BENCHMARK INDICES IN INDIA.doc

8/10/2019 BENCHMARK INDICES IN INDIA.doc

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Chapter-1

LUDHIANASTOCK

EXCHANGE


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STOCK EXCHANGE

INTRODUCTION

STOCK EXCHANGE is a platform where buyers an sellers of se!urities issue

by Go"ernment# finan!ial institutions# an !orporate houses et!$ meet an where

the tra in% of these !orporate se!urities ta&es pla!e$ The se!urities# whi!h are

tra e in the sto!& e'!han%e# are shares# ebentures of publi! limite !ompanies#

port trusts# utility un erta&in%s# an su!h other authorities$ The se!urities !ontra!ts

(re%ulations) a!t# *+,- efines sto!& e'!han%e as. AN ASSOC/AT/ON#

O0GAN/SAT/ON O0 1O23 O4 /N2/5/26A7S# 8HETHE0 /NCO09O0ATE

O0 ASS/ST/NG# 0EG67AT/NG AN2 CONT0O77/NG 16S/NESS /N

163/NG# SE77/NG AN2 2EA7/NG /N SEC60/T/ES$

A sto!& e'!han%e is a platform for the tra e of alrea y issue se!urities throu%h

primary mar&et$ /t is the essential pillar of the pri"ate se!tor an !orporate

e!onomy$ /t is the open au!tion mar&et where buyers an sellers meet an in"ol"ea !ompetiti"e pri!e for the se!urities$

Sin!e buyin% an sellin% of ifferent types of se!urities ta&e pla!e in sto!&

e'!han%e# the pri!e of parti!ular se!urities refle!ts their eman an supply$ /n

fa!t# sto!& e'!han%e is sai to be barometer of e!onomi! an finan!ial health$ :ust

li&e rea in% on a barometer refle!t the atmospheri! pressure an !han%es# sto!& mar&et ;uotations of se!urities pri!es %i"e an i ea about the e!onomi! an

in ustrial !on itions$ /t measures of all the pull an pressure of se!urities in the

mar&et$ The tra e in mar&et is throu%h the authori


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/t refle!ts hopes# aspiration an fears of people re%ar in% the performan!e of the

e!onomy$ /t e'erts a powerful an si%nifi!ant influen!e as a epressant or stimulant

of business a!ti"ity$


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HISTORYOFSTOCK

EXCHANGE


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The tra in% of se!urities in /n ia was starte in early *+=>$ The only sto!&

e'!han%e operatin% in the *+th !entury were those of 1ombay set up in *?=, an

in Ahme aba # set up in *?+@$ These were or%ani


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FEATURES OF STOCK EXCHANGES

Sto!& e'!han%es ha"e been an asso!iation of in i"i ual members !alle

member bro&er$

Sto!& e'!han%es are forme for the e'press purpose of re%ulatin% an

fa!ilitatin% the buyin% an sellin% of se!urities by an institution at lar%e$

Sto!& e'!han%e operate with ue re!o%nition from the %o"t$ un er se!urities

an !ontra!t re%ulation a!t *+,-$

The member bro&ers are mi lemen who transa!t on behalf of publi! for

!ommission$

1oar of ire!tor s limit %i"en by SE1/$

SE1/ has been set to o"ersee the or erly e"elopment of sto!& e'!han%e$

Sto!& e'!han%e lists the !ompanies who wish to raise the fun s of !apital

from publi!$

Sto!& e'!han%e fa!ilitates tra in% in se!urities of the publi! se!tor

!ompanies as well as %o"t$ se!urities$

The re!o%nition a!!or e to a sto!& e'!han%e is "ali for perio +f fi"e

years subBe!t to satisfa!tory performan!e of sto!& e'!han%e urin% this

perio $

There are mainly three parti!ipants in sto!& e'!han%e i$e$

/ssuer of se!urity (!ompany)$

/n"estor of se!urity (/n i"i ual# H64)$

/nterme iaries an pro u!ts (bro&er# mer!hant ban&ers an shares# bon s#

warrants# eri"ati"es pro u!ts et!$)$


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FUNCTIONS OF STOCK EXCHANGE

Sto!& E'!han%e performs the followin% fun!tions. The sto!& e'!han%e pro"i es appropriate !on itions where by pur!hase an

sale of se!urities ta&es pla!e at reasonable an fair pri!es$

9eople ha"in% surplus fun s in"est in the se!urities an these fun s use for

in ustriali


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LSE SECURITIESLIMITED


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LSE SECURITIES LIMITED

PROFILE

OBJECTIVES OF THE COMPANY

7SE Se!urities 7imite is a subsi iary of the 7u hiana Sto!& E'!han%e#

whi!h was forme with an obBe!ti"e to enhan!e business an in"estment

opportunities for the in"estors an members of 7u hiana Sto!& E'!han%e at lar%e#

throu%h inno"ati"e pro u!ts by en!ompassin% a "ariety of a!ti"ities relate to the

!apital mar&et$ The Company has a pai up !apital of 0s$,$,, !rores$

INTRODUCTION OF THE LSE SECURITIES LTD.

