Presentation On

Stock Market

Submitted to: Submitted By:Lect. Gourav Tandon Manpreet Kaur

(DBIMCS) MBA 1st year

Financial Market

Capital Market Money Market

Primary Market Secondary Market

Financial market Env. In India

Long-term,Governed by SEBI

Short-term,Governed by RBI

New securities issued Issued securities Trade

Growth and Evaluation of Stock market in India

Process of liberalization and de-regulation that begin in late 1980’s has directly effected the process of capital market of the country.

No. of steps were taken by the Govt. in order to bring along economy back to rails. The extent of growth can be gauged from the fact that amount realised by the primary market which has lower’s in 70’s and during the next up coming year’s. it went up high India has the highest no. of listed company’s in the world and this no. as on the date more then 10,000 company’s app.

An Overview about Stock Market 

• What are Markets? • What are shares? • What is a stock exchange? • Who is a broker? • What is a Demat A/c? • Buying and selling of dematerialised securities • How to receive income from shares? • How much should you invest? • How to make investment decisions? • How to track your investments?

1.What are Markets? • A stock market is a market for the trading of company stock/

shares, and derivatives. This includes securities listed on a stock exchange as well as those only traded privately. Market is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares, bonds, debentures etc.

• 1.1 Primary markets: The primary market is that part of the capital markets that deals with the issuance of new securities.

• 1.2 Secondary markets: The secondary market is the financial market for trading of securities that have already been issued in an initial private or public offering. In the secondary market, securities are sold by and transferred from one investor or speculator to another.

2. What are shares?

• A share is a interest of shareholder in a definite per portion of a capital it express the proportionately relationship b/w the company and the shareholder”.

Types of shares• Preferences share• Equity share• Deferred share• debentures

3. What is a stock exchange?

Securities contracts act of 1956 defines,

“an association, organization or body of individuals, incorporation, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities”

Stock exchange is a place where buyers and sellers are come together for undertaking transactions involving sale of securities.

Function of Stock Exchange

• It provide ready market for securities• It helps in price discovery of securities.• It insure low cost of raising finance issue of new market

instruments in the market• Helps in capital generation process.• Encourages capital formation• Provides proper direction to invest capital• Promotion of investment.• Help capital formation.• Give mobility to capital.• Exercise control over the working of companies.• Marketing of new issues.

In India overview • India's oldest and first stock exchange: Mumbai (Bombay) Stock

Exchange. Established in 1875. More than 6,000 stocks listed.• Total number of stock exchanges in India: 22• They are in: Ahmadabad, Bangalore, Calcutta, Chennai, Delhi etc.• There is also a National Stock Exchange (NSE) which is located

in Mumbai.• There is also an Over The Counter Exchange of India (OTCEI)

which allows listing of small and medium sized companies.• The regulatory agency which oversees the functioning of stock

markets is the Securities and Exchange Board of India (SEBI), which is also located in Bombay

Name of Indian stock exchange

1.Bombay stock exchange

2.national stock exchange(Mumbai)

3.Banglore stock exchange

4.Utter Pradesh stock exchange (Kanpur)

5.Magadh stock exchange(Patna)

6.Ahmedabad stock exchange

7.vadodara stock exchange(Baroda)

8.Bhubaneswar stock exchange

9.Calcutta stock exchange(Kolkata)

10.madras stock exchange

11.Cochin stock exchange

12.coimbatore stock exchange

13.Gauhati stock exchange

14.Hydrabad stock exchange

15.Madhya Pradesh stock exchange(Indore)

16.Jaipur stock exchange

17.Ludhina stock exchange

18.Mangalore stock exchange

19.Pune stock exchange

20.saurashtrakutch stock exchange

Listing

Any company intending to get its securities at an exchange has to fulfill certain condition , listing of securities means permission to quote share and debentures officially on the trading floor of the stock exchange. Every securities issued by companies cannot be traded a stock exchange. The stock exchanges fix certain standard which the company must fulfill before getting the securities listed.

Guidelines of listing

Guidelines will help companies to expedite the fulfillment of the various formalities and disclosure requirements that are required at various stages of Public Issues:

• Initial Public Offering• Further Public Offering

Requirements for listingSome of the requirements are as under :• Memorandum and articles of association• Copies of all prospectus or statements in lieu of prospectus.• Copies of balance sheets, audited accounts, agreements, promotes,

underwriters, brokers etc. • Letter of consent from controller of capital issue.• Detail of share and debentures issued and shares forfeited• Detail of issue of bonuses and dividends disclosed.• History of the company in brief.• Agreement with managing director etc.• An undertaking regarding compliance with provisions of the

companies act,1956 as well as rules made them.

The objectives of listing are mainly to :

•provide liquidity to securities;•mobilize savings for economic development;•protect interest of investors by ensuring full disclosures.

Hours of operation

Session TimingBeginning of the Day Session 8:00 - 9:00

pre-open trading session 9:00 - 9:15

Trading Session 9:15 - 15:30

Position Transfer Session 15:30 - 15:50

Closing Session 15:50 - 16:05

Option Exercise Session 16:05 - 16:35

Margin Session 16:35 - 16:50

Query Session 16:50 - 17:35

End of Day Session 17:30

Trading Mechanism

WorkingIndian Stock Exchange work through a sophisticated screen based system called SBTS. Trading system at NSE is termed as National Exchange for automated trading . It is called NEAT and for BSE , BSE online trading system . It is called BOLT.

Procedure• Placing an order by the client• Punching the order of client in the trading system• Execution of trading• Preparation and issue of contact notes.• Clearing of trades and determination of obligations of the client to brokers.• Releasing of shares/ funds to the client.

