70529513 bombay stock exchange

8/20/2019 70529513 Bombay Stock Exchange

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Bombay Stock Exchange

Introduction

BSE Limited is the oldest stock exchange in Asia What is now popularly known as the BSE was

established as "The Natie Share ! Stock Brokers Association" in #$%&'

(er the past #)& years* BSE has +acilitated the growth o+ the ,ndian corporate sector by

proiding it with an e++icient capital raising plat+orm'

Today* BSE is the worlds number # exchange in the world in terms o+ the number o+ listed

companies -oer ./001' ,t is the worlds &th most actie in terms o+ number o+ transactions

handled through its electronic trading system' And it is in the top ten o+ global exchanges in terms

o+ the market capitali2ation o+ its listed companies -as o+ 3ecember )#* 400/1' The companies

listed on BSE command a total market capitali2ation o+ 5S3 Trillion #'4$ as o+ 6eb* 40#0'

BSE is the +irst exchange in ,ndia and the second in the world to obtain an ,S( /00#74000

certi+ication' ,t is also the +irst Exchange in the country and second in the world to receie

,n+ormation Security 8anagement System Standard BS %%//9494004 certi+ication +or its BSE (n9

Line trading System -B(LT1' :resently* we are ,S( 4%00#7400& certi+ied* which is a ,S( ersion

o+ BS %%// +or ,n+ormation Security'

The BSE ,ndex* SENSE;* is ,ndias +irst and most popular Stock 8arket benchmark index'

Exchange traded +unds -ET61 on SENSE;* are listed on BSE and in u?arati and


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• Launched BSE StAC 86 8utual +und trading plat+orm* which enables

exchange members to use its existing in+rastructure +or transaction in 86 schemes'

• BSE now o++ers A86, @erti+ication +or 8utual 6und Adisors through BSE

Training ,nstitute -BT,1

• @o9location +acilities +or Algorithmic trading

• BSE also success+ully launched the BSE ,:( index and :S5 website

• BSE reamped its website with wide range o+ new +eatures like Lie streaming

uotes +or SENSE; companies* Adanced Stock Ceach* SENSE; Diew* 8arket

>alaxy* and 8embers

• Launched BSE SENSE; 8(B,LE STCEA8EC

With its tradition o+ sering the community* BSE has been undertaking @orporate Social

Cesponsibility -@SC1 initiaties with a +ocus on Education*


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"Emerge as the premier Indian stock exchange by establishing global benchmarks"

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The Stock Exchange* 8umbai is now BSE Limited a new name* and an entirely new perspectie''' a perspecti

born out o+ corporatisation and demutualisation' As a corporate entity* our new logo re+lects our new mission''

smoother* seamless* and e++icient* whicheer way you look at it'

BSE is Asias oldest stock exchange'''carrying the depth o+ knowledge o+ capital markets acuired since its

inception in #$%&' Located in 8umbai* the +inancial capital o+ ,ndia* BSE has been the backbone o+ the countr

capital markets

!eritage

The +irst eer stock exchange in Asia -established in #$%&1 and the +irst in the country to be granted permanentrecognition under the Securities @ontract Cegulation Act* #/&* BSE Limited has had an interesting rise to

prominence oer the past #)) years

While BSE Limited is now synonymous with 3alal Street* it was not always so' The +irst enues o+ the earliesstock broker meetings in the #$&0s were in rather natural enirons 9 under banyan trees 9 in +ront o+ the Town


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#anagement $eam

-As o+ Fuly 40##1

Sl' No'

Name 3esignation :F' Towers6loor

# 8r' 8A35L(T


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Income statement o% Bombay Stock Exchange %or the &uarte ended '()(*)+(,,

-Cs' in Lakhs1

:articulars

6or The Huarter

Ended )0'0'##

-5naudited1

6or The Gear

Ended )#'0)'##

-Audited1

,N@(8E

(perating ,ncome #)*$%'0$ ./*%'4%

(ther ,ncome $'04 .*0)$'.$

Total ,ncome #.*&&)'#0 &)*$0.'%&

E;:EN3,T5CE

Employee @osts #*/$'). %*004'$#

@omputer Technology Celated Expenses #*#%$'&0 &*$4&'/)

Administration and (ther Expenses #*&&'#. *#$0'%4

3epreciation $0#'/& )*%%/'#

Total Expenditure &*)'/. 44*%$$'4

:ro+it Be+ore ,nterest* Exceptional ,tem ! Tax /*0)/'# )#*0#'#)

,nterest )%'4. %&'%0

:ro+it be+ore tax /*00#'/4 )0*/.0'.)