7SE Se!urities 7t $# was in!orporate in :anuary# DDD with a "iew to re"i"e

the !apital mar&et in the re%ion an for ta&in% full a "anta%e of the emer%in%

opportunities bein% pro"i e by e'pansion of bi%%er sto!& e'!han%es li&e NSE an

SSE$ The !ompany sin!e its in!eption has mar!he forwar rapi ly an a!hie"e

many milestones in a short span of its e'isten!e$


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DETAILS OF DIRECTORS OF LSE SECURITIES LIMITED

Sr.No.Name Des !"a# o" Da#e o$ A%%o "#me"#*$ r$ 5ishal Goomber Chairman @$D+$ D**

$ r$ Krishan Kant 9uri 5i!e Chairman *,$D+$ D*

>$ r$ 7alit Kishore ember 2ire!tor @$D+$ D**

@$ r$ Su&hBiwan 0ai ember 2ire!tor @$D+$ D**

,$ r$ Naresh Sareen ember 2ire!tor *,$D+$ D*

-$ r$ ABay Chau hary9ubli! 0epresentati"e

2ire!tor@$D+$ D**

=$ r$ Ashish A%%arwal9ubli! 0epresentati"e

2ire!tor@$D+$ D**

?$ r$ 1ir 9al Sin%h9ubli! 0epresentati"e

2ire!tor*@$D $ DD+

+$ 2r$ 0a&esh K$ Gupta

9ubli! 0epresentati"e

2ire!tor @$D+$ D**

*D$ r$ 5inesh Kumar 9ubli! 0epresentati"e

2ire!tor@$D+$ D**

**$ rs$ 9ooBa $ Kohli 7SE 0epresentati"e 2ire!tor*@$D $ DD+


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Chapter-2

OBJECTI ES


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OBJECTIVES

To %et a basi! un erstan in% of the pro u!ts# players an fun!tionin% of

finan!ial mar&ets# parti!ularly the !apital mar&et$ To un erstan the "arious pro u!ts# parti!ipants an the fun!tions of the

se!urities mar&et$

To &now the re%ulatory framewor& for the /n ian se!urities mar&et$

To un erstan the !on!ept of mutual fun s$

To &now about the roles of ifferent players "i


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To ha"e a pra!ti!al orientation towar s the prin!iples of in"estment# pri!in%

an "aluation$

To learn the "arious metho olo%ies of finan!ial analysis$


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Chapter-!

CA"ITAL

M A

R K E T


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DEFINATION OF CAPITAL MARKET

The mar&et where in"estment instruments li&e bon s# e;uities an

mort%a%es are tra e is &nown as the !apital mar&et$ The primal role of this mar&et is to ma&e in"estment from in"estors who

ha"e surplus fun s to the ones who are runnin% a efi!it

INTRODUCTION TO CAPITAL MARKET

ar&ets e'ist to fa!ilitate the pur!hase an sale of %oo s an ser"i!es$ The

finan!ial mar&et e'ists to fa!ilitate sale an pur!hase of finan!ial instruments an

!omprises of two maBor mar&ets# namely the !apital mar&et an the money mar&et$

The istin!tion between !apital mar&et an money mar&et is that !apital mar&et

mainly eals in me ium an lon% term in"estments (maturity more than a year)

while the money mar&et eals in short term in"estments (maturity upto a year)$

The !apital mar&et is the mar&et for se!urities# where Companies an %o"ernments

!an raise lon%Ate r m fun s$ /t is a mar&et in% whi!h money is lent for perio s lon%er

than a year$ A nation s !apital m ar & et in!lu es su!h finan!ial institutions as ban&s#

insuran!e !ompanies# an s to !& e'!han%es that !hannel lon%Ate r m in"estment

fun s to !ommer!ial an in ustrial borrowers$ 6nli&e the money mar&et# on whi!h

len in% is or ina r ily short term# the !apital mar&et typi!ally finan!es fi'e

in"estments li&e tho se in buil in%s an m a! hine r y$


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A&'a"#a!es o$ (o"& mar)e#

/t is !onsi ere a wise mo"e to in"est in bon s as part of a !onsi erei"ersifie in"estment portfolio that also !onsists of sto!&s an !ash$

They are !onsi ere to be a relati"ely safe in"estment for in!reasin%

!apital an re!ei"in% a reliable interest in!ome$ The prin!ipal an

interest are set at the time the bon is pur!hase $ /f the owner !olle!ts

the !oupon an hol s it to maturity# the mar&et is irrele"ant to final

payout$ As a lon% term in"estment# bon s may be !onsi ere a wise

!hoi!eIbearin% in min the isa "anta%es$

D sa&'a"#a!es o$ (o"& mar)e#

1on s are not a "isable for short term sa"in%s for the in i"i ual

parti!ipant in the mar&et$

7on% term !ommitment is essential as the parti!ipant who !ashes in

before maturity is open to the ris& of flu!tuations in interest rates $

8hene"er there is an in!rease in interest rates # there is a !orrespon in%

e!rease in the "alue of e'istin% bon s$ Con"ersely# a e!rease in

CAPITALMARK

DEBT

0R

BOND MARKET

STOCK

MARKET
http://www.qfinance.com/dictionary/investment-portfoliohttp://www.qfinance.com/dictionary/safe-investmenthttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/safe-investmenthttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/investment-portfolio


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interest rates will !orrespon to a rise in the "alue of e'istin% bon s$

This is ue to the fa!t that new issues pay out a lower yiel $ The basi!