• Order Matching – The trading system sorts pending orders in price-time priority for order matching purposes by matching the best buy order and best sell order. Best buy order is the one with the highest price and the best sell order is the one with the lowest price (the system sorts buy orders from the seller point of view and vice versa). Orders may match with more than one order resulting in multiple trades for an order.

 • Member broker can place market orders (which will be matched

with the best available order) or limit orders (wherein member can specify the price for the order) which will remain a part of order books until matching.

• The orders are processed for potential match. Pending orders are stored in different ‘books’ based on price-time priority in the following sequence:

• All orders received on the system are sorted with the best price order getting the 1st priority for matching the best buy order match with the best sell order.

• Similarly price order are sorted on time priority the one that came in early gets priority over the later one orders are matched automatically by the computer keeping the system transparent, objective and fair.

• Where orders does not find a match it remains in the system and it displayed to the whole market till a fresh order comes in or earlier order is canceled or modified.

Settlement Cycle and Trading Hours

Equity spot markets follow a T+2 rolling settlement. This means that any trade taking place on Monday, gets settled by Wednesday. All trading on stock exchanges takes place between 9:55 am and 3:30 pm, Indian Standard Time (+ 5.5 hours GMT), Monday through Friday. Delivery of shares must be made in dematerialized form, and each exchange has its own clearing house, which assumes all settlement risk, by serving as a central counterparty. 

Market Indexes

The two prominent Indian market indexes are Sensex and Nifty. Sensex is the oldest market index for equities; it includes shares of 30 firms listed on the BSE, which represent about 45% of the index's free-float market capitalization. It was created in 1986 and provides time series data from April 1979, onward. 

Another index is the S&P CNX Nifty it includes 50 shares listed on the NSE, which represent about 62% of its free-float market capitalization. It was created in 1996 and provides time series data from July 1990, onward.

Market Regulation The overall responsibility of development, regulation and

supervision of the stock market rests with the Securities & Exchange Board of India (SEBI), which was formed in 1992 as an independent authority. Since then, SEBI has consistently tried to lay down market rules in line with the best market practices. It enjoys vast powers of imposing penalties on market participants, in case of a breach.

How the market sets prices

• The price is set by the buyer willing to pay the highest price

• The market price will be set by the buyer who can take best advantage of the asset

• Superior information about an asset can increase its value by reducing its risk

4. Who is a broker?

A stockbroker is member of recognized stock exchange who is permitted to do trade on the screen based trading system on the different stock exchanges . He is enrolled as a member with the concerned exchanges and is registered with SEBI.

5. What is a Demat A/c?

• Investors who wish to trade in the market need to have a dematerialized, or demat, account.

• In India, the government has mandated two entities –• National Securities Depository( NSDL)• Central Depository Services (India)(CDSL) – to be

the custodian of dematerialized securities.

6. Buying and selling of dematerialised securities

• The procedure for selling dematerialized securities is very simple. After you have sold the securities, you would instruct your DP to debit your account with the number of securities sold by you and credit your broker's clearing account. This delivery instruction has to be given to your DP using the delivery instruction slips given to you by your DP at the time of opening the account.

• For receiving demat securities you may give a one-time standing instruction to your DP. This standing instruction can be given at the time of account opening or later. Alternatively, you may choose to give separate receipt instruction every time some securities are to be received.

7. How to receive income from shares?

We invest in shares to make money – either through a share’s capital growth, i.e. the amount by which the share price increases in value over time, or through the dividends it pays to its shareholders. Dividends are payments made by companies to shareholders from their profits.

8. How much should you invest?

Asset allocator and other tools… Benefits of Investing Early Power of compounding Magic of compounding Risk vs. Returns The Need To Diversify Financial Investment Options Financial Investment Options

9. How to make investment decisions?

The stock market has, perhaps, the most exciting investment opportunities for the investor community. At the same time, it could be unnerving and scary. In fact, equity investment has always remained a big challenge, not only for retail but institutional investors, too. In short, investing in equities can be a difficult proposition for retail investors. However, equity must form a part of every investor’s portfolio. The proportion could vary, depending on the investor’s age, monetary requirements, risk appetite, etc.

To cope with volatility, it is important to have a disciplined and systematic approach to equity investment. Set your own rules and more importantly, follow them religiously. Indeed, the mantra for successful equity investment is a well thought-out, disciplined investment strategy. A long-term monetary commitment, adherence to discipline in investment and decisions based on company fundamentals are essential ingredients for successful equity investment.

10. How to track your investments?

The Portfolio Manager tracks and monitors all your investments, cash flow and assets, through live price updates. Investments like equity, mutual funds, assets, cash flows, borrowing and more can all be tracked. Displayed in real time, it is the most up-to-date and precise indicator of your net worth! With the Portfolio Manager, you can not only view your investments at each stage, but can use this record of your

holdings to base any future investments decisions.

The Portfolio Manager comes along with some useful tools to gain useful insight of volatile markets. These tools help you to track the trends of your current investments as well as some stocks that have caught your eye.

Features of Stock Market

•Stock Market is an organized market, where securities of govt. and semi govt. bodies and corporate enterprises or bought and sold.

•Stock Market deals in second hand or existing securities.

•Individuals alone can buy and sell securities.

•The Stock Market does not provide this facility to corporation and partnership firms.

•In the Stock Market only those securities which are listed in the Stock Market or transacted.

•Unlisted Securities or not permitted to be dealt in the market.

•The Stock Exchange to regulate its day-to-day operations.

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