STOCK EXCHANGE

WHAT IS STOCK EXCHANGE

Stock exchange is that place where

trading of shares is done in terms of sale
and purchase.
 INTRODUCTION
There are 23 stock exchanges in the India.
Mumbai's (earlier known as Bombay),
Bombay Stock Exchange is the largest, with
over 6,000 stocks listed. The BSE accounts
for over two thirds of the total trading volume
in the country. Established in 1875, the
exchange is also the oldest in Asia. Among
the twenty-two Stock Exchanges recognised
by the Government of India under the
Securities Contracts (Regulation) Act, 1956,
it was the first one to be recognised and it is
the only one that had the privilege of getting
permanent recognition ab-initio.
 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
 Cont…….
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
 Cont…….
Bombay stock exchange : it has 30 companies sripted.
1.ACC
2.BAJAJ
3.AIRTEL
4.BHEI
5.CIPLA
6.DLF
7.GRASIM
8.GUJRAT AMBUJA
9.HDFC
10.HDFC BANK
 Cntd……
11.HERO HONDA
12.HINDALCO
13.HUL
14.ICICI BANK
15.INFICYS
16.ITC
17.L&T
18.MARUTI
19.NTPC
20.ONGC
 Cntd……
21.RANBAXY
22.RELIANCE COMMUNICATION
23.RELIANCE ENERGY
24.RIL
25.SATYAM
26.SBI
27.TCS
28.TATA MOTERS
29.TATA STEEL
30.WIPRO
THE TOP TEN SINGLE DAY FALLS
OF THE SENSEX HAS :
1. Jan 21, 2008 --- 1,408.35 points
2. Jan 22, 2008 --- 857 points
3. Feb 11, 2008 --- 833.98 points
4. May 18, 2006 --- 826 points
5. Dec 17, 2007 --- 769.48 points
6. Oct 17, 2007 --- 717.43 points
7. Jan 18, 2007 --- 687.82 points
8. Nov 21, 2007 --- 678.18 points
9. Aug 16, 2007 --- 642.70 points
10. Apr 2, 2007 --- 616.73 points
• Index Value:
• 17,349.07 Trade Time:
• 3:58PM IST
• Change:
•  385.61 (2.17%)
• Prev Close:
• 17,734.68
• Open:
• 17,503.04
• Day's Range:
• 17,309.47 - 17,526.80
 NSE

The National Stock Exchange (NSE), located in

Bombay, is India's first debt market. It was set up
in 1993 to encourage stock exchange reform
through system modernization and competition. It
opened for trading in mid-1994. It was recently
accorded recognition as a stock exchange by the
Department of Company Affairs. The instruments
traded are, treasury bills, government security
and bonds issued by public sector companies
 Cntd……….
The National Stock Exchange of India
Limited has genesis in the report of the High
Powered Study Group on Establishment of
New Stock Exchanges, which recommended
promotion of a National Stock Exchange by
financial institutions (FIs) to provide access
to investors from all across the country on an
equal footing.
 Cntd………
Based on the recommendations, NSE was promoted by
leading Financial Institutions at the behest of the
Government of India and was incorporated in November
1992 as a tax-paying company unlike other stock
exchanges in the country.
NSE Group:
1. India Index Services & Products Ltd. (IISL)
2. National Securities Clearing Corporation Ltd. (NSCCL)
3. NSE.IT Ltd.
4. National Securities Depository Ltd. (NSDL)
5. DotEx International Limited
 SPECULATION

It involves the buying, holding, selling, short-

term selling of stocks, bonds. commodities,
currencies, collectibles or any valuable
financial instrument to profit from fluctuations
in its price as opposed to buying it for use or for
income via method like dividends or interest.
BENEFITS OF STOCK EXCHANGE
FROM THE POINT OF VIEW OF COMMUNITY:
1.It assist the economic development by providing a body of
interested investors.
2.it uploads the position of superior enterprises and assist them
in raising further funds.
3.It encourages capital formation
4.Government can undertake projects of national importance
and social value raising funds through the sale of its securities
on the stock exchange.
5.It is the stock exchanges that central bank of a country can
control credit by undertaking open market operations (purchase
and sale of securities)
FROM THE COMPANY POINT OF VIEW

• 1.A company whose shares quoted on stock

exchange they enjoy better reputation and credit.
• 2.The market for the shares of such a company is
naturally widened.
• 3.The market price of securities is likely to be
higher in relation to its earnings,dividends and
property values.This raises the bargaining power
of the company in the event of a takeover,merger
or amalgamation.
FROM THE INVESTORS POINT OF VIEW
1.Liquidity of the investment is increased
2.The securities dealt on a stock exchange are good
collateral security for loans.
3.The stock exchange safeguards interests of investors
through strict enforcement of rules and regulations.
4.The present net worth of investments can be easily
known by the daily quotations.
5.His risk is considerably less when he holds or
purchases listed securities.
 MARKET PLAYER

EXTERNAL:----
1.SHAREHOLDER
2.DEBENTURE HOLDER
 SHAREHOLDER
Shareholders are divided into two parts
1.Preference shareholder: Preference
shareholder are those which have preferential
right to the payment of dividend during the life
time of the company, and a preferential right to
the return of the capital when the company is
wound up.
CHARACTERISTICS OF PREF.SHAREHOLDER

• 1.The dividend on them is fixed by the articles of

the company.
• 2.They get their fixed rate of dividend before any
dividend is distributed among the other class of
shareholders.
• 3.At the time of winding up of the company, the
preference shareholder must be paid back their
capital before anything is paid to the ordinary
shareholders.
 KINDS OF PREF.SHAREHOLDER

