By: Mr.

Kumar Srikant
  MBA Finance & Marketing
Amity Business School
Amity University, Uttar Pradesh
Lucknow Campus

Introduction

SHARE MARKET/STOCK MARKET:

Share market is a financial market were equities, shares, debentures; bonds etc. are purchase and
sell. Every day, stocks are exchanged and traded in numerous stock markets around the world.
The liquidity they bring is a vital component of economic growth.

Share market is a public market were the trading of company stock and at an agreed price, these
are the securities listed on a stock exchange as well as those only for trading privately.

Stock market is a open market that trade financial assets. It is associated with a company or
acting as an individual, stock exchange is place where stocks are purchase or sell. Or it is rightly
said that stock exchange deals with a number of financial instruments such as stocks, bonds, and
equities. Where both corporate and governments are traded in stock exchange.

Stock are the listed and traded on stock exchange which are entities of a corporation or mutual
organization specialized in the business of bringing buyers and sellers of the organization to
listing stock and securities together.

What is SENSEX? And how it works?

SENSEX is termed as sensitivity index. It runs on companies shares listed in BSE (Bombay
stock exchange) and NSE (national stock exchange). Where top companies 50 companies shares
listed in NIFTY and top 20 companies shares listed in MINI NIFTY that they goes ups and
downs that determines SENSEX index every day in working day.

Functions of Stock Exchanges: An Overview

Stock exchange main function is to facilitate the transactions associated with both the buying and
selling of securities. The Buyers and sellers of shares and stocks can track the price changes of
securities from the stock markets in which they operate. The ups and downs of stock indexes
help the investors to speculate on the return on investment (ROI) of various investment options.

In stock exchange Speed and transparency are vital for all stock market transactions. The
companies listed in a stock exchange need to provide proper guidance regarding business
performance and prospects, mergers and acquisitions, stock prices, dividends and other
information at all times.

Investors make their investment decisions based on the information obtained from these
companies, and the comments of analysts who track those companies. This is an attractive
feature in investing in stocks, compared to other less liquid investment such as real state.

Exchanges also act as clearing houses for each of the transaction. Meaning that they collect and
deliver the shares and guarantee the payment the seller of the security. Exchange protects the
interests of both the buyers and sellers by assuring a timely transfer of money.

The participants of a stock market are required to operate within the specified transaction limits
fixed by the regulatory authority of that stock market.

TYPES OF STOCK MARKET:-

The stock Market divided into two categories they are as:

 Primary Market:
Primary market are the that type of capital market that deals with the issuance of new
securities, companies, governments or public sector institutions that can obtained by the
funding through issue of new securities, stock or bonds.This is typically done through a
syndicate of securities dealers.It provides the process of selling new issues to investors is
called Underwriting. It also provide the new stock issue, this sale is an initial public
offering (IPO). Dealers of issuing this IPO can earn a commission that is built into the
price of the security offering; through it can be found in the prospectus.

Following Features of Primary Market are:

 In primary market the securities are directly issued to the investors.

  Primary Market Company can receive the money and issue new securities to the
investors.
 It is also called as the market for new long term capital. In primary market the market
where the securities are sold for the first time. Therefore it is also called New Market
Issue (NIM).
 In primary issues the companies used for the purpose of setting up new business or for
expanding or modernizing the existing business.
 It plays a vital role in formation of capital to the economy by facilitating crucial function
in market.
 In primary market the new issue does not include the certain source of new long term
external finance, such as loans from financial institutions. Borrowers in the new issue
market may raise capital for converting private capital into public capital – this is called
as Going Public.

Methods of Issuing Securities in the Primary Market .They are as:-

 Initial Public Offer (IPO).

 Preferential Issue.
 Right Issue (For Existing Companies).

Secondary Market:

This market is also called as Aftermarket or Second market, it also called a financial market
where previously issued securities and financial instruments such as stock, bonds, options, and
future are brought or sold.
Secondary market is termed as the market of any used goods or assets, or an alternative use for
an existing product or assets where the customer base in the second market. For example,
companies have been traditionally used for primarily for food production and feedstock. Where
the 2nd and 3rd market is used or developed for the ethanol production.
Primary issue of securities or financial instruments, or the primary market, Investors purchase
these securities directly from issuers such as corporations. Issuing share in an IPO or private
settlements. After the initial issuance, Investors can purchase from other investor in the
secondary market.

