Stock Market Indices

Presented By:

Priti Kopade M-3023 Bhagyashree Powale M-3039 Ankita Sawant M-3046 Nikhat Shaikh M-3048 Pranoti Shinde M-3053

Contents

Introduction Bse and Nse Indices

INTRODUCTION:

A stock market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.

A place where shares, stocks and bonds are bought and sold.

Stock

market??

STOCK MARKET INDICES:Stock market indices are the barometer of the stock

market.BSE SENSEX,NSE-50 etc are some of the market

indices.

Their usefulness: Indices help to recognize broad trends in the market. The investor can use the indices to allocate the funds rationally among the stocks. Technical analysts use these indices to predict the future market. Indices function as a status report on the general economy.

Determinants of a Stock Index

Liquidity Diversification Optimum Size Market Capitalization Averaging

BOMBAY STOCK EXCHANGE BSE

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage of over 133 years of existence.

BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act (SCRA) 1956.

Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by providing it with cost and time efficient access to resources.

SENSEX (BSE30)

The index includes 30 companies which figure in top 100 in terms of market capitalization and are also among the leaders in their industry groups.

Presently the following are the constituent companies: ACC,Infosys, ICICI Bank, Dr.

Reddy’s Lab, SBI, CIPLA, Zee Telefilms, Nestle India, RPL, RIL, HCL Tech., Bajaj Auto, BHEL, Castrol, BSES, Colgate Palmolive, Hindalco, Grasim, Glaxo, Hero Honda, Gujarat Ambuja Cements, HLL, HPCL, ITC, L&T, MTNL, Ranbaxy, TISCO, TELCO and Satyam.

NATIONAL STOCK EXCHANGE (NSE)

The National Stock Exchange of India (NSE) situated in Mumbai - is the largest and most advanced exchange with 1016 companies listed and 726 trading members.

The NSE is owned by the group of leading financial institutions such as Indian Bank or Life Insurance Corporation of India.

Standard and Poor’s CRISIL NSE Exchange NIFTY S&P CNX NIFTY is an S&P endorsed Stock Index

owned by the India Index Services Ltd (IISL). It is a highly diversified index, accurately reflecting

the overall market conditions and is composed of 50 liquid stocks.

(NSE, CRISIL and S&P).

Use of Indices

Historical comparism of returns on money invested.

Lead indicator of economy.

Up to date information.

National Stock Exchange Indices

S & P CNX Nifty Is owned and managed by IISL.

52% of Nifty stocks in 6 months.

63% of Free Float Market Capitalization.

Ideal for derivatives trading.

CNX Nifty Junior It represents 12% of Free Float Market

Capitalization.

15% of all stocks of NSE.

S & P CNX DeftyBase date 3/11/ 1995.

Value as on base date- 1000

Exchange rate as on base date- 34.65

Bombay Stock Exchange Indices

BSE 100

BSE 200

BSE IPO

BSE Mid Cap and BSE Small Cap

Priti Kopade

M - 3023

6 Signals of stock price increase

1. RISE IN EARNINGS If a company earns 100 Rs.per share for the past 2

years & its earning are know 120 Rs. per share i.e a 20% increase , consider is increase as positive.

As the saying goes , “Earnings drive the market.”

2. INCREASE IN ASSETS AS DEBTS ARE STABLE OR DECREASING

Key to growing the book value of company. Rising book value has a positive impact on market value which in turn tend to strive stock price up.

3. POSITIVE PUBLICITY FOR INDUSTRY

4. HEAVY INSIDER OR CORPORATE BUYING

5. Powerful Demographics If a company generates lots of profit from the

teenage market and market is going to expand.

6. Low P/E Relative to Industry or Market If the industry P/E ratio is 20 and you are

looking at a stock that has a P/E of 15, all things being equal, that great.

The company has room for growth, and you have a good value.

The Trend is your Friend

Driven By The Trust Of Our Customers

HERO HONDA MOTOR LTD INDIA

Type : Public company BSE:HEROHONDA MFounded: January 19, 1984

in Gurgaon,Haryana, IndiaHeadquarters : New Delhi, IndiaKey people: Brijmohan Lal Munjal (chairman &

founder) Toshiaki Nakagawa (joint managing director) Pawan Munjal (CEO)Industry: AutomotiveProducts: Motorcycles, ScootersRevenue: US$ 2.8 billionWebsite: www.Herohonda.com

28

Market capitalisation*USD million

31-3-1996 31-3-2000 31-3-2005

The Hero Honda Group’s market capitalization

Change In Price

3 months

1 year

Intra day

Change: -19.20(1.14%)  Change: -30.35(0.19%) 

Open: 1,675.00 Open: 16,229.27 Close: 1,671 Close:

16,255.97

Compare with BSE

Last Trade: 1,671.00INR Change: 20.55(1.21%) 

Hero Honda

Price Earning Ratio

BHAGYASHREE S. POWALE

SYBMS

ROLL NO. M-3039

Definition

The P/E ratio of a stock is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share.

"Trailing P/E" or "P/E ttm”:Earnings per share is the net income of the company for the most recent 12 month period, divided by number of shares outstanding.

"Trailing P/E from continued operations”:Instead of net income, uses operating earnings which exclude earnings from discontinued operations, extraordinary items, or accounting changes.

"Forward P/E", "P/Ef", or "estimated P/E”:Instead of net income, uses estimated net earnings over next 12 months. Estimates are typically derived as the mean of a select group of analysts

Determining Share Prices

The company's future and recent performance, including potential growth.

Perceived risk, including risk due to high leverage.

Prospects for companies of this type, the market sector.

Present Value of Growth Opportunities (PVGO)

Present value of growth opportunities is calculated by finding the difference between price of equity with constant growth and price of equity with no growth.

PVGO = P(Growth) - P(No growth) = [D1/(r-g)] - E/r

Other related measures

Earnings yield

Price/Dividend Ratio

Dividend Yield

Two analytical models

Fundamental analysis.

Technical analysis.

EFFECTS OF STOCK MARKET ON INDIAN ECONOMY

Wealth effect

Effect on pension

Investment

Raising funds for companies

EFFECT ON COMPANIES

Difficult to issue share rights

Firm is trying to take over

A collapsing share price is often a reflection of badly performing firm

STOCK MARKET ON JANUARY 2008

Already since the start of the year the FTSE-100 has fallen 7%. Yesterday, the stock market fell 3% of 190 points on fears related to the growing credit crunch. In particular, American bank Citibank wrote off $18billion from its mortgage defaults. It hopes this will draw a line under the losses in the derivatives market.

Although, mortgage defaults in the UK are not such a problem in the UK. The UK is been squeezed by the shortage of capital as investors are unwilling to risk purchasing any ’subprime’ related debt. This has caused the cost of borrowing to increase, it means that mortgage costs have increased despite the cut in interest rates.

FACTORS THAT WILL AFFECT THE STOCK MARKET IN THE CURRENT YEAR

Slow down in growth

Cut in interest rates

Credit crisis

CURRENT BSE INDICES

BSE AUTO 6850.00 29.71

BANKEX 9583.75 17.08

BANKNIFTY 8504.55 8.40

CAPITAL GOODS 13165.67 0.97

CONSUMER DURABLES

3957.17 52.56

BSE FMCG 2746.09 2.64

BSE HEALTH CARE 4830.08 31.35

BSE IT 5160.63 1.38

BSE METALS 16015.03 14.19

OIL& GAS 9593.95 0.80

BSE PSU 9131.91 11.56

BSE TECK 3165.86 8.86

BSE SMALL CAP 7994.98 48.92

BSE MID CAP 6330.23 26.30