for the dedicated day traders, who churn their portfolio on minor movements i
the market, sometimes several times a day.
The Trader Terminal offers
Lightning fast order execution
Monitoring of marked to market positions on a minute-to-minute basis
Diet ODIN
The Diet ODIN terminal provides the facility to trade not only in cash as well as derivatives bu
also in the commodities segment in the Multi-Commodity Exchange (MCX) and the Nationa
Commodity & Derivatives Exchange (NCDEX);
Though it doesnt provide charting features, it provides a cleaner interface for faster orde
execution, a facet well appreciated by the true-blue trader of today.
Customer Category
Investor
Trader
18
-
7/28/2019 Ashish Project Final Aa
19/139
Brokerage- Investor
Investor
One-time registration fees Rs.555
Minimum Initial Margin Rs.5000/-
Trading Brokerage (Cash) 0.10%
Delivery Brokerage 0.50%
F&O Brokerage 0.10%
Minimum Per Share(Trading) 5 Paisa
Minimum Per Share(Delivery) 5 Paisa
Registration of Investor
Registration charge of Rs.555 is once payable and non refundable. This charge cannot be waived o
under any circumstances.
Account cannot be opened without the minimum initial margin of Rs. 5000 and any point of tim
the ledger balance of the client should be minimum Rs. 5000.
If the client has a debit balance then stock value minus debit has to worth a minimum Rs. 5000.
19
-
7/28/2019 Ashish Project Final Aa
20/139
Client can withdraw funds from the account but has to maintain a minimum ledger balance of Rs
5000
If the minimum balance is not maintained then the account will be frozen and client cannot operat
both trading and demat account. The account can be re-activated by payment of Rs. 50 p.m.
20
-
7/28/2019 Ashish Project Final Aa
21/139
Brokerage- Trader
Quarterly Annual
Registration fees Rs. 3000/- Rs. 8000/-
Minimum Initial Margin Rs. 5000/- Rs. 5000/-
Trading Brokerage (Cash) 0.05% 0.05%
Delivery Brokerage 0.25% 0.25%
F&O Brokerage 0.05% 0.05%
Minimum Per Share (Trading) 1paisa 1paisa
Minimum Per Share (Delivery) 5paisa 5paisa
Terminalsoffered
An Investor and Trader can opt for any of the products we offer
Investor Terminal
Trader Terminal 2005
Diet ODIN
21
-
7/28/2019 Ashish Project Final Aa
22/139
An Investor that has opted for TT5 can be de-activated if the brokerage earned is no
sufficient. Our Audit team will keep a check on this and produce a monthly list of such
customers
Under the Investor or Trader scheme a client can also choose offline trading.
Depository Charges
Account opening charges - Nil
Annual maintenance charges - Nil
Custody / Holding charges - Nil
Transaction Credit - Nil
Transaction Debit - 0.05% of transaction value (Minimum Rs.15/ Maximum
Rs.100/-)
DP charges mentioned above are the same for Investor and Trader. If the client opens onl
a demat account then the client will be Charged annual maintenance charge of Rs. 250
22
-
7/28/2019 Ashish Project Final Aa
23/139
India info line securities pvt ltd is a technology oriented company offering integrated Equit
analysis, Stock trading, Depository & Insurance services, Margin Trading facilities back by real time ris
management system and fast trade execution. India info line also provides its clients with valuable real
time information, access to breaking news and market happening along with in-depth and insightfu
analysis.
Someoftheuniquefeaturesare:-
Trading via branch network, telephone and internet account.
Customized products for lending against shares.
Automated extended margin trading facility.
Integrated trading and Depository Account.
Technology transforming desktops into NEAT like terminal for Internet trading.
One screen for cash and derivatives trading.
Facility to buy today & tomorrow itself.
Real time online fund transfer & Exposure updating facility with HDFC bank.
Equity research department, which studies the market and provides information.
Up-to-date news, data and analysis via Indiainfoline.com
Customized insurance services.
23
-
7/28/2019 Ashish Project Final Aa
24/139
Equity analysis report to support your investment decisions.
Features of power India info line
Live streaming quotas
Fast order entry.
Tic-by-tic live charts.
Technical analysis.
Live news and alerts
Extensive reports for real time accounting.
Benefits of trading with India info line
Personal relationship manager-24/7
Most competitive brokerage & DP charges
Only one time account opening charges and no annual maintenance charges.
Margin trading of 3 times the cash deposited for delivery based trade.
Margin trading of 6 times the cash deposited for intra-day based trade.
Margin trading of 2 times the approved category A based shares deposited for delivery based trade
24
-
7/28/2019 Ashish Project Final Aa
25/139
Margin trading of 4 times the approved category A-based shares deposited for intra-day.
Buy today sell tomorrow for all securities.
Management of portfolio and advises.
Charges:
Rs. 555/- one time payment for account opening for equity trading and DP-online trading.
0.5% for delivery based trading.
0.1% for intra-day trading.
RS.750/- additional one time charge for the installation of PIB-optional.
Equity analysis @ Rs. 500/- pm or Rs. 6000/-annual. optional.
Postregistrationservices:
Deliver and receive chaques, securities & place orders.
Obtain market information.
Get access to IPO via the book building rout as well as to all the fixed price issues.
25
-
7/28/2019 Ashish Project Final Aa
26/139
Documents required for account opening are:
2 passport size photographs
Identity proof-photocopy of the following:
a) Passport
b) PAN card
c) Voter ID
d) Driving license
e) Ration card
Address proof-photocopy of any one driving license/passport/ration card/voter card/telephone
bill/electricity bill/bank statement
Initial chaques in favors of India info line securities Ltd.
Besides this India info line also offers insurance and mutual funds to .suits your varying needs. We
distributed unit linked insurance products ofBirla Sun life and TATA AIG. Further we also offer a
bouquet ofMutual fund of all major assets management companies.
Need of Study:
26
-
7/28/2019 Ashish Project Final Aa
27/139
SCOPE OF THE STUDY:
The study is limited to Derivatives With special reference to Futures in the Indian context and th
IndiaInfoline has been taken as representative sample for the study.
The study cannot be said as totally perfect, any alteration may come. The study has only made humbl
attempt at evaluating Derivatives Markets only in Indian Context. The study is not based on th
International perspective of the Derivatives Markets.
Objectives of the Study:
27
-
7/28/2019 Ashish Project Final Aa
28/139
To understand the concept of the Financial Derivatives such as Futures and Options.
To examine the advantage and the disadvantages of different strategies along with situations.
To study the different ways of buying and selling of Options.