Tax Expenses 4*&$&'&) %*%'%/

Net :ro+it 6or The :eriod *.#')/ 4)*#%)'.

Less7 8inority ,nterest %)4'$% #*/%'&)

Add7 Share o+ :ro+it o+ Associate -Net1 9 )&$')$

:ro+it a+ter tax and share o+ associate &*$)'&4 4#*&.'./

:aid up Euity @apital -6ace Dalue :er Share Ce' #

Each1#*0).'0$ #*0).'0$

Ceseres -Excluding Cealuation Cesere1 9 4##*..'%)

Basic E:S a+ter Extraordinary ,tem -INot

Annualised1.'%I #/'0&

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3iluted E:S a+ter Extraordinary ,tem -INot

Annualised1.'%I #/'0&

Notes7

#' The aboe unaudited +inancial results +or the uarter and period ended Fune )0* 40## hae been

reiewed by the Audit @ommittee and approed by the Board o+ 3irectors on 4.th August* 40##'

4' The Statutory Auditors hae carried out a Limited Ceiew o+ the +inancial results'

)' As per the de+inition o+ business segment and geographical segment* contained in Accounting

Standard9#% "Segment Ceporting"* the 8anagement is o+ the opinion that the Exchanges operations

comprise o+ two segments i2'

a1 Stock Exchange Actiity b1 3epository Serices

-Cs' in Lakhs1

:articulars6or the Huater Ended

Fune )0* 40##

, Segment Ceenue

-a1 Stock Exchange Actiity #0*$.'%)-b1 3epository Actiity )*4)%'40

Total #)*/4#'/)

Less7 ,nter Segment Ceenue 9

Total ,ncome #)*/4#'/)

,, Segment Cesults

-a1 Stock Exchange Actiity %*0%$'//

-b1 3epository Actiity 4*.&4'&4

Total /*&)#'

Add 7 5nallocated @orporate ,ncome )#'#%

Less 7 5nallocated @orporate Expenses #*#0'%&

:ro+it be+ore tax /*00#'/)

Tax Expenses 4*&$&'&)

7

http://en.wikipedia.org/wiki/Profit_takinghttp://en.wikipedia.org/wiki/Profit_taking


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:ro+it a+ter tax *.#'.0

,,, @apital EmployedAs at

Fune )0*40##

-a1 Stock Exchange Actiity #$/*/))'/%-b1 3epository Actiity 4%*%#/')

-c1 5nallocated .$#'&)

Total 4#$*#)&'#)

.' The @ompany appropriates income earned -net o+ taxes1 on earmarked +unds to the respectie +und

balances under Ceseres ! Surplus' Earnings per share +or the respectie periods is computed a+ter

ad?usting +or appropriations in respect o+ the earmarked +unds'

&' The @ompany in the current uarter has distributed diidend o+ Cs' .J9 per share aggregating Cs'.*/#'## Lakhs -including 3iidend 3istribution Tax1 as declared in its Annual >eneral 8eeting dated

4/th Fune* 40##'

' :ursuant to the BSE -@orporatisation ! 3emutualisation1 Scheme* 400&* -the Scheme1 the

@ompany intends to reorgani2e its operations through a @ourt approed Scheme o+ Arrangement by

trans+erring its @learing ! Settlement business and related assets and liabilities to ,ndian @learing

@orporation Limited e++ectie April 0#* 40##'

This proposed reorgani2ation would be sub?ect to receipt o+ necessary approalsJregistrations +rom

statutory authorities and the approal o+ the Scheme by the @ourt'

%' The group commenced presentation o+ consolidated +inancial results +rom hal+ year ended

September )0* 40#0* hence comparatie +igures +or the preious period are not presented'

6or and

on behal+

o+ Board

o+

3irectors

o+

8umbai*

August 4.* 40##

BSE

L,8,TE3 s

8adhu

=annan

83 !