!on!ept of bon mar&et "olatility is that the "alue of bon s an !han%es

in interest rates run in"ersely to ea!h other$

8hen interest rates rop# in"estors ha"e to rein"est their interest

in!ome an return of prin!ipal at lower rates$

The final pur!hasin% power of an in"estment in bon s is re u!e by a

!orrespon in% in!rease in inflation# whi!h also results in hi%her interest

rates an !orrespon in%ly lower bon pri!es$

/f there is a e!line in the bon mar&et as a whole# in i"i ual se!urities

also fall in "alue$

Timin% is !ru!ial. a se!urity may in the future une'pe!te ly

un erperform relati"e to the mar&et$

A bon may perform poorly after pur!hase# or it may impro"e after you

sell it$

Corporate bon s ha"e relati"ely low li;ui ity !ompare with

%o"ernment bon s # whi!h usually ha"e a short lo!& in perio (i$e$ they

!an be !ashe in ;ui!&ly)$

T*e ma+or re$orms " #*e (o"& mar)e# " I"& a

The system of au!tion intro u!e to sell the %o"ernment se!urities$
http://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/new-issuehttp://www.qfinance.com/dictionary/bond-markethttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/purchasing-powerhttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/bond-markethttp://www.qfinance.com/dictionary/corporate-bondhttp://www.qfinance.com/dictionary/government-bondhttp://www.qfinance.com/dictionary/cash-inhttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/new-issuehttp://www.qfinance.com/dictionary/bond-markethttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/purchasing-powerhttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/interest-ratehttp://www.qfinance.com/dictionary/bond-markethttp://www.qfinance.com/dictionary/corporate-bondhttp://www.qfinance.com/dictionary/government-bondhttp://www.qfinance.com/dictionary/cash-in


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The intro u!tion of eli"ery "ersus payment (2"9) system by the

0eser"e 1an& of /n ia to nullify the ris& of settlement in se!urities

an assure the smooth fun!tionin% of the se!urities eli"ery an

payment$

The !omputeri


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CAPITAL MARKET

The !apital mar&et is the mar&et for se!urities# where Companies an %o"ernments

!an raise lon% term fun s$ /t is a mar&et in whi!h money is lent for perio s lon%er

than a year$ A nation s !apital mar&et in!lu es su!h finan!ial institutions as ban&s#

insuran!e !ompanies# an sto!& e'!han%es that !hannel lon% term in"estment

fun s to !ommer!ial an in ustrial borrowers$ 6nli&e the money mar&et# on whi!h

len in% is or inarily short term# the !apital mar&et typi!ally finan!es fi'e

in"estments li&e those in buil in%s an ma!hinery$

Na#,re a"& Co"s# #,e"#s-

The !apital mar&et !onsists of number of in i"i uals an institutions (in!lu in% the

%o"ernment) that !hannali


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The eman for !apital !omes mostly from a%ri!ulture# in ustry# tra e the

%o"ernment$ The pre ominant form of in ustrial or%ani


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FACTORS AFFECTING CAPITAL MARKET ININDIA

The !apital mar&et is affe!te by a ran%e of fa!tors $ Some of the fa!tors whi!h

influen!e !apital mar&et are as follows.

a Per$orma"/e o$ &omes# / /om%a" es-0

The performan!e of the !ompanies or rather !orporate earnin%s is one of the

fa!tors whi!h has ire!t impa!t or effe!t on !apital mar&et in a !ountry$ 8ea&

!orporate earnin%s in i!ate that the eman for %oo s an ser"i!es in the e!onomyis less ue to slow %rowth in per !apita in!ome of people$ 1e!ause of slow %rowth

in eman there is slow %rowth in employment whi!h means slow %rowth in

eman in the near future$ Thus wea& !orporate earnin%s in i!ate a"era%e or not so

%oo prospe!ts for the e!onomy as a whole in the near term$ /n su!h a s!enario the

in"estors ( both omesti! as well as forei%n ) woul be wary to in"est in the

!apital mar&et an thus there is bear mar&et li&e situation$ The opposite !ase of it

woul be robust !orporate earnin%s an it s positi"e impa!t on the !apital mar&et$

The !orporate earnin%s for the April J :une ;uarter for the !urrent fis!al has

been %oo $ The !ompanies li&e TCS# /nfosys# aruti Su


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positi"ely refle!te in the sto!& mar&et( rise in sense' F nifty) in the last two

wee&s$

( E"' ro"me"#a1 Fa/#ors -0

En"ironmental 4a!tor in /n ia s !onte't primarily means onsoon $ /n /n ia

aroun -D L of a%ri!ultural pro u!tion is epen ent on monsoon$ Thus there is

hea"y epen en!e on monsoon$ The maBor !hun& of a%ri!ultural pro u!tion !omes

from the states of 9unBab # Haryana F 6ttar 9ra esh$ Thus efi!ient or elaye

monsoon in this part of the !ountry woul ire!tly affe!t the a%ri!ultural output in

the !ountry$ Apart from monsoon other natural !alamities li&e 4loo s# tsunami#

rou%ht# earth;ua&e# et!$ also ha"e an impa!t on the !apital mar&et of a !ountry$

The /n ian et 2epartment (/ 2) state that /n ia woul re!ei"e only +> L

rainfall of 7on% 9erio A"era%e (79A)$ This pie!e of news ire!tly ha an impa!t

on /n ian !apital mar&et with 1SE Sense' fallin% by D$, L$ The maBor losers were

automa&ers an !onsumer %oo s firms sin!e the below normal monsoon fore!ast

tri%%ere !on!erns that eman in the !ru!ial rural heartlan woul ta&e a hit$This is be!ause a efi!ient monsoon !oul seriously s;uee


