STOCK EXCHANGE

EASY WAY TO EARN MONEY

EASY WAY TO LOOSE MONEY

SARAVANAN S

WHAT IS STOCK EXCHANGE?

Definition of Stock Exchange:
The securities regulation act of 1956 defined stock exchange as
an association , organization , or a individual which is established
for the purpose of assisting , regulating , and controlling business in
buying ,selling and dealing in securities.
Meaning:
The Stock Exchange is nothing but more than a
giant, globally networked, organized market
place
where everyday huge sums of money are
moved back and
forth, in total 60 Trillion Euro
are traded a year. However
this all is done not by
products or cash but Securities.
Securities are
rights to assets in form of share.

HISTORY OF STOCK EXCHANGE

The stock exchange was established by East

India company in 18th century . In India it
was established in 1850 with 22 stock brokers
opposite to town hall Bombay .This stock
exchange is known as oldest stock exchange
of Asia.

FEATURES OF STOCK EXCHANGE

It is an organized market
It is a securities market
It is an important constituent of capital market i.e., market for longterm finance
It is a voluntary association of persons desirous of dealing in securities
Stock exchange is a voluntary association, its membership is not open
to everybody
In a stock exchange, only the members can deal
in i.e., buy & sell securities
The members of a stock exchange can buy and
sell securities either as brokers for & on behalf
of their clients
The dealings in a stock exchange are under
certain accepted code of conduct i.e., rules and
regulations

IMPORTANT FUNCTION OF STOCK

EXCHANGE
Provide central and convenient meeting places for sellers and
buyer of securities
Increase the marketability and liquidity of securities
Contribute to stability of prices of securities
Equalization of price of securities
Smoothen price movement
Help the investors to know the worth of their holdings
Promote the habit of saving and investment
Help capital formation
Help companies and government to raise funds
from the investors
Provide forecasting service

BROKER AND JOBBER

BROKER:
He is one acts as a intermediary on behalf of others. A broker
in a stock exchange ,is a commission agent who transacts
business in securities on behalf of non members.
JOBBER:
He is not allowed to deal with the public directly .He deals
with brokers who are engaged with the investors . Thus, the
securities is bought by the jobber from members and sells to
members who are operating on the stock exchange as broker.

DIFFERENCES BETWEEN A JOBBER AND A

BROKER
JOBBER
BROKER
A jobber is an independent
dealer in securities,
purchasing or selling
securities on his own account
A jobber deals only with the
brokers ,does not deal with
the general public
A jobber earns profit from his
operations i.e., buying and
selling activities
Each jobber specializes in
certain group of securities

A broker deals with the jobber

on behalf of his clients. in
other words, a broker is a
middleman between a jobber
and clients
A broker is merely an agent,
buying or selling securities on
behalf of his clients
A broker gets only
commission for his dealings
The broker deals in all types
of securities

SPECULATION AND SPECULATOR

SPECULATION : It is the transaction of members to buy or sell
securities on stock exchange with a view to make profits to
anticipated raise or fall in price of securities.
SPECULATOR : The dealer in stock exchange who indulge in
speculation are called speculator . They do not take delivery of
securities purchased or sold by them , but only pay or rescue the
difference between the purchase price and sale price . The
different types of speculators are
BULL
BEAR
STAG
LAME DUCK

BULL
He is speculator who expects the future raise in price of securities
he buys the securities to sell them at future date at the higher price.
He is called as bull because his activities resembles as a bull , as the
bull tends to throw its victims up in the air through its horns. In
simple the bull speculator tries to raise the price of securities by
placing a big purchase orders.

BEAR
He is speculator who expects future fall in prices , he does an
agreement to sell securities at future date at the present market
rate .
He is called as bear because his
altitude resembles with bear , as the
bear tends to stamp its victims down
to earth through its paws . In simple
the bear speculator forces of prices
of securities to fall through his
activities.

STAG {DEER}
He operates in new issue of market . He is just like a bull
speculator . He applies large number of shares in the issue market
only by paying , application money , allotment money. He is not a
genuine investor because , he sells the allotted securities at the
premium and makes profit. In simple he is cautious in his
dealings . He creates an artificial rise in prices of new shares and
makes profits.