28
-
7/28/2019 Ashish Project Final Aa
29/139
PART II
29
-
7/28/2019 Ashish Project Final Aa
30/139
CHAPTER-2
RESEARCH
METHODOLOGY
30
-
7/28/2019 Ashish Project Final Aa
31/139
RESEARCH METHODOLOGY:RESEARCH METHODOLOGY:
Research in Common parlance refers to the search for knowledge. One can also define research a
a Scientific and Systematic search for pertinent information of a specific topic, it is the pursuit o
truth with the help of study , observation , comparison and experiment.
RESEARCH DESIGN:
Research design is actually the blue print of the research project and when implemented mus
bring out the information required for solving the identified problem. The research design indicate
the method of research (i.e method of information gathering , the instruments of research, th
method of sampling etc.). The Choice of research design depends upon the depth and extent o
data required the cost benefits of research, the urgency of work and the time available fo
Completing it.
RESEARCH OBJECTIVE:
The purpose of research is to acquire knowledge about the financial products of India Infoline.
31
-
7/28/2019 Ashish Project Final Aa
32/139
DATA COLLECTION:
The data used for the project can be divided into two major forms:
1) Primary Data
2) Secondary Data
Primary Data was collected by getting the feedback forms filled by the people we met in th
organizations visited. We also used to write our daily reports based on our experiences of that particula
day and maintained a record of the companys reaction on the product, as well as the presentation.
Secondary Data was collected by going through several websites of the companies on the Internet lik
www.nseindia.com,www.5paisa.com,www.indiainfoline.com etc. Information about the companies and th
industry was also collected by going through financial papers and magazines like Econom
Times,Business World,Business Today.etc.
32
-
7/28/2019 Ashish Project Final Aa
33/139
Limitations:
The study was conducted in Hyderabad only.
As the time was limited, study was confined to conceptual understanding o
Derivatives market in India.
33
-
7/28/2019 Ashish Project Final Aa
34/139
CHAPTER 3
DESCRIPTIVE
WORK ON
SUBTOPIC
34
-
7/28/2019 Ashish Project Final Aa
35/139
DESCRIPTIVE WORK ON SUBTOPIC
STOCK MARKET BASICS
Meaning of stock
Stock is a share in the ownership of a company. It represents a claim on the company's asset
and earnings
Whether you say shares, equity or stock, it all means the same thing.
If a company wants to growmaybe build more factories, hire more people or develop new
productsit needs money. It could get a loan from a bank. By issuing stock, a company can raise mone
without going into debt. People who buy the stock are giving the company the money it needs to grow. No
every company can issue stock. A business owned by one person (a proprietorship) or a few people (
partnership) cannot issue stock. Only a business corporation can issue stock. A corporation has a specia
legal status. Like a school, its existence does not depend on the people who run it. Under the law it i
separate from the people associated with it, and has special legal rights and responsibilities as well as it
own unique name.
35
-
7/28/2019 Ashish Project Final Aa
36/139
When the price of a particular stock rises, that stock is said to be "up," meaning up in price. When the pric
falls, the stock is said to have gone "down. The terms "up" and "down" are also used to describe the ris
and fall of the market as a whole. Stock market
The stock market is the market for the trading of company stock, both those securities listed on
stock exchange as well as those only traded privately. Although common, the term 'the stock market' is
somewhat abstract concept for the mechanism that enables the trading of company stocks. It is also used t
describe the totality of all stocks, especially within one country. In simple words:
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
36
-
7/28/2019 Ashish Project Final Aa
37/139
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
Stock exchange
The Bombay Stock Exchange (BSE)
National Stock Exchange of India Ltd (NSE)
Trading on BSE and NSE
To provide Transparency, Efficiency and Depth to market, BSE and NSE provide Screen Base
Trading on Trading Platforms called BOLT and NEAT.
These platforms provide Trading Facility to Brokers, Sub-brokers and their clients throug
thousands of trading terminals spread throughout the nation
BSE and NSE provide trading facility on two segments which are
- Cash Segment and
- Derivative Segment
NEAT CASH
37
-
7/28/2019 Ashish Project Final Aa
38/139
BOLT
38
-
7/28/2019 Ashish Project Final Aa
39/139
39
BOLT
-
7/28/2019 Ashish Project Final Aa
40/139
Markettiming
Trading on the equities segment takes place on all days of the week (except Saturdays and Sundays an
holidays declared by the exchange in advance).
The market timings of the equities segment are:
Normal market open : 09:55 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 15.50 hours
in BSE
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
40
-
7/28/2019 Ashish Project Final Aa
41/139
Important 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
Types of indexes
Price weighted index
Equally weighted index
Market capitalization weighted index
41
-
7/28/2019 Ashish Project Final Aa
42/139
Major Indices in India
S&P CNX Nifty
Sensex
The SENSEX, short form of the BSE-Sensitive Index, is a "Market Capitalization-Weighted" index o
30 stocks representing a sample of large, well-established and financially sound companies. It is th
oldest index in India and has acquired a unique place in the collective consciousness of investors. Th
index is widely used to measure the performance of the Indian stock markets. SENSEX is considered t
be the pulse of the Indian stock markets as it represents the underlying universe of listed stocks at Th
Stock Exchange, Mumbai. Further, as the oldest index of the Indian Stock market, it provides tim
series data over a fairly long period of time (since 1978-79
S&P CNX Nifty
S&P CNX Nifty is a well diversified 50 stock index accounting for 21 sectors of the economy. It is used
for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds.
S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint
venture between NSE and CRISIL. IISL is India's first specialised company focused upon the index as a
core product. IISL has a Marketing and licensing agreement with Standard & Poor's (S&P), who are world
leaders in index services.
The traded value for the last six months of all Nifty stocks is approximately 48.15% of the traded
value of all stocks on the NSE
Nifty stocks represent about 59.32% of the total market capitalization as on June 30, 2008.
Impact cost of the S&P CNX Nifty for a portfolio size of Rs.2 crore is 0.14%
S&P CNX Nifty isprofessionally maintained and is ideal for derivatives tradingList of S&P CNX Nifty stocks
42
http://www.nse-india.com/content/indices/ind_niftylist.csvhttp://www.nse-india.com/content/indices/ind_niftytrading.htmhttp://www.nse-india.com/content/indices/ind_indexfunds.htmhttp://www.nse-india.com/content/indices/ind_iisl.htmhttp://www.nse-india.com/content/indices/ind_ic_2007.csvhttp://www.nse-india.com/content/indices/ind_niftymaintenance.htmhttp://www.nse-india.com/content/indices/ind_niftylist.csvhttp://www.nse-india.com/content/indices/ind_niftylist.csvhttp://www.nse-india.com/content/indices/ind_niftytrading.htmhttp://www.nse-india.com/content/indices/ind_indexfunds.htmhttp://www.nse-india.com/content/indices/ind_iisl.htmhttp://www.nse-india.com/content/indices/ind_ic_2007.csvhttp://www.nse-india.com/content/indices/ind_niftymaintenance.htmhttp://www.nse-india.com/content/indices/ind_niftylist.csv -
7/28/2019 Ashish Project Final Aa
43/139
Constituents list
of S&P CNX
Nifty
Company Name Industry Symbol
ABB Ltd. ELECTRICAL EQUIPMENT ABB
ACC Ltd. CEMENT AND CEMENT PRODUCTS ACC
Ambuja
Cements Ltd.CEMENT AND CEMENT PRODUCTS
AMBUJACEM
Bharat Heavy
Electricals Ltd.