@E(

8


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Scams


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Through the second hal+ o+ #//# 8ehta had earned the sobriuet o+ the KBig BullK* who was said

to hae started the bull run'

(n April 4)* #//4* ?ournalist Sucheta 3alal in a column in The Times o+ ,ndia* exposed the

dubious ways o+


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willing to issue BCs as and when reuired* +or a +ee*K the authors point out'

(nce these +ake BCs were issued* they were passed on to other banks and the banks in turn gae

money to 8ehta* obiously assuming that they were lending against goernment securities when

this was not really the case' This money was used to drie up the prices o+ stocks in the stock

market' When time came to return the money* the shares were sold +or a pro+it and the BC was

retired' The money due to the bank was returned'

The game went on as long as the stock prices kept going up* and no one had a clue about 8ehtaKs

modus operandi' (nce the scam was exposed though* a lot o+ banks were le+t holding BCs which

did not hae any alue 9 the banking system had been swindled o+ a whopping Cs .*000 crore'

When the scam was +inally reealed* the @hairman o+ the Di?aya Bank committed suicide by

?umping +rom the o++ice roo+ because he knew that i+ people come to know about his inolement

in issuing cheues to


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BSE categories

Bombay Stock Exchange or the BSE is the largest stock exchange in ,ndia in terms o+ highest

number o+ companies listed with the stock exchange' ,+ you consider the market capitali2ation o+

the companies listed with BSE een then the stock exchange is the largest in the country' There

are thousands o+ companies listed at the stock exchange and they are diided into di++erent

categories depending on arious +actors including market capitali2ation* parameters set by the

Securities and Exchange Board o+ ,ndia or the SEB,* number o+ years o+ listing at the exchange*

euity capital o+ the company* liuidity o+ the company and so many other +actors'

8arket capitali2ation o+ the company is a determining +actor +or diiding the stocks in di++erent

groups' 8arket capitali2ation o+ a company is calculated by multiplying the number o+

outstanding stocks o+ the company at the market with the current price o+ the stock at the market'

Along with that the bonds at the debt market o+ the company are also taken into consideration'

3epending on the market capitali2ation stocks are diided mainly into three categories M the large

cap stocks* mid cap stocks and the small cap stocks' >enerally the biggest companies with amarket capital o+ more than #0 billion are considered to be large cap stocks' The range +or

determining the mid cap stocks is between 4 billion to #0 billion' @ompanies that hae a

market capitali2ation o+ the less than 4 billion are grouped under the small cap stocks'

Securities and Exchange Board o+ ,ndia is the goerning body +or all the stock exchanges in ,ndia

and they +rame the rules and regulations +or the stock exchanges' Starting right +rom the listing o+

the companies* issuing o+ securities* trading o+ stocks at the stock market* eerything is controlled

by the Securities and Exchange Board o+ ,ndia or SEB,' Based on the guideline and parameters o+

trading by the SEB, authorities* the stocks listed at the BSE are diided' That means there are

di++erent trading guidelines and rules +or each o+ the categories o+ stocks listed at the BombayStock Exchange'

(ther +actors like the number o+ years o+ listing o+ the company are considered +or determining

the authenticity o+ the company and the business potential o+ the company' The euity capital o+

the company and the asset o+ the companies are also considered +or examining the +inancial

potential o+ the company' When a company applies +or listing at the Bombay Stock Exchange

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they hae to +ul+ill all the set conditions and then the BSE authority carries out a due diligence to

examine the company' A+ter that depending on the parameters o+ the categori2ation the company

is listed at the appropriate group' (+ten times listed stocks are rearranged by the BSE' That is the

group or the category o+ the stocks is changed on the basis o+ the parameters that are set +or

determining the category o+ the stock'


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0eed %or Bombay Stock Exchange

BSE is one o+ the +actors ,ndian Economy depends upon' BSE has played a ma?or role in thedeelopment o+ the country' Through BSE* 6oreign ,nestors hae inested in ,ndia' 3ue toinward +low o+ +oreign currency the* the ,ndian economy hae started showing the upward trendtowards the deelopment o+ the country' BSE proides employment +or many people' Trading inBSE is also a business +or a +ew* their +amily income depends on it* that is the reason why when

scandals occur in the stock market it not only a++ects the companies listed but also a++ects many+amilies' ,n the +ew extreme cases* it is obsered that the bread winner o+ a +amily tends to suicidedue to the losses occurred' ,n most o+ ma?or industrial cities all oer the world* where the businesses were eoling and reuired inestment capital to grow and thrie* stock exchangesacted as the inter+ace between Suppliers and @onsumers o+ capital' (ne o+ the key adantages o+the stock exchanges is that they are e++icient medium +or raising resources and channeling saings+rom the general public by the way o+ issue o+ Euity 3ebt @apital by ?oint stock companieswhich are listed on stock exchanges' Not to +orget that the taxes and other statutory charges paid by BSE are substantial and make a si2eable contribution to the >oernment excheuer -6inancialresourcesQ +unds1' 6or example* transactions on the stock exchanges are sub?ect to stamp duties*which is paid to the State >oernment' The annual reenue +rom this source ranges +rom Cs %& M