LAME DUCK
He is speculator when the bear operator finds it difficult to deliver
the securities to the consumer on a particular day as agreed upon , he
struggles as a lame duck in fulfilling his commitment . This happens
when the prices do not fall as expected by the bear and the other party is
not willing to postpone the settlement to the next period.

Largest stock exchanges

IN INDIA

NATIONAL STOCK EXCHANGE

BOMBAY STOCK EXCHANGE
CALCUTTA STOCK EXCHANGE
COCHIN STOCK EXCHANGE
MULTI COMMODITY
EXCHANGE
DERIVATIVES EXCHANGE
OTC EXCHANGE
PUNE STOCK EXCHANGE
INTERCONNECTS EXCHANGE

IN THE WORLD

LONDON STOCK EXCHANGE

NEW YORK STOCK EXCHANGE
SHANHAI STOCK EXCHANGE
AUSTRALIA STOCK
EXCHANGE
TOKYO STOCK EXCHANGE
HONG KONG STOCK
EXCHANGE
TORONTO STOCK EXCHANGE
DEUTSCHE BORSE
BM&F BOVESPA
NASDAQ OMX STOCK
EXCHANGE

LONDON STOCK EXCHANGE

It was the first stock exchange established by east India
company in 18th century in London. The top gainer of LONDON
STOCK EXCHANGE is Blue chip shares.

BOMBAY STOCK EXCHANGE

It is oldest and first stock exchange of India established in the year
1875. First it was started under banyan tree opposite to town hall of
Bombay over 22 stock brokers. The top gainer in BSE is 100 companies
in that GMR infra is first

OVER-THE-COUNTER EXCHANGE OF INDIA

The OTCEI is a national, ringless and computerized stock exchange. It was
established in october,1990.it started its operation in september,1992.
Features of OTCEI
1. It is a nation-wide stock exchange. Its operational all over India.
2. It is a ringless stock exchange. The trading ring(i.e., trading Place) commonly
found in a traditional stock exchange is not found in it.
3. It is a computerized stock exchange
Advantages of OTCEI
1. It helps the investors to have easy and direct access to
the stock exchange
2. It helps investors to get fair prices for their securities
3. It provide safety to the investors
4. To provide computerized trading system
5. To provide investors a convenient, efficient and
transparent mode of investment

SECURITIES AND EXCHANGE BOARD OF

INDIA
Function Of SEBI
Regulating the business in stock exchange and any other
securities markets.
Promoting and regulating self-regulatory organization.
Registering and regulating the work of collective investment
scheme, including mutual funds.
Prohibiting fraudulent and unfair trade practices relating to
securities market.
Promoting education, and training of intermediaries of securities
market

Power of SEBI
Power to approve the bye-laws of stock exchange
Power to inspect the books of accounts
Power to grant license to any person for the purpose of dealing in
certain areas.
Power to delegate powers exercisable by it.
Power to try directly the foliation of certain provision of the company
Act

HOW TO DEAL AND INVEST IN STOCK

EXCHANGE
In order to deal with a securities one as to have an account called
Demat a/c or Trading a/c. It is just like a bank account. Same
procedure of opening the bank account is followed to open the a/c.
But all the banks does not give this facility of opening the account ,
only few banks provide this facility. After demat a/c or Trading a/s is
opened then the securities is bought and sold. The banks which gives
facility of demat a/c in India is
ICICI Bank
Citi Bank
Bank of Baroda

General Market Advice:

1. Never chase a stock.
2. Buy when markets are in the grip of panic.
3. Only buy fundamentally strong stocks, which are undervalued.
4. Buy stocks grown in top line and bottom line over the past years.
5. Invest in companies with proven management.
6. Avoid loss-making companies.
7. PE Ratio and Growth in earnings per share are the key.
8. Look for the dividend paying record.

General Market Advice:

9. Invest in stocks for sure returns.
10. Stocks have been the high yielding
asset class over the past.
11. Stocks are an asset class.
12. The basic property of any asset class is
to grow.
13. Buy when everyone is selling and sell
when everyone buys.
14. Invest a fixed amount each month.

HAPPY INVESTMENT WITH

LOTS OF PROFITS