ELECTRICAL EQUIPMENTBHEL
Bharat
Petroleum
Corporation Ltd.
REFINERIES
BPCL
Bharti Airtel
Ltd.
TELECOMMUNICATION - SERVICESBHARTIARTL
Cairn India Ltd. OIL EXPLORATION/PRODUCTION CAIRN
Cipla Ltd. PHARMACEUTICALS CIPLA
DLF Ltd. CONSTRUCTION DLF
Dr. Reddy's
Laboratories
Ltd.
PHARMACEUTICALS
DRREDDY
GAIL (India)
Ltd.
GASGAIL
Grasim
Industries Ltd.
CEMENT AND CEMENT PRODUCTS
GRASIMHCL
Technologies
Ltd.
COMPUTERS - SOFTWARE
HCLTECH
HDFC Bank
Ltd.BANKS
HDFCBANK
Hero Honda
Motors Ltd.
AUTOMOBILES - 2 AND 3 WHEELERSHEROHONDA
Hindalco
Industries Ltd.
ALUMINIUMHINDALCO
Hindustan
Unilever Ltd.
DIVERSIFIEDHINDUNILVR
Housing
Development
Finance
Corporation Ltd.
FINANCE - HOUSING
HDFC
I T C Ltd. CIGARETTES ITC
43
-
7/28/2019 Ashish Project Final Aa
44/139
ICICI Bank Ltd. BANKS ICICIBANK
Idea Cellular
Ltd.
TELECOMMUNICATION - SERVICESIDEA
Infosys
Technologies
Ltd.
COMPUTERS - SOFTWARE
INFOSYSTCH
Larsen &Toubro Ltd.
ENGINEERINGLT
Mahindra &
Mahindra Ltd.
AUTOMOBILES - 4 WHEELERSM&M
Maruti Suzuki
India Ltd.
AUTOMOBILES - 4 WHEELERSMARUTI
NTPC Ltd. POWER NTPC
National
Aluminium Co.
Ltd.
ALUMINIUM
NATIONALUM
Oil & Natural
Gas CorporationLtd.
OIL EXPLORATION/PRODUCTION
ONGC
Power Grid
Corporation of
India Ltd.
POWER
POWERGRID
Punjab National
Bank
BANKSPNB
Ranbaxy
Laboratories
Ltd.
PHARMACEUTICALS
RANBAXY
Reliance
Communications
Ltd.
TELECOMMUNICATION - SERVICES
RCOM
Reliance
Industries Ltd.
REFINERIESRELIANCE
Reliance
Infrastructure
Ltd.
POWER
RELINFRA
Reliance
Petroleum Ltd.
REFINERIESRPL
Satyam
Computer
Services Ltd.
COMPUTERS - SOFTWARE
SATYAMCOMP
Siemens Ltd. ELECTRICAL EQUIPMENT SIEMENS
State Bank of
India
BANKSSBIN
Steel Authority
of India Ltd.
STEEL AND STEEL PRODUCTSSAIL
Sterlite METALS STER
44
-
7/28/2019 Ashish Project Final Aa
45/139
Industries
(India) Ltd.
Sun
Pharmaceutical
Industries Ltd.
PHARMACEUTICALS
SUNPHARMA
Suzlon Energy
Ltd.
ELECTRICAL EQUIPMENT
SUZLON
Tata
Communications
Ltd.
TELECOMMUNICATION - SERVICES
TATACOMM
Tata
Consultancy
Services Ltd.
COMPUTERS - SOFTWARE
TCS
Tata Motors Ltd.AUTOMOBILES - 4 WHEELERS TATAMOTORS
Tata Power Co.
Ltd.
POWERTATAPOWER
Tata Steel Ltd. STEEL AND STEEL PRODUCTS TATASTEEL
Unitech Ltd.CONSTRUCTION
UNITECHWipro Ltd. COMPUTERS - SOFTWARE WIPRO
Zee
Entertainment
Enterprises Ltd.
MEDIA & ENTERTAINMENT
ZEEL
LegalFramework
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
45
-
7/28/2019 Ashish Project Final Aa
46/139
Market Segments
Rolling Settlement
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
46
-
7/28/2019 Ashish Project Final Aa
47/139
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 margi
requirements.
Margin Requirement
MTM- Mark to Market margin
Volatility Margin
Gross Exposure Margin
SPAN 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
47
-
7/28/2019 Ashish Project Final Aa
48/139
Frequently used terms
Margin Money
Bull and Bear
Settlement Cycle
Squared transaction
Delivery Transaction
Positions - + (buy) & - (sell)
Prices- Last traded price, closing price, opening price, average price
Pay-in & pay-out
Bid and offer
Short selling
Long position
Auction
Settlement Number
48
-
7/28/2019 Ashish Project Final Aa
49/139
CAPITAL MARKETS
Segments of the Capital Market
Primary market
-Channel for creation of new securities
Secondary market
-The new securities issued in the primary market are traded the secondary market
Primary Market
This is part of the financial market where enterprises issue their new shares and bonds. It
characterized by being the only moment when the enterprise receives money in exchange for selling it
financial assets. In simple words:
The primary market provides the channel for creation of new securities.
Primary market provides opportunity to issuers of securities; Government as well as corporates, t
raise resources to meet their requirements of investment.
49
-
7/28/2019 Ashish Project Final Aa
50/139
Classification of Issues
50
-
7/28/2019 Ashish Project Final Aa
51/139
Initial Public Offer
Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue o
securities or an offer for sale of its existing securities or both for the first time to the public. Thi
paves way for listing and trading of the issuers securities.
A follow on public offering (Further Issue) is when an already listed company make
either a fresh issue of securities to the public or an offer for sale to the public, through an offe
document.
Pricing of an Issue
Fixed Price
Price discovery through Book Building Process
Book Building Process
Book Building is basically a process used in IPOs for efficient price discovery.
51
-
7/28/2019 Ashish Project Final Aa
52/139
It is a mechanism where, during the period for which the IPO is open, bids are collected from
investors at various prices, which are above or equal to the floor price. The offer price is determine
after the bid closing date.
Rights Issue
Rights Issue is when a listed company which proposes to issue fresh securities to its existin
shareholders as on a record date.