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power# !ement an finishe steel) whi!h !omes out e"ery month# et!$ This ma!ro J

e!onomi! in i!ators in i!ate the state of the e!onomy an the ire!tion in whi!h

the e!onomy is hea e an therefore impa!ts the !apital mar&et in /n ia$

A !ase in the point was e!laration of !ore in ustries %rowth fi%ure$ The si' Core

/nfrastru!ture /n ustries J Coal# Cru e oil# refinin%# finishe steel# power F !ement

J%rew -$,L in :une # the fi%ure !ame on the > r of :uly an ha a positi"e

impa!t on the !apital mar&et with the sense' an nifty risin% by >?? points F

* , points respe!ti"ely$

& G1o(a1 C,es -0

/n this worl of %lobalisation "arious e!onomies are inter epen ent an

inter!onne!te $ An e"ent in one part of the worl is boun to affe!t other parts of

the worl # howe"er the ma%nitu e an intensity of impa!t woul "ary$

Thus !apital mar&et in /n ia is also affe!te by e"elopments in other parts of the

worl i$e$ 6$S$# Europe# :apan # et!$

Global !ues in!lu es !orporate earnin%s of NC s# !onsumer !onfi en!e in e' in

e"elope !ountries# Bobless !laims in e"elope !ountries# %lobal %rowth outloo&

%i"en by "arious a%en!ies li&e / 4# e!onomi! %rowth of maBor e!onomies# pri!e of

!ru e Joil# !re it ratin% of "arious e!onomies %i"en by oo y s# S F 9# et!$

An ob"ious e'ample at this point in time woul be that of subprime !risis F

re!ession $ 0e!ession starte in 6$S$ an some parts of the Europe in early

DD? $Sin!e then it has impa!te all the !ountries of the worl e"elope #

e"elopin% # less e"elope an e"en emer%in% e!onomies$


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e Po1 # /a1 s#a( 1 #2 a"& !o'er"me"# %o1 / es-0

4or any e!onomy to a!hie"e an sustain %rowth it has to ha"e politi!al stability

an pro %rowth %o"ernment poli!ies$ This is be!ause when there is politi!al

stability there is stability an !onsisten!y in %o"ernment s attitu e whi!h is

!ommuni!ate throu%h "arious %o"ernment poli!ies$ The "i!e "ersa is the !ase

when there is no politi!al stability $So !apital mar&et also rea!ts to the nature of

%o"ernment # attitu e of %o"ernment# an "arious poli!ies of the %o"ernment$

The abo"e statement !an be substantiate by the fa!t the when the man ate !ame

in 69A %o"ernment s fa"our ( 8ithout the ba%%a%e of left party) on ay *- DD+#

the sto!& mar&ets on on ay # *? th ay ha a bullish rally with sense' !losin%

?DD point hi%her o"er the pre"ious ay s !lose$ The reason was politi!al stability$

Also without the ba%%a%e of left party %o"ernment !an %o ahea with reforms$

$ Gro3#* %ros%e/#,s o$ a" e/o"om2-0

8hen the national in!ome of the !ountry in!reases an per !apita in!ome of

people in!reases it is sai that the e!onomy is %rowin% $ Hi%her in!ome also means

hi%her e'pen iture an hi%her sa"in%s$This au%urs well for the e!onomy as hi%her

e'pen iture means hi%her eman an hi%her sa"in%s means hi%her in"estment$

Thus when an e!onomy is %rowin% at a %oo pa!e !apital mar&et of the !ountry

attra!ts more money from in"estors# both from within an outsi e the !ountry an

"i!e "ersa$ So we !an say that %rowth prospe!ts of an e!onomy oes ha"e an

impa!t on !apital mar&ets$

! I"'es#or Se"# me"# a"& r s) a%%e# #e -0


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Another fa!tor whi!h influen!es !apital mar&et is in"estor sentiment an their ris&

appetite$ E"en if the in"estors ha"e the money to in"est but if they are not

!onfi ent about the returns from their in"estment # they may stay away from

in"estment for some time$ At the same time if the in"estors ha"e low ris& appetite # whi!h they were ha"in% in %lobal an /n ian !apital mar&et some four

to fi"e months ba!& ue to %lobal finan!ial melt own an re!essionary situation in

6$S$ F some parts of Europe # they may stay away from in"estment an wait for

the ri%ht time to !ome$

I"& a" Ca% #a1 Mar)e#


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4*2 Ca% #a1 Mar)e#s E5 s#

M Capital mar&ets fa!ilitate the transfer of !apital ( i.e. finan!ial) assets from one

owner to another$

M They pro"i e li;ui ity$

J 7i;ui ity refers to how easily an asset !an be transferre without loss of

"alue$

M A si e benefit of !apital mar&ets is that the transa!tion pri!e pro"i es a measure of

the "alue of the asset$

Ro1e o$ Ca% #a1 Mar)e#s

M obili


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M 0ea y F Continuous ar&ets

M 9roper Channelisation of 4un s

M 9ro"ision of a "ariety of Ser"i!es

F,"/# o"s o$ a /a% #a1 mar)e#

M 2isseminate information effi!iently

M Enable ;ui!& "aluation of finan!ial instruments Jboth e;uity an ebt

M 9ro"i e insuran!e a%ainst mar&et ris& or pri!e ris&

M Enable wi er parti!ipation

M 9ro"i e operational effi!ien!y throu%h

simplifie transa!tion pro!e ure

lowerin% settlement timin%s an

lowerin% transa!tion !osts

M 2e"elop inte%ration amon%

real se!tor an finan!ial se!tor

e;uity an ebt instrumentslon% term an short term fun s

9ri"ate se!tor an %o"ernment se!tor an

2omesti! fun s an e'ternal fun s

M 2ire!t the flow of fun s into effi!ient !hannels throu%h

in"estment

isin"estment

rein"estment


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Fa/#ors /o"#r (,# "! #o !ro3#* o$ I"& a" Ca% #a1 Mar)e#

