TOPIC

SHARE MARKET IN INDIA

WHAT IS STOCK EXCHANGE?

Stock exchange is that place where

trading of shares is done in terms of

sale and purchase.

•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.

INTRODUCTION :

.

Name of 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

1.ACC

2.BAJAJ

3.AIRTEL

4.BHEL

5.CIPLA

6.DLF

7.GRASIM

8.GUJRAT AMBUJA

9.HDFC

10.TATA 11.RIL 12.SATYAM 13.INFOSYS 14. WIPRO 15. SBI ETC….

Bombay stock exchange : It has 30 companies scripted. Some of they are…

THE TOP TEN SINGLE DAY FALLS OF THE SENSEX HAS :

1. Jan 21, 2008 --- 1,408.35 points

2. Oct 24, 2008 --- 1070.63 points

3. Mar 17, 2008 --- 951.03 points

4. Jul 06, 2009 --- 870 points

5. Jan 22, 2008 --- 857 points

6. Feb 11, 2008 --- 833.98 points

7. May 18, 2006 --- 826 points

8. Oct 10, 2008 --- 800.10 points

9. Mar 13, 2008 --- 770.63 points

10. Dec 17, 2007 --- 769.48 points

BSE SENSEX CHART DATE 11/01/2012 FROM 9:15AM TO 3:30 PM MARKET CLOSE WITH +10.77 AT 16,175.86

NATIONAL STOCK EXCHANGE (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

CONT……….

•The Organisation: 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.

CONT………

• 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

SPECULATION :

•Definition : 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.

Kinds of speculation

• Bull Market (Tejiwala): In case of that they purchase

the shares at current prices to sell at a higher price

in the near future and makes a profit if his

expectations come true.he is also called a long

buyer.

• Bear Market (Mandiwala) : He sells security in the

hope that he will be able to buy them back at lesser

price.It is also called “short selling”.

Cont………………

• Lame duck : When a bear has made contracts to sell

securities,find it difficult to meet his commitment

due to non-availability of security,they always

struggling..

• Stag : He is that type of speculator who applies for a

large number of a shares in a new issue with the

intention of selling them at a premium. He is bullish

and very cautious.

BENEFITS OF STOCK EXCHANGE

FROM THE POINT OF VIEW OF COMMUNITY: •1.It assist the economis 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.

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 cumulative pref.share: These shares cannot claim arrears of dividends of any year (if not paid due to insufficiency of profits ) out of profits of subsequent year.

• 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 reserves 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.

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

•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.

•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.

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:

•1. 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.

•2. Tender offers: this has basically two types

•A. 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…………. •B. 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.

conclusion

• THE STOCK EXCHANGE IS CONSIDERED TO BE

THE BAROMETER OF ECONOMIC ACTIVITY.