The rights are normally offered in a particular ratio to the number of securities held prior to th
issue and generally issued at a price lower than the currently traded market price of the share
Preferential Issue
A Preferential issue is an issue of shares or of convertible securities by listed companies to a selec
group of persons which is neither a rights issue nor a public issue.
This is a faster way for a company to raise equity capital.
Private placement can be done with a maximum of 50 investors.
52
-
7/28/2019 Ashish Project Final Aa
53/139
Secondary Market
The market where securities are traded after they are initially offered in the primary market. Mos
trading is done in the secondary market. In simple words:
Secondary market refers to a market where securities are traded after being initially offered to th
public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done i
the secondary market.
Secondary market comprises of equity markets and the debt markets.
Role of Secondary Market
For the general investor, the secondary market provides an efficient platform for trading of hi
securities.
For the management of the company, secondary equity markets serve as a monitoring and contro
conduitby facilitating value-enhancing control activities
53
-
7/28/2019 Ashish Project Final Aa
54/139
Stock Exchange
The stock exchanges in India, under the overall
supervision of the regulatory authority, the Securities and
Exchange Board of India (SEBI),provide a trading
platform, where buyers and sellers can meet to transact in
Securities.
Role of Stock Exchange
Facilitate Listing of Securities
Register members -Stock Brokers, sub brokers
Make and enforce bye-laws
Provide trading platform to investors
Manage risk in securities transactions
Provide indices
Leading Stock Exchanges
National Stock Exchange (NSE)
The Stock Exchange, Mumbai (BSE)
54
-
7/28/2019 Ashish Project Final Aa
55/139
National Stock Exchange (NSE)
NSE, promoted by leading financial institutions, was incorporated in 1992 as a corporate entity.
Trading in Equities and Debt Market commenced in 1994.
It is the largest exchange in the country in terms of volume of trading.
It enjoys leadership position among exchanges in India.
The Stock Exchange, Mumbai (BSE)
The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Nativ
Share and Stock Brokers Association
It is the oldest stock exchange in Asia.
It has evolved over the years into its present status as the premier Stock Exchange in the country.
It is the first Stock Exchange in the Country to get recognition from the Govt. of India under th
Securities Contracts (Regulation) Act, 1956.
55
-
7/28/2019 Ashish Project Final Aa
56/139
Capital Market Instruments
Equity shares
Preference shares
Futures and Options
Debentures/Bonds
Government securities
Equity Shares
Equity shares represent proportionate ownership in a company. Investors who own equity shares i
a company are entitled to ownership rights such as
Share in the profits of the company ( in the form of dividends )
Share in the residual funds after liquidation / winding up of the company
Voting rights
Reasons for buying equities
56
-
7/28/2019 Ashish Project Final Aa
57/139
Owning equity in a company means owning part of that company. Each part is known as a share.
If a company has issued 100 shares of stock, and you bought one, you own 1% of that company
People who own stock are called stockholders, or shareholders.
Stockholders hope the company will earn money as it grows. If a company earns money, th
stockholders share the profits. Over time, people usually earn more from owning stock than from
leaving money in the bank, buying bonds, or making other investments.
Preference Shares
Preferential shareholders enjoy a preferential right over equity shareholders with regards to :
Receipt of dividend
Receipt of residual funds after liquidation
Futures and Options
Future and Options are derivative products whose value is derived from the value of one or mor
basic variables
57
-
7/28/2019 Ashish Project Final Aa
58/139
Underlying Asset can be Equity, Forex, commodity or any other asset.
Debentures/ Bonds
Debt instruments issued by corporate and government
Debentures and bonds can have many variations depending upon redemption, charge, convertibilit
etc.
Government Securities
The Central Government and the State Governments issue securities periodically for the purpose o
raising loans from the public. There are two main types of Government securities:
Dated Securities: These securities have a maturity period of more than 1 year
Treasury Bills: These have a maturity period of less than 1 year
Regulatory Framework
Main legislations governing the capital market
Securities Contract (Regulations) Act,1956
58
-
7/28/2019 Ashish Project Final Aa
59/139
Companies Act, 1956
Securities Exchange Board of India Act, 1992
Depositories Act,1996
Role of SEBI
SEBI was set up to
develop and regulate capital market
protect interest of investors
register various participants
make rules for participants
regulate stock exchanges
prohibit fraudulent and unfair practices
promote investors education
59
-
7/28/2019 Ashish Project Final Aa
60/139
LISTING REQUIREMENTS
[I] Minimum Listing Requirements for new companies
(A) Minimum Capital:
1. New companies can be listed on the Exchange, if their issued & subscribed equity capital after th
public issue is Rs.10 crores. In addition to this the issuer company should have a post issue ne
worth (equity capital + free reserves excluding revaluation reserve) of Rs.20 crores.
2. For new companies in high technology ( i.e. information technology, internet, e-commerc
telecommunication, media including advertisement, entertainment etc.) the following criteria wi
be applicable regarding there hold limit:
i. The total income/sales from the main activity, which should be in the field of information
technology, internet, e-commerce, telecommunication, media including advertisement,
entertainment etc. should not be less than 75% of the total income during the two
immediately preceding years as certified by the Auditors of the company.
ii. The minimum post-issue paid-up equity capital should be Rs.5 Crores.
iii. The minimum market capitalization should be Rs.50 Crores. (The capitalization will b
calculated by multiplying the post issue subscribed number of equity shares with the Issu
price).
iv. Post issue net worth (equity capital + free reserves excluding revaluation reserve) of Rs.2
Crores.
60
-
7/28/2019 Ashish Project Final Aa
61/139
(B) Minimum Public offers:
As per Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957, securities of a compan
can be listed on a Stock Exchange only when at least 25% of each class or kind of securities is offered t
the public for subscription.
In case of IPOs by unlisted companies in the IT& entertainment sector, at least 10% of the securitie
issued by the company may be offered to the public subject to the following:
Minimum 20 lakhs securities are offered to the public (excluding reservation, firm allotment an
promoters contribution)
The size of the offer to the public is minimum 50 crores.
For this purpose, the term "offered to the public" means only the portion offered to the public and doe
not include reservations of securities on firm or competitive basis.
SEBI may, however, relax this condition on the basis of recommendations of stock exchange(s), only i
respect of a Government company defined under Section 617 of the Companies Act, 1956.
[II] Minimum Listing Requirements for companies listed on other stock exchanges
1. The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the direc
listing norms for companies listed on others The Company should have minimum issued and paid u
equity capital of Rs. 3 crores.
61
-
7/28/2019 Ashish Project Final Aa
62/139
2. The Company should have profit making track record for last three years. The revenues/profits arisin
out of extra ordinary items or income from any source of non-recurring nature should be exclude
while calculating distributable profits.