M Establishment of 2e"elopment ban&s F /n ustrial finan!ial institution$

M 7e%islati"e measures

M Growin% publi! !onfi en!eM /n!reasin% awareness of in"estment opportunities

M Growth of un erwritin% business

M Settin% up of SE1/

M utual 4un s

M Cre it 0atin% A%en!ies

I"& a" Ca% #a1 Mar)e# 0 H s#or /a1 %ers%e/# 'e

M Sto!& ar&et was for a pri"ile%e few

M Ar!hai! systems Out !ry metho

M 7a!& of Transparen!y Hi%h tones !osts

M No use of Te!hnolo%y

M Out ate ban&in% system

M 5olumes less than 0s$ >DD !r per ayM No settlement %uarantee me!hanism Hi%h ris&s

I"& a" Ca% #a1 mar)e#s 6 C*ro"o1o!2

M *++@ E;uity Tra in% !ommen!es on NSE

M *++, All Tra in% %oes Ele!troni!

M *++- 2epository !omes in to e'isten!e

M *+++ 4//s 9arti!ipation Globalisation

M DDD o"er ?DL tra es in 2emat form

M DD* aBor Sto!&s mo"e to 0ollin% Sett

M DD> T settlements in all sto!&s


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M DD> 2emutualisation of E'!han%es

Ca% #a1 Mar)e#s 6 Re$orms

M Ea!h s!am has brou%ht in reforms *++ DD*M S!reen base Tra in% throu%h NSE

M Capital a e;ua!y norms stipulate

M 2emateriali


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Chapter-#INITIAL "UBLIC OFFER

AND FOLLO$ ON"UBLIC OFFER

"ROCESS


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INITIAL PUBLIC OFFERING

An " # a1 %,(1 / o$$er "! (IPO ) or s#o/) mar)e# 1a,"/* is a type of publi!

offerin% where shares of sto!& in a !ompany are sol to the %eneral publi!# on

a se!urities e'!han%e # for the first time$ Throu%h this pro!ess# a pri"ate

!ompany transforms into a publi! !ompany $ /nitial publi! offerin%s are use by

!ompanies to raise e'pansion !apital# to possibly moneti# o!uments un er seal in an on%oin% lawsuit were obtaine by New York

Times 8all Street 1usiness !olumnist :oe No!era $ The o!uments relate to the

/9O of eToys$!om # urin% the ot !om bubble# an alle%e that &i!&ba!&s were
http://en.wikipedia.org/wiki/Public_offeringhttp://en.wikipedia.org/wiki/Public_offeringhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Securities_exchangehttp://en.wikipedia.org/wiki/Private_companyhttp://en.wikipedia.org/wiki/Private_companyhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Monetizehttp://en.wikipedia.org/wiki/Prospectus_(finance)http://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Securities_underwritinghttp://en.wikipedia.org/wiki/Dutch_auctionhttp://en.wikipedia.org/wiki/Googlehttp://en.wikipedia.org/wiki/Under_sealhttp://en.wikipedia.org/wiki/Joe_Nocerahttp://en.wikipedia.org/wiki/EToys.comhttp://en.wikipedia.org/wiki/Kickback_(bribery)http://en.wikipedia.org/wiki/Public_offeringhttp://en.wikipedia.org/wiki/Public_offeringhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Securities_exchangehttp://en.wikipedia.org/wiki/Private_companyhttp://en.wikipedia.org/wiki/Private_companyhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Monetizehttp://en.wikipedia.org/wiki/Prospectus_(finance)http://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Securities_underwritinghttp://en.wikipedia.org/wiki/Dutch_auctionhttp://en.wikipedia.org/wiki/Googlehttp://en.wikipedia.org/wiki/Under_sealhttp://en.wikipedia.org/wiki/Joe_Nocerahttp://en.wikipedia.org/wiki/EToys.comhttp://en.wikipedia.org/wiki/Kickback_(bribery)


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eman e from institutional in"estors who ma e lar%e profits flippin% eliberately

un er"alue /9Os un erwritten by in"estment ban&er Gol man Sa!hs $ Reuters 8all

Street !orrespon ent 4eli' Salmon su%%este that both the !ompany %oin% publi!

an their initial sharehol ers woul be efrau e by su!h a pra!ti!e$ The lawsuit ison%oin%# an the alle%ations remain unpro"en$
http://en.wikipedia.org/wiki/Flippinghttp://en.wikipedia.org/wiki/Investment_bankerhttp://en.wikipedia.org/wiki/Goldman_Sachshttp://en.wikipedia.org/wiki/Felix_Salmonhttp://en.wikipedia.org/wiki/Flippinghttp://en.wikipedia.org/wiki/Investment_bankerhttp://en.wikipedia.org/wiki/Goldman_Sachshttp://en.wikipedia.org/wiki/Felix_Salmon