Functions of secondary market:

The function of the secondary market is vital to an efficient and modern capital market.
In the Secondary market securities are sold and transferred by one investor to the other investor.
In the market condition where secondary market be highly liquid. Or fundamentally, secondary
markets is to mesh with the investors preference for liquidity for the investors need not to tie up
with his or her money for a long period time, or in case of the investor need it to be deal with
unforeseen circumstances.
Secondary market allocates accurate share price capital more efficiently. the new projects that
are financed through a new primary market offering, but there is also accuracy may also matter
in the secondary market because:
 It reduce the price accuracy to maintain the agency cost management, or make less risky
when take over or moving capital into the hands of better managers.
 Allocation of accurate share price for the allocation of debt finance whether debt
offerings or institutional borrowing.

BOMBAY STOCK EXCHANGE (BSE)

In India share market started functioning from 1875. First name share trading associated with
India was the native share and stock broker’s association which later came to known as Bombay
stock exchange (BSE). Exchange operates with the help of stock brokers, the buyers and the
sellers participating in a stock market carry out their transaction.The brokers representing selling
parties to take their orders to the stock exchange floor and then find brokers representing parties
wiling to invest in similar stock . if both parties agree to trade at the fixed price ,the transaction
takes place in both the favor.It works the stock that are listed or traded on stock exchanges.
Which are entities a corporation or mutual organization for specialized in the business or
bringing buyers and sellers of the organizations to a listing of stock and securities together. Stock
market in the India includes the trading of all the securities listed on the BSE (Bombay stock
exchange) and NSE and the many other regional exchanges like Delhi stock exchange.As an
Indian share market enables the buying and selling of the collective shares of the various
companies as well as other securities and derivatives. Shares of the Indian market are expressed
as a company’s sales revenue from Indian share market divided by the total sales revenue
available in the Share market of India.The Indian share market is thus one of the most important
sources of the companies for raising money. Of the leading stock exchanges that deal with the
share trading in the Indian stock market the National Stock Exchange of India NSE is the largest
stock exchange in India while the Bombay stock exchange BSE is the oldest. Some others are:

 Securities and Exchange Board of India (SEBI)

 Calcutta Stock Exchange Association Limited
 Delhi Stock Exchange Association
 Inter-connected Stock Exchange of India

National Stock Exchange (NSE)

NSE is the second largest exchange in the south Asia. It is the leading most stock exchange in
India in term of total volume traded. It based in Mumbai but it has presence in over 1500 towns
and cities. It got the recognition as a stock exchange in July 1993 under the securities contracts
(regulation) Act, 1956. The products that can be traded in NSE are:-

 Equity or Share.
 Futures (Both index and stock).
 Options (Call and Put).
 Wholesale Debt Market.
 Retail Debt Market.
NSE is leading index is Nifty 50 or properly Nifty and is composed of 50 diversified Benchmark
Indian company stocks. It is constructed on the basis of weighted average market capitalization
method. NSE provides its customers with a fully automated screen based trading system known
as NEAT system with speedy, efficient and transparent transactions.
Hours: NSE trading session start from 09:30am to 03:30pm on all days except Saturdays,
Sundays, and holidays declared by the Exchange in advance.

NIFTY:

Nifty is the major indicator of all the major companies of the NSE. Where the top 50 stocks are
that stocks were it is favored by the institutional investors in the 1960s and 1970s that shows the
ups and downs of share market. Nifty has two part first is where 50 companies are listed is called
big Nifty. And other is called MINI NIFTY. Where 20 companies are listed in it. Companies in
this group were usually characterized by consistent earnings growth and high P/E ratios.

MCX (MULTI COMMODITY EXCHANGE)

It is established in 2003 and based in Mumbai. It is an independent commodity exchange board

based in India. MCX offer commodity for trading in future like:

 Agricultural commodities.
 Bullion
 Ferrous and Non- ferrous metals
 Pulses.
 Oils Seeds.
 Energy.
 Plantations.
 Spices.
 And other soft commodities.
National Commodity & Derivatives Exchange Limited (NCDEX)

NCDEX is the online commodity based exchange in India. It is located in Mumbai and offer
facilities in more than 550 centers in India.
It was incorporated as a private limited company incorporated on April 23, 2003.Under the
Companies Act, and 1956. But it obtained its Certificate For Commencement of Business on
May 9, 2003.and started its operations on Dec. 15 2003.

NSDL (National Securities and Depository Limited)

NSDL is the first depository in India that established under depository Act August 1996. This
depository promoted by national stature responsible for the economic development of country.
Since its establishment a national infrastructure of international standards that handles most of
the securities that held and settled in Dematerialized from the Indian capital market.

Its main aim to ensure safety and soundness of Indian marketplaces by developing the settlement
solutions to increase efficiency, minimize risk and reduce costs. In NSDL, the central role in
developing products and services that will continue to grow the nurture needs of the financial
services industry.