3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excludin
revaluation reserves).
4. Minimum market capitalization of the listed capital should be at least two times of the paid up capital.
5. The company should have a dividend paying track record for the last 3 consecutive years and th
minimum dividend should be at least 10%.
6. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders as pe
Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single shareholder shoul
hold more than 0.5% of the paid-up capital of the company individually or jointly with others except i
case of Banks/Financial Institutions/Foreign Institutional Investors/Overseas Corporate Bodies an
Non-Resident Indians.
7. The company should sign an agreement with CDSL & NSDL for demat trading.
[III] Minimum Requirements for companies delisted by this Exchange seekin
relisting of this Exchange
The companies delisted by this Exchange and seeking relisting are required to make a fresh publi
offer and comply with the prevailing SEBI's and BSE's guidelines regarding initial public offerings.
[IV] Permission to use the name of the Exchange in an Issuer Company's prospectus
62
-
7/28/2019 Ashish Project Final Aa
63/139
The Exchange follows a procedure in terms of which companies desiring to list their securitie
offered through public issues are required to obtain its prior permission to use the name of the Exchange i
their prospectus or offer for sale documents before filing the same with the concerned office of th
Registrar of Companies. The Exchange has since last three years formed a "Listing Committee" to analys
draft prospectus/offer documents of the companies in respect of their forthcoming public issues o
securities and decide upon the matter of granting them permission to use the name of "Bombay Stoc
Exchange Limited" in their prospectus/offer documents. The committee evaluates the promoters, company
project and several other factors before taking decision in this regard.
[V] Submission of Letter of Application
As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities on th
Exchange is required to submit a Letter of Application to all the Stock Exchanges where it proposes t
have its securities listed before filing the prospectus with the Registrar of Companies.
[VI] Allotment of Securities
As per Listing Agreement, a company is required to complete allotment of securities offered to th
public within 30 days of the date of closure of the subscription list and approach the Regional Stoc
Exchange, i.e. Stock Exchange nearest to its Registered Office for approval of the basis of allotment. I
case of Book Building issue, Allotment shall be made not later than 15 days from the closure of the issu
failing which interest at the rate of 15% shall be paid to the investors.
[VII] Trading Permission
63
-
7/28/2019 Ashish Project Final Aa
64/139
As per Securities and Exchange Board of India Guidelines, the issuer company should complete th
formalities for trading at all the Stock Exchanges where the securities are to be listed within 7 working
days of finalization of Basis of Allotment.
A company should scrupulously adhere to the time limit for allotment of all securities and dispatc
of Allotment Letters/Share Certificates and Refund Orders and for obtaining the listing permissions of al
the Exchanges whose names are stated in its prospectus or offer documents. In the event of listin
permission to a company being denied by any Stock Exchange where it had applied for listing of it
securities, it cannot proceed with the allotment of shares. However, the company may file an appeal befor
the Securities and Exchange Board of India under Section 22 of the Securities Contracts (Regulation) Ac
1956.
[VIII] Requirement of 1% Security
The companies making public/rights issues are required to deposit 1% of issue amount with th
Regional Stock Exchange before the issue opens. This amount is liable to be forfeited in the event of th
company not resolving the complaints of investors regarding delay in sending refund orders/shar
certificates, non-payment of commission to underwriters, brokers, etc.
[IX] Payment of Listing Fees
All companies listed on the Exchange have to pay Annual Listing Fees by the 30th April of ever
financial year to the Exchange as per the Schedule of Listing Fees prescribed from time to time.
The schedule of listing fees for the year 2004-2005, prescribed by the Governing Board of th
Exchange and approved by the Securities and Exchange Board of India is given hereunder toc
Exchange(s) and seeking listing at BSE. These norms are applicable with immediate effect.
64
-
7/28/2019 Ashish Project Final Aa
65/139
65
-
7/28/2019 Ashish Project Final Aa
66/139
[X] Compliance with Listing Agreement
The companies desirous of getting their securities listed are required to enter into an agreement wit
the Exchange called the Listing Agreement and they are required to make certain disclosures and perform
certain acts. As such, the agreement is of great importance and is executed under the common seal of
company. Under the Listing Agreement, a company undertakes, amongst other things, to provide facilitie
for prompt transfer, registration, sub-division and consolidation of securities; to give proper notice o
closure of transfer books and record dates, to forward copies of unabridged Annual Reports and Balanc
Sheets to the shareholders, to file Distribution Schedule with the Exchange annually; to furnish financia
results on a quarterly basis; intimate promptly to the Exchange the happenings which are likely t
materially affect the financial performance of the Company and its stock prices, to comply with th
conditions of Corporate Governance, etc.
The Listing Department of the Exchange monitors the compliance of the companies with the provisions o
the Listing Agreement, especially with regard to timely payment of annual listing fees, submission o
quarterly results, requirement of minimum number of shareholders, etc. and takes penal action against th
defaulting companies.
[XI] "Z" Group
The Exchange has introduced a new category called "Z Group" from July 1999 for companies wh
have not complied with and are in breach of provisions of the Listing Agreement. The number o
companies placed under this group as at the end of May, 2001
New Direct listing norms
66
-
7/28/2019 Ashish Project Final Aa
67/139
The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the direc
listing norms for companies listed on other Stock Exchange(s) and seeking listing at BSE. These norms ar
applicable with immediate effect.
1. The company should have minimum issued and paid up equity capital of Rs. 3 crores.
2. The Company should have profit making track record for last three years. The revenues/profit
arising out of extra ordinary items or income from any source of non-recurring nature should b
excluded while calculating distributable profits.
3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excludin
revaluation reserves).
4. Minimum market capitalization of the listed capital should be at least two times of the paid u
capital.
5. The company should have a dividend paying track record for the last 3 consecutive years and th
minimum dividend should be at least 10%.
6. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders as pe
Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single shareholde
should hold more than 0.5% of the paid-up capital of the company individually or jointly wit
others except in case of Banks/Financial Institutions/Foreign Institutional Investors/Oversea
Corporate Bodies and Non-Resident Indians.
7. The company should have at least two years listing record with any of the Regional Stoc
Exchange.
8. The company should sign an agreement with CDSL & NSDL for demat trading.
67
-
7/28/2019 Ashish Project Final Aa
68/139
9. The company should have minimum issued and paid up equity capital of Rs. 3 crores.
10. The Company should have profit making track record for last three years. The revenues/profi
arising out of extra ordinary items or income from any source of non-recurring nature should b
excluded while calculating distributable profits.
11. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excludin
revaluation reserves).
12. Minimum market capitalization of the listed capital should be at least two times of the paid u
capital.
13. The company should have a dividend paying track record for the last 3 consecutive years and th
minimum dividend should be at least 10%.