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REASONS FOR LISTING

8hen a !ompany lists its se!urities on a public exchange # the money pai by the

in"estin% publi! for the newly issue shares %oes ire!tly to the !ompany

(primary offerin%) as well as to any early pri"ate in"estors who opt to sell all

or a portion of their hol in%s (se!on ary offerin%) as part of the lar%er /9O$

An /9O# therefore# allows a !ompany to tap into a wi e pool of potential

in"estors to pro"i e itself with !apital for future %rowth# repayment of ebt#

or wor&in% !apital$ A !ompany sellin% !ommon shares is ne"er re;uire to

repay the !apital to its publi! in"estors$ Those in"estors must en ure the

unpre i!table nature of the open mar&et to pri!e an tra e their shares$ After

the /9O# when shares tra e freely in the open mar&et# money passes between

publi! in"estors$ 4or early pri"ate in"estors who !hoose to sell shares as part

of the /9O pro!ess# the /9O represents an opportunity to monetize their

in"estment$ After the /9O# on!e shares tra e in the open mar&et# in"estors

hol in% lar%e blo!&s of shares !an either sell those shares pie!emeal in the

open mar&et# or sell a lar%e blo!& of shares ire!tly to the publi!# at a fi'e pri!e# throu%h a secondary market offering $ This type of offerin% is not

iluti"e# sin!e no new shares are bein% !reate $

On!e a !ompany is liste # it is able to issue a itional !ommon shares in a number

of ifferent ways# one of whi!h is the follow on offerin% $ This metho pro"i es

!apital for "arious !orporate purposes throu%h the issuan!e of e;uity (see sto!&

ilution ) without in!urrin% any ebt$ This ability to ;ui!&ly raise potentially lar%eamounts of !apital from the mar&etpla!e is a &ey reason many !ompanies see& to

%o publi!$

An /9O a!!or s se"eral benefits to the pre"iously pri"ate !ompany.
http://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Monetizehttp://en.wikipedia.org/wiki/Secondary_market_offeringhttp://en.wikipedia.org/wiki/Follow-on_offeringhttp://en.wikipedia.org/wiki/Stock_dilutionhttp://en.wikipedia.org/wiki/Stock_dilutionhttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Monetizehttp://en.wikipedia.org/wiki/Secondary_market_offeringhttp://en.wikipedia.org/wiki/Follow-on_offeringhttp://en.wikipedia.org/wiki/Stock_dilutionhttp://en.wikipedia.org/wiki/Stock_dilution


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Chapter-%

BENCHMARK INDICES OF INDIA


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I"& /es- SENSEX : NIFTY

Sto!& ar&et performan!e is ;uantifie by !al!ulatin% an in e' usin% the ben!hmar& s!rip s an as &nown to all SENSEX (Sensiti"e /n e') is asso!iate

with 1ombay Sto!& E'!han%e an SF9 CNX N/4T3 is asso!iate with NationalSto!& E'!han%e

NSE- Na# o"a1 S#o/) E5/*a"!e

The National Sto!& E'!han%e (NSE)# lo!ate in 1ombay# is /n ia s first ebtmar&et$ /t was set up in *++> to en!oura%e sto!& e'!han%e reform throu%h systemmo erni


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Ser"i!es of /n ia 7t )$ //S7 is /n ia s first spe!iali


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C,rre"/2 o$ Ca1/,1a# o"

4or the SF9 CNX Nifty# all pri!es are in /n ian rupees$

Base Da#e

The base perio for the SF9 CNX Nifty in e' is No"ember ># *++,# whi!h

mar&e the !ompletion of one year of operations of NSE s Capital ar&et

Se%ment$ The base "alue of the in e' has been set at *DDD# an a base

!apital of 0s $D- trillion$

Par#"ers* %

The SF9 CNX Nifty is owne an mana%e by /n ia /n e' Ser"i!es an

9ro u!ts 7t $ (//S7)# whi!h is a Boint "enture between the NSE an C0/S/7$

//S7 is /n ia s first spe!iali


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D 'ers $ /a# o".

The SF9 CNX Nifty is a i"ersifie in e'# a!!urately refle!tin% the o"erall

mar&et$ The rewar to ris& ratio of SF9 CNX Nifty is hi%her than other

lea in% in i!es# offerin% similar returns but at lesser ris&$

L ;, & #2.

ar&et impa!t !ost is the best measure of the li;ui ity of a sto!&$ /t

a!!urately refle!ts the !osts fa!e when a!tually tra in% an in e'$ 4or a

sto!& to ;ualify for in!lusion in the SF9 CNX Nifty# it has to reliably ha"e

mar&et impa!t !ost below D$,D L# when oin% SF9 CNX Nifty tra es of

0upees (0s) D million$ The !urrent impa!t !ost of the SF9 CNX Nifty for a portfolio siL$

He&! "! E$$e/# 'e"ess

The basi! ris& of the SF9 CNX Nifty futures is lower than other in e'

portfolios# ue to the li;ui ity of the SF9 CNX Nifty !onstituent sto!&s an

of the NSE$ /n a ition# the SF9 CNX Nifty has hi%her !orrelations with

typi!al in"estment portfolios in /n ia# !ompare to other in i!es$ These twofa!tors allow for effe!ti"e he %in% of the /n e'$

I"&e5 Fam 12

S:P CNX De$#2.