#00 crores With the opening up o+ the +inancial markets to 6oreign ,nestors a number o+ +oreigninstitutional inestors and brokers hae established a si2eable presence in 8umbai'With no doubtwe can clearly state without BSE* the ,ndian Economy would hae been a complete di++erentstory' Darious companies wouldnt hae been a strong and success+ul as they are today and the brokers and traders would hae been elsewhere' BSE is an asset to our country and its existence plays a ital role in many peoples li+e who depends on it' ,ndeed* BSE has made a ma?orcontribution to the industrial and economic deelopment o+ ,ndia'

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/unction o% Bombay Stock Exchange

The Stock 8arket is a piotal institution in the +inancial system' A

well9ordered stock market per+orms seeral economic +unctions7

,t ensures the measure o+ sa+ety and +air dealing

,t per+orms an Oact o+ magic by translating short9term

inestments into long9term +unds +or companies'

,t directs the +low o+ capital in the most pro+itable

channels'

,t induces companies to raise their standard o+

per+ormance'

,t o++ers guidance to management about the cost o+ captal

#easure o% Sa%ety and /air 1ealing2

The Bombay stock exchanges operate under a regulatory +ramework whichseeks to protect the interest o+ inestors' The rules* regulations*

and bye9laws o+ a stock exchange* which are approed by thecentral goernment* are meant to ensure that a reasonablemeasure o+ sa+ety is proided to inestors and transactions take place in competitie conditions which are +air to all concerned'

Act o% #agic2

8ost o+ the inestors are interested in short9term inestments' The

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reuirements o+ companies are* howeer* long9term in nature theyreuire euity capital on a more or less permanent basis anddebenture capital +or ) to#& years' Thanks to the negotiability andtrans+erability o+ securities* through the Bombay stock exchange* it is possible+or companies to obtain their long9term reuirements +rom

inestors with short9term hori2ons' While one inestor issubstituted by another when a security is transacted* the companyis assured o+ aailability o+ +unds'

/low o% 3apital in the #ost ro%itable 3hannels2

@ompanies which hae more pro+itable inestment opportunities arenormally able to raise substantial +unds through the stock market* whereas companies which donot hae such opportunities arenormally not able to do so' As a result* the Bombay stock exchange +acilitates

the direction o+ the +low o+ capital in the most pro+itable channels'

Inducement to 3ompanies to 4aise their Standard o%

er%ormance2

When the euity capital o+ a company is listed on a stock exchange* the per+ormance o+ the company is re+lected in themarket price o+ the euity stock* which is readily aailable +or publicconsumption' :ut di++erently* the companys per+ormance is moreOisible in the eyes o+ public' Such a public exposure normallyinduces companies to raise their standard o+ per+ormance'

5uidance o% 3ost o% 3apital2

The market alue o+ the securities o+ company are reuired +or computing its cost o+ capital' Such alues can be obtained +romstock market uotations'


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IS$I05 O/ $!E 3O#A0IES O0 S$O36

E73!A05E

ublic imited 3ompany)

:ublic Listed @ompany:ublic Non9listed @ompany8isted 3ompany9 means a public ltd @o which is7

#' Listed on any one or more recogni2ed stock exchanges in ,ndia'4' Securities -shares7 debentures1 o+ such company are traded on such stock exchanges'

O:nlisted company9 there+ore means a company whose securitiesare not listed on any o+ recogni2ed stock exchanges in ,ndia'

;hy 3ompanies get isted with Stock Exchange<

@ompanies get listed with Stock Exchange +or +ollowing reasons7

#' Securities are +reely trans+erable'4' Easy liuidity o+ securities')' Easy aailability o+ prices o+ securities'.' Ceputation* ,mage* >oodwill'&' :ublic awareness'' 8ore transparency'%'


