Securities Market Basics

Presented by:
KARISHMA VELAGALETI
KOMAL GUPTA
IMBA (IB), SEMESTER 8
Organization structure
Securities
market
Equity market Debt market
Govt. securities
market
Corporate debt
market
Money market
Derivatives
market
Options market Futures market
Participants in the securities market
1. Regulators
2. Stock exchanges
3. Listed securities
4. Depositors
5. Brokers
6. Foreign Instititutional
Investors
7. Merchant bankers
Primary dealers
Mutual funds
Custodians
Registrars
Underwriters
Bankers to an issue
Debenture trustees
Venture capital funds
Credit rating agencies
Primary equity market
Public issue Rights issue
Private
placement
Preferential
allotment
What is Trading?
Buying and selling of securities
Traders are also called Brokers
Open Outcry
system/
Floor Based
Trading
Screen
Based
Trading
Who is a broker?

A stockbroker is person who is licensed
to trade in shares. Brokers also have
direct access to the share market and
can act as your agent in share
transactions. For this service they
charge a fee.


They can also offer additional services like advice on shares, debentures,
government bonds and listed property trusts and non-listed investment options
(cash management trusts, property and equity trusts.
Types of Order
Limit Order
Market Order
Stop Order
Day Order
Week Order
Month Order
Open Order
Fill or kill Order
Settlement
BUYER SELLER
Clearing
House Agent
CASH
SECURITY
SECURITY
CASH
DEPOSITORY
Evolution of Settlement System
Account Period Settlement system
Rolling Settlement
T+5
T+3
T+2
Speculation
Speculators are people who invest in
securities for a short term with the intention
to make quicker profits

Positions
Long: BUY
Short: SALE
Types of Speculator
Bull
Bear
Lame Duck
Stag
Margin Trading
Borrowing money from bank or broker for
investing/purchasing securities is known as
margin trading
Investor
provides
interest to the
broker on the
sum borrowed
What is a Depository?
Depository is like a bank. Depository holds securities for
investors in electronic form and provides services related to
transaction of securities.


Depository (NSDL)
Depository
Participants
(DP)
What is a Depository?
Depository is like a bank wherein the deposits are
securities in electronic form
There are two depositories in India National Securities
Depository Limited (NSDL) (1996) and
Central Depository Services Limited (CDSL) (1999)
Transaction Costs
Trading costs
Clearing
costs
Settlement
cost
Brokerage cost
Market impact cost
Securities Transaction cost
What is an Index?
Index shows how a specified portfolio of share
prices are moving in order to give an
indication of market trend.
An index represents a basket of securities
Stock market Indices
Price Weighted Index
Sum of prices of sample shares in a certain year
with reference to the base year. Eg: Dow Jones
Industrial Average

Value Weighted Index
It reflects aggregate market cap of the sample of
shares in a certain year in relation to the base yr.
Eg: Sensex, S&P CNX Nifty

Share Price in
Base Year
Price in
year t
Price
relative
No. of
outstandi
ng shares
Market
cap in
base year
Market
cap in t
year
A 50 70 140 10 500 700
B 40 50 125 20 800 1000
C 100 90 90 5 500 450
D 20 80 400 15 300 1200
E 15 24 160 50 750 1200
Sum 225 314 915 2850 4550
Price weighted Index: (314/225) X 100 = 140

Value Weighted Index: (4550/2850) X 100 = 160


Stock Markets in India
Name of the Stock Exchange Location
OTC Exchange of India Mumbai
The Uttar Pradesh Stock Exchange
Association Ltd.
Kanpur
Jaipur Stock Exchange Jaipur
Madras Stock Exchange Madras
Cochin Stock Exchange Cochin
Bangalore Stock Exchange Bangalore
National Stock Exchange Exchange Plaza, Bandra-Kurla Complex,
Bandra(E), Mumbai - 400051
Guwahati Stock Exchange Guwahati
Ludhiana Stock Exchange Ludhiana
Calcutta Stock Exchange Kolkata
Bhubaneshwar Stock Exchange Orissa
Contd..
Name of the Stock Exchange Location
Delhi Stock Exchange DSE House, 3/1, Asaf Ali Road, New Delhi
- 110002
Vadodara Stock Exchange Ltd. Vadodara
Ahmedabad Stock Exchange Ltd. Ahmedabad
Madhya Pradesh Stock Exchange Ltd. Madhya Pradesh
Pune Stock Exchange Ltd. Pune
Bombay Stock Exchange Ltd. Phiroze Jeejeebhoy Towers , Dalal Street,
Mumbai 400023
Inter connected Stock Exchange of India
Ltd.
Mumbai
MCX Stock Exchange Ltd Mumbai
The Bombay Stock Exchange is the oldest exchange in Asia. It
traces its history to the 1850s, when four Gujarati and one Parsi
stockbroker would gather under banyan trees in front of
Mumbai's Town Hall.
The group eventually moved to Dalal Street in 1874 and in 1875
became an official organization known as 'The Native Share &
Stock Brokers Association'.
In 1956, the BSE became the first stock exchange to be
recognized by the Indian Government under the Securities
Contracts Regulation Act.



Bombay Stock Exchange
The Bombay Stock Exchange developed the BSE SENSEX in
1986, giving the BSE a means to measure overall performance
of the exchange
Historically an open outcry floor trading exchange, the
Bombay Stock Exchange switched to an electronic trading
system in 1995.
This automated, screen-based trading platform called BSE On-
line trading (BOLT) currently has a capacity of 8 million orders
per day.
Bombay Stock Exchange
Indices of BSE
SENSEX
MIDCAP
SMLCAP
BSE-100
BSE-200
BSE-500
DOLLEX-30
DOLLEX-100
DOLLEX-200
Also known as BSE 30 is a free-float market
capitalization-weighted stock market index of 30
well-established and financially sound companies
listed on Bombay Stock Exchange
Established in 1986
Base value of the SENSEX is taken as 100 on April 1,
1979, and its base year as 1978-79.
SENSEX
Indices of NSE
S&P CNX Nifty
CNX Nifty Junior
S&P CNX 500
CNX IT
BANK NIFTY
INDIA VIX
CNX 100
S&P CNX DEFTY
CNX MIDCAP
CNX INFRA
CNX PHARMA
CNX FMCG
CNX MNC
CNX PSE
CNX PSU BANK
CNX ENERGY

Standard & Poor CRISIL NSE IndeX 50 = S&P CNX Nifty
Nifty is owned and managed by India Index Services and
Products Ltd. (IISL), which is a joint venture between NSE and
CRISIL. IISL has a marketing and licensing agreement with
Standard & Poor's.
The base period for the S&P CNX Nifty index is November 3, 1995
The Nifty is a well diversified 50 stock index accounting for 23
sectors of the economy.
S&P CNX Nifty