[XII] Cash Management Services (CMS) - Collection of Listing Fees
As a further step towards simplifying the system of payment of listing fees, the Exchange has
entered into an arrangement with HDFC Bank for collection of listing fees, from 141 locations, situated all
over India. Details of the HDFC Bank branches, are available on our website site www.bseindia.com as
well as on the HDFC Bank website www.hdfcbank.com The above facility is being provided free of cost t
the Companies.
TYPES OF SECURITIES TRADED IN COMPANY
Shares
Commodities
68
http://www.bseindia.com/http://www.hdfcbank.com/http://www.bseindia.com/http://www.hdfcbank.com/ -
7/28/2019 Ashish Project Final Aa
69/139
Mutual fund
Life insurance
SHARES
Meaning: - A share or stock is a document issued by a company, which entitles its holder to be one o
the owners of the company. A share is issued by a company or can be purchased from the stock market.
By owning a share you can earn a portion and selling shares you get capital gain. So, your return i
the dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold
the share at a price below your buying price.
Procedure for doing trading in shares:
Every transaction in the stock exchange is carried out through licensed members calle
brokers. To trade in shares, you have to approach a broker However, since most stock exchange broke
69
-
7/28/2019 Ashish Project Final Aa
70/139
deal in very high volumes, they generally do not entertain small investors. These brokers have a network o
sub-brokerswho provide them with orders.
The general investors should identify a sub-broker for regular trading in shares and place his orde
for purchase and sale through the sub-broker. The sub/broker will transmit the order to his broker who wi
then execute it
.
Derivatives
Introduction
70
-
7/28/2019 Ashish Project Final Aa
71/139
A derivative is a contract/product that has no independent value i.e.: it derives its value from th
underlying asset. Underlying asset can be securities, commodities, bullion, currency, live stock or anythin
else.
A derivative is a financial instrument whose value depends on other, more basic, underlyin
variables. The variables underlying could be prices of traded securities and stock, prices of gold or copper
prices of oranges to even the amount of snow that falls on a ski resort.
Derivatives have become increasingly important in the field of finance. Options and futures ar
traded actively on many exchanges. Forward contracts, swaps and different types of options are regularl
traded outside exchanges by financial institutions, banks and their corporate clients in what are termed a
over-the-counter markets i.e. there is no single market place or an organized exchange
In other words, derivatives means forward, futures, option or any other hybrid contract of pr
determined fixed duration, linked for the purpose of contract fulfillment to the value of specified real o
financial asset or to index of securities.
In the international market, various derivatives products are traded. To start with, we need t
understand three products, namely forward, futures and options.
Concept
Derivative is a product whose value is derived from the value of one or more basic variables.
71
-
7/28/2019 Ashish Project Final Aa
72/139
Underlying Asset can be Equity, Forex, commodity or any other asset.
Types of Derivatives
Forwards
Futures
Options
SWAPS
Forwards
A forward contract is a customized contract between two entities, where settlement takes place on
specific date in the future at todays pre-agreed price. Forward contract is a one to one bipartit
contract, which is to be performed in future at the terms decided today. Forward contracts are bein
used in India on large scale in the foreign exchange market to cover the currency risk.
Forward contracts being negotiated by the parties on one to one basis, offer the tremendous flexibility
to them to articulate the contract in terms of price, quantity, quality, delivery time and place. However
forward contracts suffer from poor liquidity and default risk
72
-
7/28/2019 Ashish Project Final Aa
73/139
Futures
Future contracts are the organized/standardized contracts in terms of quantity, quality, delivery time
and place for settlement on any date in future. These contracts are traded on exchanges. Futures trading
entail liquid investments that allow investors to purchase or sell assets at specified prices or at later
dates. Based upon the anticipated price of the future, futures contracts can be drawn up for various
markets. In simple words:
A future is contracting to buy or sell an underlying asset at a specified future date, at a specified
price.
These contracts are traded and settled on exchanges.
Future contracts can be on individual scrips or indices.
Reasons for buying Futures contracts
73
-
7/28/2019 Ashish Project Final Aa
74/139
Procedure for work in future
Futures trading occur on exchange, allowing investors the right and obligation to buy and sell. Th
contracts are regulated so the investors can turn their investments into money right away. Some standar
conditions include guaranteeing the delivery month and location, the quantity and quality of th
commodities, as well as the last day to trade. In order to end the futures contract, the holder must either sel
the long position or purchase back the short position. Cash settlement, expiry, and physical delivery ar
three ways to complete the transaction of a futures contract.
Futures terminology
Spot Price
Futures Price
Expiry Date
74
Reasons for BUYING futures
contracts
Reasons for SELLING futures
contracts
Hedgers To lock in a price and thereby obtain
protection against rising prices
To lock in a price and thereby obtain
protection against declining prices
Speculators To profit from rising prices To profit from declining prices
-
7/28/2019 Ashish Project Final Aa
75/139
Contract Cycle -One month
-Two month
-Three month
Options
An option is a contract, which gives the buyer (holder) the right, but not the obligation, to buy or sel
specified quantity of the underlying assets, at a specific (strike) price on or before a specified tim
(expiration date). The underlying may be physical commodities like wheat/ rice/ cotton/ gold/ oil o
financial instruments like equity stocks/ stock index/ bonds etc. In simple words:
Options are derivative instruments where one party has a right to buy/sell the underlying while the
other party has an obligation to buy/sell
The person with the right is called the buyer of the option. The person with the obligation is called
the writer of the option.
Risks in Options
The risk/ loss of an option buyer is limited to the premium that he has paid. An option holder wh
neither sells his option in the secondary market nor exercises it prior to its expiration loses his entir
investment (Premium), in the option. The risk of an Options Writer however is unlimited where his gain
75
-
7/28/2019 Ashish Project Final Aa
76/139
are limited to the Premiums earned. The writer of an uncovered call is in an extremely risky position an
may incur large losses if the value of the underlying asset increases above the exercise price. The potentia
loss is unlimited for the writer of an uncovered call. When a physical delivery uncovered call is assigned a
exercise, the writer will have to purchase the underlying asset to meet his call obligation and his loss wi
be the excess of the purchase price over the exercise price of the call reduced by the premium received fo
writing the call. (In the case of a cash-settled option, the loss will be the cash settlement amount reduced b
the premium.) As with writing uncovered calls, the risk of writing put options is substantial. The writer of
put option bears a risk of loss if the value of the underlying asset declines below the exercise price, an
such loss could be substantial if the decline is significant. The writer of a put bears the risk of a decline in
the price of the underlying interest-potentially to zero. Since the leverage inherent in an option can caus
the impact of price changes in the underlying asset to be magnified in the price of the option, a writer of a
option that is uncovered and unhedged may have a significantly greater risk than a short seller of th
underlying interest.