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,n order to list securities o+ a company ! get its shares traded onany recogni2ed stock exchanges* the :ublic Ltd @ompany mayeither come out with a public issue -i'e' to o++er +urther securitiesto public1 or make an o++er +or sale o+ existing securities to public' This can be done by issuing o+ :rospectus ! @omplying

with all The :roinces o+ @ompany Act #/&'Each stock exchange has its own criteria +or listing securitieswhich should also be met'E'g'7 ,+ company intends to get listed its securities in BombayStock Exchange* 8umbai post issue capital -paid up capital a+ter proposed public issue1 o+ such companies should be Cs' #0@rores atleast'The @ompany enters into a listing agreement with concernedstock exchange ! on receipt o+ permission +rom concerned Stock Exchange* company is listed and securities are therea+ter tradedon such stock exchange'

1ematerialisation

3ematerialisation is the process o+ conerting the physical +orm o+ shares into electronic +orm':rior to dematerialisation the ,ndian stock markets hae +aced seeral problems like delay in thetrans+er o+ certi+icates* +orgery o+ certi+icates etc' 3ematerialisation helps to oercome these problems as well as reduces the transaction time as compared to the physical segment' The article

discusses the procedures* adantages and problems o+ dematerialisation'

The ,ndian Stock markets hae seen a ma?or change with the introduction o+ depository systemand scrip less trading mechanism' There were arious problems like inordinate delays in thetrans+er o+ share certi+icates* delay in receipt o+ securities and inadeuate in+rastructure in bankingand postal segments to handle a large olume o+ application and storage o+ share certi+icates 'Tooercome these problems physical dealing in securities should be eliminated ' The ,ndian stockmarket introduced the system o+ dematerialisation recogni2ing the need +or scrip less trading'

According to the 3epositories Act* #//* an inestor has the option to hold shares either in physical or electronic +orm 'The process o+ conerting the physical +orm o+ shares into electronic

+orm is called dematerialisation or in short demats' The conerted electronic data is stored withthe depository +rom where they can be traded' ,t is similar to a bank where an inestor opens anaccount with any o+ the depository participants' 3epository participant is a representatie o+ thedepository 'The 3: maintains the inestors securities account balances and intimates him aboutthe status o+ holdings'

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rocedure %or converting the physical shares into electronic %orm)

To conert the shares into electronic +orm the inestor should open an account with any o+ thedepository participants' 6or opening an account the inestor has to +ill up the account opening+orm' An account number -client ,31 will be allotted a+ter signing the agreement which de+ines

the rights and duties o+ the 3: and the inestor wishing to open the account' The client ,3 alongwith the 3: ,3 gies a uniue identi+ication in the depository system' Any number o+ depositoryaccounts can be opened'

A+ter opening an account with the 3: the inestor should surrender the physical certi+icates heldin his name to a depository participant' These certi+icates will be sent to the respectie companieswhere they will be cancelled a+ter demateriali2ation and will credit the inestors account with the3:' The securities on dematerialisation will appear as balances in the depository account' These balances can be trans+erred like the shares held in physical +orm' 3ematerialised shares are in the+ungible +orm and do not hae any distinctie or certi+icate numbers 'The securities in the dematcan again be conerted into physical +orm which is called as rematerialisation'

Sa%ety to the investor

= Securities Exchange Board o+ ,ndia -SEB,1 has laid down certain rules and regulations +orgetting registered as a depository participant' With the recommendation o+ the 3epository andSEB,s own independent ealuation a 3: will be registered under SEB,'

= The inestors account will be creditedJdebited by the 3: only on the basis o+ alid instruction+rom the client'

= The system drien mandatory reconciliation is done between the 3: and NS3L'

= :eriodic inspections o+ both 3: and C!T agent are conducted by NS3L

= The data interchange between NS3L and its business partners is protected by standard protection measures such as encryption'

= No direct communication links exist between two business partners and all communications are

routed through NS3L'

= A statement o+ account is receied periodically by the inestors' NS3L sends statement o+account to a random sample o+ inestors a s a counter check'

= The inestor has the right to approach NS3L i+ the grieances o+ the inestors are not resoled by the concerned 3:'

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Advantages o% dematerialisation

= There is no risk due to loss on account o+ +ire* the+t or mutilation'

= There is no chance o+ bad deliery at the time o+ selling shares as there is no signature

mismatch'

= Transaction costs are usually lower than that in the physical segment'