1.Comulative shareholder: These shares are entitled

to fixed dividends whether there are profits or
loss.If profits are not sufficient to pay in a particular
year then that will pay on next year.
2.Non comulative pref. share: These shares cannot
claim arrears of dividends of any year (if not paid
due to insufficiency of pfofits ) out of rofits of
subsequent year.
 Cont…….
3.Participating pref. Shares: These shares receives a
fixed rate of dividend in priority to ordinary shares
and further,the right to participate in balance of
profits in an agreed proportion together with
ordinary shares.
4.Redeemable pref.shares: These are shares which
can be purchased back by the company.The
company researves its rights to call back or
purchased these shares at any time .
EQUITY SHARES

• All shares which are not preference shares

are equity shares.These shares do not have
a fixed rate of dividend,they are always
irredeemable and their holders have
normal voting rights.
• They are also the owners of the company.
• They take dividend
 DEBENTURES
A document under the company seal which
provides for the payment of a principal sum
and interest there on at regular intervals
which is usually secured by a fixed or
floating charge on the company’s property or
undertaking which acknowledges a loan to
the company.
 INTERNAL PLAYERS
The members of the stock exchange can be divided
into two parts:
A.Broker: He is a commission agent who transacts
business in securities on behalf of non-members.They
may have number of sub-brokers to canvass and
secure business for them.
B.Jobber: He is an independent dealer securities.He
purchase and sells securities in his own name. He is
not allowed to deal with non-members directly.He
works for profit.
 Tarawaniwala
• Non-members : The following categories of non
members are also permitted to enter trading hall
and transact business on the behalf of members.
• Authorized clerks: They are the assistant or
agents.They buy or sell on the behalf of
employers.They can not transact business on
their own account.
• Remisers: They are the sub-brokers. He is also
called the half commission men.
CAUSES OF PRICE FLUCTUATION

• 1.DAMAND AND SUPPLY

• 2.BANK RATE
• 3.SPECULATIVE PRESSURE
• 4.ACTIONS OF UNDERWRITERS AND
OTHER FINANCIAL INSTITUTIONS
• 5.CHANGE IN COMPANY’S BOARD OF
DIRECTORS
• 6.FINANCIAL POSITION OF THE COMPANY
 CONT……..
• 7.TRADE CYCLE
• 8.POLITICAL FACTORS
• 9.SYMPATHETIC FLUCTUATIONS
• 10.OTHER FACTORS:
• A.EXPECTED MONSOON
• B.PERSONAL HEALTH OF HEAD OF
GOVERNMENT OR CHAIRMAN OF THE COMPANY
• C.OIL PRICES IN THE INTERNATIONAL MARKET.
 Cntd …….
• D.CHANGES IN EXCHANGE RATE
• E.BORDER TENSION
• F.STOCK BROKERS SCAM LIKE HARSHAD
MEHTA AND KETHAN PAREKH
• G.STRIKES AND LOCK-OUT OF THE
COMPANY.
• H.NEW BUDGET PROPOSALS
• I.LOBERLIZATION AND PRIVATIZATION
OF THE COMPANY.
 SEBI
• It was constituted and made a statutory body by
SEBI act 1992.With the coming into effect of
SEBI, some of the powers and function exercised
by the central government,in respect of
regulation of stock exchanges were transferred to
the SEBI.
 OBJECTIVES OF SEBI

1.Registring and regulating the working of stock brokers, sub-

brokers, share transfer agents, underwriters (who may be
associated securities market in any manner).
2.Registering and regulating the working of collective
investment scheme including mutual funds.
3.Prohibiting insider trading in securities.
4.Regulating substantial acquisition of shares and takeovers of
companies.
 Contd……
5.Calling for information from,undertaking inspection,
conducting inquiries and audits of stock exchanges and
intermediaries and self regulatory organizations in the
securities market.
6.Performing such function and exercising such powers
under the provisons of the capital issues(control) act
1947 and SCRA 1956,as may be delegated to it by the
central government.
7.Performing such other functions as may be
prescribed.
 BUY BACK SHARES

• In simple term when company re-

purchase of its own shares that is

called buy back shares.

 MODESS OF REPURCHASE
Basically there are two modes of repurchase:
•Open market repurchase: company makes an
announcement regarding the repurchase of a specified
number of shares. The purchases are made
anonymously through a broker from the secondary
market over a specified period of time.
•Tender offers: this is basically two types
•Fixed price tender offers: company announces a
fixed price at which it is willing to buy its shares, a
maximum number of shares that it will commit to buy
and an expiration date for the offer. The offer price is
premium over the market price to encourage the
shareholder.
 Cont………….

Dutch auction tender offers : In a dutch

auction, the company announces the
maximum number of shares it wishes to buy
and a range of prices at which it will
entertain offers.Shareholders who choose to
participate must then select a single price in
this range at which to tender their shares .
RULES FOR REPURCHASE UNDER SEBI
ACT 1988
• 1.Regulations cover only the listed securities of the
company
• 2.In case of purchase through the stock exchange an offer
for buy back will not remain open for more than 30 days.
• 3.Buy back through negotiated deals, spot transactions or
private arrangements is not permitted.
• 4.In the purchases made through stock exchange, the
details under the buy back scheme shall be made
available to the stock exchange on daily basis:the details
in turn shall be made available to public regularly.
 HOW RATING IS GIVEN TO THE
COMPANY?

Basically rating is given after see the

company 'image,management quality,assets
quality,auditors quality,accounting accuracy.
Rating is not fixed, it may be change. The
rating grades are:
AAA: HIGHEST SAFTY
AA: HIGH SAFTY
A: ADEQUATE SAFTY
BBB: MODERATE SAFTY
BB: IN ADEQUATE SAFTY
BC&D: HIGH RISK AND DEFAULT
CREDIT RATING AGENCY IN INDIA

1. CRISIL
2. ICRA
3. CARE
4. DPCR