The SF9 CNX 2efty is a 6$S$ ollar enominate in e' base on the SF9

CNX Nifty$ This in e' was e"elope to pro"i e a ben!hmar& of /n ian

sto!&s to international in"estors# pro"i in% them with an instrument for measurin% returns on their e;uity in"estment in ollar terms$ This ensures

that the ris& arisin% out of !urren!y flu!tuation is !o"ere throu%h the SF9

CNX 2efty$


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How are the SENSEX >D F N/4T3 ,D Sto!&s are sele!te

7istin% History Tra in% 4re;uen!y 0an& base on the ar&et Cap (Shoul be Amon% top *DD) ar&et Capitali


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SENSEX : " $#2 Ca1/,1a# o" Me#*o&o1o!2

SENSEX is !al!ulate usin% the 4ree float ar&et CapitaliD !omponent sto!&s relati"e to a base perio $ The mar&et !apitali


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The base perio of SENSEX is *+=? =+ an the base "alue is *DD in e'

points$ ( notation *+=? =+P*DD)$ The !al!ulation of SENSEX in"ol"es i"i in% the free float mar&et

!apitaliD !ompanies in the /n e' by a number !alle the /n e'2i"isor$

The 2i"isor is the only lin& to the ori%inal base perio "alue of the

SENSEX$ /t &eeps the /n e' !omparable o"er time an is the a Bustment

point for all /n e' a Bustments arisin% out of !orporate a!tions# repla!ement

of s!rip s et!$ 2urin% mar&et hours# pri!es of the in e' s!rip s# at whi!h latest tra es are

e'e!ute # are use by the tra in% system to !al!ulate SENSEX e"ery *,

se!on s$ The "alue of SENSEX is isseminate in real time$

Ca1/,1a# o"s o$ #*e S:P CNX De$#2

The 6$S$ ollar 0upee e'!han%e rate is base on a real time polle

in i!ati"e ata fee # whi!h !ontains bi as& rates at a point in time$ The

polle ata is sour!e from Thomson 0euters$ The ata is polle from

mar&et parti!ipants# in!lu in% lea in% nationali


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E'!han%e of /n ia 7t $ (NSE) an applie to the !losin% "alue of the SF9

CNX Nifty$

I"&e5 C1os,re A1!or #*m

The !losin% SENSEX F N/4T3 on any tra in% ay is !ompute ta&in% the

wei%hte a"era%e of all the tra es on SENSEX F N/4T3 !onstituents in the

last >D minutes of tra in% session$ /f a SENSEX F N/4T3 !onstituent has not tra e in the last >D minutes# the

last tra e pri!e is ta&en for !omputation of the /n e' !losure$ /f a SENSEX F N/4T3 !onstituent has not tra e at all in a ay# then its last

ay s !losin% pri!e is ta&en for !omputation of /n e' !losure$ The use of /n e' Closure Al%orithm pre"ents any intentional manipulation

of the !losin% in e' "alue$

NIFTY

The National Sto!& E'!han%e (NSE) is asso!iate with N/4T3 an it is also!al!ulate by the same metho olo%y but with two &ey ifferen!es$

*$ 1ase year is *++, an base "alue is *DDD$

$ N/4T3 is !al!ulate base on ,D sto!&s$

E"erythin% else remains the same in N/4T3 /n e' !al!ulation as well$

1enefits of Sto!& E'!han%es to Community

*$ /t assist the e!onomies e"elopment by pro"i in% a bo y of interestein"estors$

$ /t uploa s the position of superior enterprises an assist them in raisin%further fun s$


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>$ /t en!oura%es !apital formation

@$ Go"ernment !an un erta&e proBe!ts of national importan!e an so!ial "alueraisin% fun s throu%h the sale of its se!urities on the sto!& e'!han%e$

,$ /t is the sto!& e'!han%es that !entral ban& of a !ountry !an !ontrol !re it byun erta&in% open mar&et operations (pur!hase an sale of se!urities)

Be"e$ #s #o I"'es#or

*$ 7i;ui ity of the in"estment is in!rease

$ The se!urities ealt on a sto!& e'!han%e are %oo !ollateral se!urity for loans$

>$ The sto!& e'!han%e safe%uar s interests of in"estors throu%h stri!tenfor!ement of rules an re%ulations$

@$ The present net worth of in"estments !an be easily &nown by the aily;uotations$

,$ The ris& is !onsi erably less when in"estor hol s or pur!hases liste

se!urities$

Be"e$ #s #o #*e /om%a"2

*$ A !ompany whose shares ;uote on sto!& e'!han%e they enBoy better

reputation an !re it$

$ The mar&et for the shares of su!h a !ompany is naturally wi ene $

>$ The mar&et pri!e of se!urities is li&ely to be hi%her in relation to itsearnin%s# i"i en s an property "alues$ This raises the bar%ainin% power of the !ompany in the e"ent of a ta&eo"er# mer%er or amal%amation$


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A&+,s#me"#s $or Bo",s< R !*#s a"& Ne312 Iss,e& Ca% #a1

N/4T3 !al!ulation nee s to be a Buste for issue of 1onus or 0i%hts shares#

/f no a Bustments are ma e# a is!ontinuity woul arise between the !urrent

"alue of the in e' an its pre"ious "alue espite the non o!!urren!e of any

e!onomi! a!ti"ity of substan!e At the NSE /n e' Cell # the base "alue is a Buste # whi!h is use to alter

mar&et !apitali


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CHA"TER-%FINDINGS


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FINDINGS

/t has foun that ma'imum people are tra in% in share mar&et$ /n"estors li&e to in"est money in share mar&e to obtain %oo returns$ ost of them are ris& a "ersi"e in their approa!h$ They li&e to in"est most of their money in mutual fun s$