= The bonus Jrights shares allotted to the inestor will be immediately credited into his account'

= Share transactions like sale or purchase and trans+erJtransmission etc' can be e++ected in a muchsimpler and +aster way'

roblems o% 1ematerialisation'

:rior to demateriali2ation there was almost a gap o+ three months between application date andlisting o+ shares '3ematerialisation has reduced this gap to a great extent' But uick money bringswith itsel+ a host o+ problems' @urrent regulations prohibit multiple bids or applications by asingle person'But the inestors open multiple demat accounts and make multiple applications tosubscribe to ,:(s in the hope o+ getting allotment'

The recent ,:( allotment scam proes that een a highly automated system is not the solution to preent malpractices* i+ there is laxity' The scam o+ Ges bank and ,36@ reeal that the inestor banker has +ailed to weed out multiple applications either direct or benami' Not only the inestor banker the 3: and the depository +ailed to detect the large number o+ demat accounts opened withthe same address but di++erent names' Lack o+ coordination between banks* 3:s* brokers

depositories* registrars and inestment bankers and clarity o+ their roles has gien rise to such problems'

4emedial measures

= To preent the sprouting o+ +ictitious demat accounts at 3:s the allotment o+ shares should bechecked thoroughly'

= The concerned 3: should strictly en+orce the =now your client -=G@1 norms rather thanrelying on bank documents and eri+ication o+ brokers'

= 3:s should be asked to gie monthly +igure o+ accounts opened +or the public'

= @oordination and @lear de+inition o+ roles is important to weed out manipulations'

Though dematerialisation has seeral bene+its the recent scam has the potential to adersely a++ectthe con+idence o+ retail inestors in the capital market 'To reap the bene+its o+ dematerialisationSEB,* as a regulator has to place a system that is alert and igilant against un?ust gains'

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$4A1I05 > SE$$E#E0$

3emat Account is a compulsory Account +or traders who want totrade in stock market' This account is mainly used +or buying andselling o+ shares'

$rading

Each Stock Exchange has listed and permitted securities that aretraded on it' There are two ways o+ organi2ing the trading actiity'

#' Open Outcry System

5nder the open outcry system traders shout and resort to signals on the trading +loor o+ theexchange which consists o+ seeral Onotional trading posts +or di++erent securities' A member -orhis representatie1 wishing to buy or sell a certain security* reaches the trading post where the

security is traded'


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,n the screen9based system the trading ring is replaced by the computer screen and distant participants can trade with each other through the computer network' A large screen based tradingsystem -a1 enhances the in+ormational e++iciency o+ the market as more participants trade at a+aster speedQ -b1 permits the market participants to get a +ull iew o+ the market* which increasestheir con+idence in the marketQ and -c1 establishes transparent audit trails'

Settlement2

The settlement o+ transactions is done on a settlement period basis' Earlier* the settlement periodon the ,ndian Stock Exchanges was % days* but now it is TR# settlement' TR# includes the day o+trade and an additional day' 3uring a settlement period* buying and selling transactions in a particular security can be suared up' Suare o++ is a same day settlement cycle' At the end o+settlement period* transactions are settled on net basis' Since the settlement period used to be % days and the settlement is +or the net position* most o+ the transactions aresuared within the settlement period' @learly these transactions are motiated by a desire to pro+it+rom price ariations within the settlement period' Traditionally* trades hae been settled by

physical deliery' This means that the securities hae to physically moe +rom the seller tothe sellers broker* +rom the sellers broker to the buyers broker -through the clearing house o+the exchange or directly1* and +rom the buyers broker to the buyer' 6urther the buyer has to lodgethe securities with the trans+er agents o+ the company and the process o+ the trans+er may take oneto three months' This leads to high paperwork cost and creates bad paper risks'To mitigate the cost and the risks associated with the physical deliery* settlement in thedeeloped securities market is mainly through electronic deliery +acilitated by depositories' AOdepository is an institution which immobili2es physical certi+icates -o+ securities1 and e++ect trans+ers o+ ownership by electronic book entry' A beginning in the directiono+ electronic deliery has been made in ,ndia with the establishment o+ the National Securities3epository Limited -NS3L1* ,ndias +irst depository* in #//' As NS3L expands its operationsand as new depositories come into being* settlement will progressiely be done more byelectronic deliery and less by physical deliery'