76
-
7/28/2019 Ashish Project Final Aa
77/139
Types of Options
Based on the right:
- Call option
- Put option
Call Option: A call option gives the holder (buyer/ one who is long call), the right to bu
specified quantity of the underlying asset at a specified price on or before a specified time. Th
seller (one who is short call ) however, has the obligation to sell the underlying asset if the buyer o
the call option decides to exercise his option to buy. The buyer of a call option acquires the right bu
not the obligation to purchase a particular futures contract at a stated price on or before a particula
date.
Put Option: A Put option gives the holder (buyer/ one who is long Put), the right to sell specifie
quantity of the underlying asset at a specified price on or before a specified time. The seller (on
who is short Put) however, has the obligation to buy the underlying asset if the buyer of the pu
option decides to exercise his option to sell.
77
-
7/28/2019 Ashish Project Final Aa
78/139
CALL OPTIONS PUT OPTIONS
Option buyer or option holder Buys the right to buy the
underlying asset at the specified
price
Buys the right to sell the
underlying asset at the specified
price
Option seller or option writer Has the obligation to sell the
underlying asset (to the option
holder) at the specified price
Has the obligation to buy the
underlying asset (to the option
holder) at the specified price.
Based on the exercise:
- American ( Individual Securities)
- European (S&P CNX Nifty)
78
-
7/28/2019 Ashish Project Final Aa
79/139
Procedure for using Options
If you anticipate a certain directional movement in the price of a stock, the right to buy or sell that stock a
a predetermined price, for a specific duration of time can offer an attractive investment opportunity. Th
decision as to what type of option to buy is dependent on whether your outlook for the respective securit
is positive (bullish) or negative (bearish). If your outlook is positive, buying a call option creates th
opportunity to share in the upside potential of a stock without having to risk more than a fraction of it
market value. Conversely, if you anticipate downward movement, buying a put option will enable you t
protect against downside risk without limiting profit potential. Purchasing options offer you the ability t
position yourself accordingly with your market expectations in a manner such that you can both profit an
protect with limited risk. Once you have purchased an option contract, you can do one of the following:
You can sell an option of the same series as the one you had bought & close out your position in
that option at any time, or;
You can exercise the option on the expiration day in case of European Option or on or before th
expiration day in case of an American option.
79
-
7/28/2019 Ashish Project Final Aa
80/139
ITM/ATM/OTM:
CALL OPTION PUT OPTION
In-the-money Strike price < Spot price of
underlying asset
Strike price > Spot price of
underlying asset
At-the-money Strike price = Spot price of
underlying asset
Strike price = Spot price of
underlying asset
Out-of-the-money Strike price > Spot price of
underlying asset
Strike price < Spot price of
underlying asset
Futures V/s Options
80
-
7/28/2019 Ashish Project Final Aa
81/139
The major differences in Futures and Options are as under:
Futures Options
Futures are agreements/contracts to buy or sell
specified quantity of the underlying assets at a
price agreed upon by the buyer & seller, on or
before a specified time. The buyer is obligated to
buy/sell the underlying asset.
Unlike futures, the buyer in case of options
enjoys the right & not obligation, to buy or sell
the underlying asset.
Futures contracts are highly leveraged positions
with unlimited risk for both the buyer as well as
the seller.
In case of options, for a buyer (or holder of the
option), the downside is limited to the premium
(option price) he has paid while the profits may
be unlimited. For a seller or writer of an option,
however, the downside is unlimited while profits
are limited to the premium he has originally
received from the buyer.
The Futures contracts prices are affected only by
the prices of the underlying asset.
The prices of options are however; affected by
prices of the underlying asset, time remaining for
expiry of the contract & volatility of the
underlying asset.
It costs nothing to enter into a futures contract. There is a cost of entering into an options
contract, termed as Premium.
Benefits of trading in F&O
Transfer of risk
81
-
7/28/2019 Ashish Project Final Aa
82/139
Incentive to make profit with minimal amount of risk capital
Lower transaction costs
Liquidity, price discovery
Eliminates security specific risks
Power to leverage
Margin
SPAN Margin
-Initial margin
-Mark to market margin
Exchange requires customer to maintain margin with broker.
82
-
7/28/2019 Ashish Project Final Aa
83/139
83
-
7/28/2019 Ashish Project Final Aa
84/139
Meaning of commodities
Commodities are broadly defined as natural resources, chemicals and physical products you can touch
taste, smell, grow, mine, consume or deliver. In simple words:
Commodity includes all kinds of goods.
FERA defines "goods" as "every kind of movable property
Other than actionable claims, money and securities".
Goods with commercial value traded widely in bulk; usually a raw material or primary produce, fo
processing;
Agricultural commodities: food grains, fibers, oilseeds complex, sugar, plantation crop
horticulture crops;
Non-agro commodities: Base metals, precious metals; industrial products: crude;
84
http://www.lind-waldock.com/edu/com/index.shtmlhttp://www.lind-waldock.com/edu/com/index.shtml -
7/28/2019 Ashish Project Final Aa
85/139
Concept of Derivatives
Derivative is a product whose value is derived from the value of one or more basic variables.
Underlying Asset can be Equity, Forex, commodity or any other asset.
Commodity & Financial derivatives
In Financial derivatives all contracts are
cash settled
In Commodities derivatives the seller
has the option to give physical delivery
at an accredited warehouse
In Financial derivatives the concept of
varying quality of asset does not exist
In Commodities derivatives the quality
of the asset of the underlying can vary
largely.
Indian Commodity Market
- An Overview
History
85
-
7/28/2019 Ashish Project Final Aa
86/139
The futures markets were developed initially to help agricultural producers and consumers manage the
price risks they faced harvesting, marketing and processing food crops each year. The modern futures
industry still serves those markets. In simple words:
Organized commodities trading started in 1875 - Bombay Cotto
Trade Association
The government had banned futures trading in 1975, saying
Excessive speculation had driven prices up.
It allowed trading to resume three years later but restricted it
To a few commodities. Trading in some other commodities
Resumed only in 1997
In 2004, Government of India allowed the Multi Commodity
Exchange and the National Commodity and Derivatives
Exchange Ltd. to set up new bourses with a national reach and
Launch online trading in a range of commodities.