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LIMITATIONSSin!ere efforts ha"e been ma e to !olle!t authenti! an reliable information

from respon ents# howe"er the report is subBe!t to followin% limit$

*$ S!ope of my stu y was limite to 7u hiana !ity only$ So the results may

at be appre!iable in other areas$$ Often the first an most si%nifi!ant barrier to entry is simply the !ost of

%oin% publi!# whi!h !an ran%e upwar s from a ;uarter of a million

ollars to o"er a million ollars an hi%her$>$ 9ubli! !ompanies# with the re;uirement to pro"i e etails of the intimate

finan!ial pi!ture of the !ompany itself# are also more "ulnerable toa!;uisition by other !ompanies$

@$ The problem relate to %atherin% ata arise$,$ The members of sto!& e'!han%e are not helpin% us properly$


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Chapter-%

CONCLUSION


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CONCLUSION

/n"estment Trusts play a "ital role in helpin% well mana%e businesses to se!ure

finan!e$ At the same time they pro"i e attra!ti"e opportunities to many in"estors

from youn% a ults sa"in% for their future# to parents sa"in% for their !hil s

e u!ation or to pro"i e an in!ome for those alrea y in retirement$ They also

pro"i e a ser"i!e to lar%e finan!ial institutions that are responsible for pro"i in%

in!ome an %rowth for pension fun s an other in"estments$

The fun mana%er plays a "ital role in eli"erin% returns to sharehol ers$ 4un

ana%ers !onstantly &eep their sharehol ers in min # &nowin% that their own

performan!e is Bu %e aily by the "alue of the /n"estment Trust# whi!h is reporte

on in the finan!ial press an throu%h other me ia$ 4un mana%ers nee to ha"e a

&een un erstan in% of all that is happenin% in the worl that affe!ts the e!onomy#

in!lu in% politi!al# so!ial an te!hnolo%i!al !han%es$

/n a ition# the /n"estment Trust must pro u!e a formal annual report to

sharehol ers on!e a year# hol an annual %eneral meetin% for sharehol ers to

e'press their "iews on!e a year# as well as re%ularly !ommuni!ate with

sharehol ers e% newsletters or up ate reports on the !ompany s web site$


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BIBLIOGRA"HY

www$money!ontrol$!om

www$onlinesear!honline$!om

www$lse$!o$in

www$bsein ia$!om

www$nsein ia$!om

www$! slin ia$!om

www$ns l$!o$in
http://www.moneycontrol.com/http://www.onlinesearchonline.com/http://www.lse.co.in/http://www.bseindia.com/http://www.nseindia.com/http://www.cdslindia.com/http://www.nsdl.co.in/http://www.moneycontrol.com/http://www.onlinesearchonline.com/http://www.lse.co.in/http://www.bseindia.com/http://www.nseindia.com/http://www.cdslindia.com/http://www.nsdl.co.in/


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SUMMER TRAINING REPORT

ON

BENCHMARK INDICES OF INDIA

Submitte in partial fulfillment of the re;uirements

for the e%ree of BACHELOR OF COMMERCE

=Sess o"- 89>?0>@

PUNJAB TECHNICAL UNIVERSITY< JALANDHAR

S,(m ##e& #o- S,(m ##e& (2-

rs$ 9ooBa Kohli Aman eep1$Com ( n year)0oll No$*+

DESH BHAGAT FOUNDATION GROUP OFINSTITUTION

MOGA


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ACKNO4LEDGEMENT

3ou !annot is!o"er new o!eans unless you ha"e the !oura%e to lose si%ht of the

share

The worl of !apital mar&et was far from us# but we %ot an opportunity to emission

the !apital mar&et at 7u hiana sto!& e'!han%e$ 8e are in ebte to our Tea!hers

who mol e at this Bun!tion of our !areer from where we !an ta&e off better in the

!ompetiti"e s!enario of to ay s worl $

8e woul li&e to than&s Mrs. Poo+a Ko*1 for %i"in% us an opportunity to o our

9roBe!t 0eport in 7u hiana Sto!& E'!han%e$

A feelin% of elathim insists me on e'pressin% my heartiest than&s# eep sense of

%ratitu e to all my maBor a "isors for their Bu i!ious impe!!able$

Aman eep


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DECLARATION

/ Aman eep# 0oll No$*+# stu ent of 1$Com ( n year) of 2esh 1ha%at 4oun ation Group

of /nstitution# o%a# un erta&e the Summer Trainin% wor& on Ro1e o$ Ca% #a1 Mar)e#

" E/o"om / De'e1o%me"# in my own wor& an is ori%inal one in has not seen an

submitte earlier to the uni"ersity or to any institute for fulfillment of the re;uirement of

a !ourse of stu y$

9la!e. 7u hiana Si%nature

2ate. Aman eep0oll No$*+1$Com ( n year)


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PREFACE

The su!!essful !ompletion of this proBe!t was a uni;ue e'perien!e for me be!ause

by "isitin% many pla!e an intera!tin% "arious person# / a!hie"e a better

&nowle %e about this system$ The e'perien!e whi!h / %aine by oin% this proBe!t

was essential at this turnin% point of my !arrier this proBe!t is bein% submitte

whi!h !ontent etaile analysis of the resear!h un er ta&en by me$

The resear!h pro"i es a opportunity to the stu ent to e"ote his her s&ills

&nowle %e an !ompeten!ies re;uire urin% the te!hni!al session$

The resear!h is on the topi! 0ole of Capital ar&et in E!onomi! 2e"elopment$


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BENCHMARK INDICES IN INDIA.doc

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