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I0VES$#E0$,nestment means the use o+ money +or the purpose o+ makingmore money* to gain income or increase capital* or both'

Short Term ,nestment

Long Term ,nestment

,) Short $erm Investment2

,t is more riskyA success+ul short term trading mindset instead reuires irondiscipline* intense +ocus and steely deotion'Short term trading can be diided in ) sections

3ay Trading Swing Trading

:osition Trading

1ay $rading

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3ay traders buy and sell stocks throughout the day in the hope that the price o+ the stocks will+luctuate in alue during the day* allowing them to earn uick pro+its' A day trader will hold astock anywhere +rom a +ew seconds to +ew hours* but will always sell all o+ those stocks close o+the day' The day trader will there+ore not own any position at the close o+ the each day* and thereis oernight risk' The ob?ectie o+ day trading is to uickly get in and out o+ any particular stock

+or pro+its anywhere +rom +ew cents to seeral points per share on an intra9day basis' 3ay tradingcan be +urther sub9diided into number o+ styles* including'Scalpers: This style o+ day trading inoles the rapid and repeated buying and selling o+ a largeolume o+ stocks within seconds or minutes' The ob?ectie is to earn a small per share pro+it oneach transaction while minimi2ing the risk'

Momentum Traders: This style o+ day trading inoles identi+ying andtrading stocks that are in a moing pattern during the day* in anattempt to buy stocks at bottoms and sell at tops'

Swing $rading

The principal di++erence between day trading and swing trading is that swing traders will normallyhae a slightly longer time hori2on than day traders +or holding a position in a stock' As is thecase with day traders* swing traders also attempt to predict the short term +luctuation in astocks price'


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succumbs to the markets lure and deelops a +rantic* get9it9now mindset belieing eery price bliprepresents a trading opportunity' As this attitude is +anned by the media and brokerage industry*more and more long term traders hae become aggressie swing traders and swing traders become rabid day traders 9 more o+ten than not with disastrous conseuences' Long term tradingresults in less trades with +ewer mistakes and lower commission and slippage costs because

oertrading is one o+ the biggest sources o+ losses +acing both new and established traders' Why isthis soK (biously* more trades mean more commissions and more slippage' 6ew short9termtraders reali2e* howeer* that their total commission and slippage costs in any year o+ten exceedtheir total losses +or the year' ,n other words* many losing short9term traders would hae actuallymade money on an annual basis had they not incurred the exorbitant commission and slippagecosts o+ trading throughout the year' 6ewer trades mean +ewer mistakes' Long term trading unlikeshort term reuires dramatically reduced time +or analysis and trading' ,+ you are trading usingweekly data* only one to two hours each weekend are reuired to implement a sophisticated longterm trading system +or 4# or more commodities' This includes the time to completely downloadyour uotes and update your data +iles* eri+y which are the correct months to trade +or eachcommodity* +igure out i+ you hae any positions to rolloer* generate your trading signals* and

write down orders to your broker' (n the contrary a typical success+ul day trader literally becomesa slae to their uote machines during market hours'

/actors A%%ecting Bombay Stock Exchange

There are arious +actors that a++ects BSE7

,?Scams like the %ollowing one2@

$!E 6E$A0 A4E6! S3A#

=etan :arekh was a graduate +rom oernment o+ ,ndia* the stock markets and the inestorsalike This sudden crash in the stock markets prompted the Securities Exchange Board o+ ,ndia-SEB,1 to launch immediate inestigations intothe olatility o+ stock markets' The scam shook theinestors con+idence in the oerall +unctioning o+ the stock markets' By the end o+ 8arch 400#*at least eight people were reported to hae committed suicide and hundreds o+ inestors weredrien to the brink o+ bankruptcy' The +irst arrest in the scam was o+ the noted bull* =etan :arekh-=:1* on 8arch )0* 400#* by the @entral Bureau o+ ,nestigation -@B,1' Soon* reports abounded

as to how =: had single handedly caused one o+ the biggest scams in the history o+ ,ndian+inancial markets'