Facts - India
Agriculture - 26% of GDP
Agro commodities thriving
Huge domestic consumption market
One of the Worlds largest importer of gold, edible oils
Third largest producer of cotton
86
-
7/28/2019 Ashish Project Final Aa
87/139
Leading coffee / tea / sugar producer
87
-
7/28/2019 Ashish Project Final Aa
88/139
Marketstructure
88
Ministry of Consumer Affairs, Food &
Public Distribution
Forward Market Commission
Outcry ExchangesOnline Exchanges
MCXMumbai
NCDEXMumbai
NMCEAhmedabad
NBOTIndore
-
7/28/2019 Ashish Project Final Aa
89/139
List of Commodities
Energy
Products
Bullion
Products Metals Agricultural Products
Crude Oil
Furnace Oil
Gold
Silver
Copper
Tin
Nickel
Steel
Arabica & Robusta Coffee,
Wheat, Chana, Sugar, Rice,
Guar Seed, Jute Sacking,
Pepper, Castor Seed, Guar
Gum, Raw Jute, Urad, Yellow
Peas, Turmeric, Soymeal
Crude Palm Oil, Cotton,
Mustard Seed, Mustard Oil
Soybean, Refined Soy Oilgur,
Maize, Raw Silk, Cocoon,
Jeera, Chilly, Cashew,
Cottonseed Oilcake, Sesame
Seed, Tur, Metha Oil, Kapas.
Market participants
Traders - Speculators, Hedgers, Arbitrageurs, Investors
Producers - Farmers, Manufacturers
89
-
7/28/2019 Ashish Project Final Aa
90/139
Consumers - Jewelers, Textile Mills, etc
Market Timings
Bullion/ Metals Trading: 10.00am to 12.00pm
Agro Commodities: 10.00am to 5.00pm
MCX
MCX an independent and de-mutulised multi commodity exchange inaugurated in the year Novembe
2003, has permanent recognition from Government of India for facilitating online trading, clearing an
settlement operations for commodity futures markets across the country.
Key shareholders of MCX include Financial Technologies (I) Ltd., State Bank of India & associates,
Fidelity International, National Stock Exchange of India Ltd., National Bank for Agriculture and Rural
Development, HDFC Bank, SBI Life Insurance Co. Ltd., Union Bank of India, Canara Bank, Bank of
India, Bank of Baroda and Corporation Bank.
NCDEX
90
-
7/28/2019 Ashish Project Final Aa
91/139
NCDEX is a public limited company incorporated on April 23, 2003 NCDEX is a nation-leve
technology driven de-mutualized on-line commodity exchange with an independent Board o
Directors and professionals not having any vested interest in commodity markets
Key promoted of NCDEX includes ICICI Bank Limited (ICICI Bank), Life Insurance Corporatio
of India (LIC), National Bank for Agriculture and Rural Development (NABARD) and Nationa
Stock Exchange of India Limited (NSE). Punjab National Bank (PNB), CRISIL Limited (formerl
the Credit Rating Information Services of India Limited), Indian Farmers Fertilizer Cooperativ
Limited (IFFCO) and Canara Bank
Procedure for Trading in Commodities
Futures
A future is contracting to buy or sell an underlying asset at a specified future date, at a specified price.
These contracts are traded and settled on exchanges.
Future contracts can be on individual scrips or indices.
Products Offered
Online Trading
Diet Odin for customer
91
-
7/28/2019 Ashish Project Final Aa
92/139
Offline Trading
Branch/Franchise/RM places order using Dealer Odin
Clients can trade on both on MCX and NCDEX
Brokerage Structure
ONLINE OFFLINE
Registration fees Rs.500 Rs.500
Minimum Initial Margin Rs. 25000 Rs.25000
Trading Brokerage 0.05% 0.10%
Delivery Brokerage 0.25% 0.50%
Other Charges
Exchange Charges: Rs.4 per lac
92
-
7/28/2019 Ashish Project Final Aa
93/139
Stamp Duty:Rs.1 per lac
Service Tax: 10.2%
Reasons for trade in commodities
Driven by demand and supply
True reflector of economic activity
Impervious to intangibles like management quality or sentiments
Not impacted by statements
Physical settlement
Internationally driven market
Comparison of India Asset Market
93
-
7/28/2019 Ashish Project Final Aa
94/139
MUTUAL FUND
94
-
7/28/2019 Ashish Project Final Aa
95/139
History of Mutual Fund in India
Unit Trust of India (UTI) was the first mutual fund set up in India in the year 1963. In early 1990s
Government allowed public sector banks and institutions to set up mutual funds. UTI has an extensiv
marketing network of over 40,000 agents all over the country.
In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives o
SEBI are to protect the interest of investors in securities and to promote the development of and t
regulate the securities market.
In 1995, the RBI permitted private sector institutions to set up Money Market Mutual Fund
(MMMFs). They can invest in treasury bills, call and notice money, commercial paper, commercial bill
accepted/co-accepted by banks, certificates of deposit and dated government securities having unexpire
maturity up to one year.
As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds t
protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafte
mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulation
were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issue
guidelines to the mutual funds from time to time to protect the interests of investors.
All mutual funds whether promoted by public sector or private sector entities including thos
promoted by foreign entities are governed by the same set of Regulations. There is no distinction i
regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEB
The risks associated with the schemes launched by the mutual funds sponsored by these entities are o
similar type.
95
-
7/28/2019 Ashish Project Final Aa
96/139
MEANING
Mutual fund is Investment Company that pools money from shareholders and invests in a variety o
securities, such as stocks, bonds and money market instruments. Most open-end mutual funds stand read
to buy back (redeem) its shares at their current net asset value, which depends on the total market value o
the fund's investment portfolio at the time of redemption. Most open-end mutual funds continuously offe
new shares to investors. Also known as an open-end investment company, to differentiate it from a closed
end investment company. Mutual funds invest pooled cash of many investors to meet the fund's state
investment objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund
current net asset value: total fund assets divided by shares outstanding.
In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to th
investors and investing funds in securities in accordance with objectives as disclosed in offer document.
Investments in securities are spread across a wide cross-section of industries and sectors and thu
the risk is reduced. Diversification reduces the risk because all stocks may not move in the same directio
in the same proportion at the same time. Mutual fund issues units to the investors in accordance wit
quantum of money invested by them. Investors of mutual funds are known as unit holders. The profits o
losses are shared by the investors in proportion to their investments. The mutual funds normally come ou
with a number of schemes with different investment objectives which are launched from time to time. I
India, A mutual fund is required to be registered with Securities and Exchange Board of India (SEB
which regulates securities markets before it can collect funds from the public.
In Short, a mutual fundis a common pool of money in to which investors with common investmen
objective place their contributions that are to be invested in accordance with the stated investment objectiv
96
-
7/28/2019 Ashish Project Final Aa
97/139
of the scheme. The investment manager would invest the money collected from the investor in to asset
that are defined/ permitted by the stated objective of the scheme. For example, an equity fund would inves
equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc . Mutu
Fund is a suitable investment for the common man as it offers an opportunity to invest in a diversified
professionally managed basket of securities at a relatively low cost.
Many people may also want to consider mutual funds which have specific social agendas, i
addition to making a profit. A number of environmentally-friendly mutu