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was one o+ the ma?or scam in ,ndia a+ter oernment o+ ,ndia1 mentions some reasons +or the need o+ 6,, +lows' 6,, +lows supplement andaugment domestic saings and domestic inestment without increasing the +oreign debt o+ our country' @apital in+lows to the euity market increase stock prices lower the cost o+ euity capitaland encourage inestment by ,ndian +irms' The ,ndian stock markets are both shallow and narrowand the moement o+ stocks depends on limited number o+ stocks' As 6,,s purchases and sellsthese stocks there is a high degree o+ olatility in the stock markets' ,+ any set o+ deelopmentencourages out+low o+ capital that will increase the ulnerability o+ the situation' The high degreeo+ olatility can be attributed to the +ollowing reasons

UThe increase in inestment by 6,,s increases stock indices in turn increases the stock prices andencourages +urther inestments' ,n this eent when any correction takes place the stock pricesdeclines and there will be +ull out by the 6,,s in large number as earning per share declines' UThe6,,s manipulate the situation o+ boom in such a manner that they wait till the index raises up to acertain height and exit at an appropriate time' This tendency increases the olatility +urther'

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So een though the port+olio inestment by 6,,s increases the +low o+ money in the economicsystem* it may create problems o+ in+lation'

$4A0S/O4#A$IO0 O/ $!E S$O36

E73!A05E- #:#BAI $O BSE $1)

The change in the name o+ Asias oldest stock exchange* +rom the Stock Exchange* 8umbai to theBombay Stock Exchange Ltd'* -BSE Ltd'1 is o+ more than cosmetic signi+icance' Along with thechange in name comes a new perspectie* one brought about by a comprehensie change in itownership and management' 5ntil now* the BSE like most other exchanges in ,ndia was ownedand managed by brokers* who also had the sole right to trade in the exchanges' @on+licts o+interest were bound to arise in such situations' 5ntil the adent o+ the National Stock Exchange in #//.* the BSE was ,ndias pre9eminent exchange* accounting +or an oerwhelminglylarge proportion o+ the share market transactions o+ the country' @ompanies whereer locatedwere adised to seek a listing o+ their shares on the BSE so that they could hae access to its largereseroir o+ capital and inestor base' Legally speaking* it was enough i+ they listed their shares

on any one o+ the regional stock exchanges* closest to their registered o++ice' This last rule* like somany others connected with the securities market* had to be discarded in the wake o+ thesweeping changes in the +inancial markets since the #//0s' :erceptions o+ both inestors andregulators changed dramatically +orcing the stock exchanges to oerhaulthemseles'A series o+ securities scams through the #//0s in which brokers were inariably held accountable*the inability o+ the broker9dominated exchanges to check mal+easance* and a astly expandingrole +or the capital market in the national economy necessitated a thorough reiew o+ the age9oldstock market structure' ,n the new demutualised an corporatised exchanges that came about as part o+ a ma?or capital market re+orm a time9bound program +or #0 other exchanges has since been announced V the right to trade is segregated +rom the right t own and manage the exchange'The transition is not going to be easy as it inoles the imparting o+ a much greater degree o+ pro+essionalism' Stock market pro+essionals +rom outside the broking community are reportedlyin short supply' By +ar the biggest unknown +actor relates to the +uture ownership o+ the exchange'Brokers will cede control and inestors including retail ones will hold a substantial portion o+ theexchanges euity' Apart +rom this being totally new to ,ndia* it does raise the possibility o+ othercon+licts o+ interest including the one connected with the listing o+ its own shares'

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3O03:SIO0

With the increasing >lobali2ation* the Stock Exchanges hae tremendously a++ected the +inancialconditions o+ ,ndia' The stock markets o+ the +uture will hae a rede+ined pupose and reinentedarchitecture due to the adent and widespread use o technology' ,n+ormation and stock priceuotations are aailable almost instantaneously* and* more importantly* inestors can act on thisdata by executing a trade +rom anywhere at anytime' This new market will bring bene+its toinestors* the listed companies* and the economies o+ the company' Trading will become cheaper*+aster and settlement will be simpler wit reduced risk' Caising capital +or companies will becomeeasier* thereby contributing directly to the Economic >rowth' Already* BSE has shown its proactie response by increasingly using leading edge to technologies to e++ectiely compete inthe global enironment' ,n the not too distant +uture* once +ull capital account conertibility is permitted in ,ndia* one could well witnessan expansion o+ trading olumes and its resultanteconomic bene+its to the thriing and eer young metropolis o+ 8umbai' ,nspite o+ all these positie predictions* the +uture o+ Stock Exchanges is likely to be uncertain and een theirsurial is a ma?or uestion mark'

70529513 bombay stock exchange

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