bse (100 marks)

8/11/2019 Bse (100 Marks)

http://slidepdf.com/reader/full/bse-100-marks 1/72

BOMB Y STOCK EXCH NGE

INTRODUCTION

TO

PROJECT

1

8/11/2019 Bse (100 Marks)



1.1 OBJECTIVE OF THE STUDY

As the country is witnessing there is a manic change in the stock market, the

desire is to know the Indian stock market sector. As the stock market sector is

becoming more and more beneficial, in this increasingly competitive scenario,

the risk associated with it also increases in investment in shares that is depends

on [EQUITY AND DARIVATIVES SHARES OF THE COMPANY].

Thus, realizing the importance and relevance of the shares, I choose to study the

“STOCK MARKET”. By focusing on the various risk factors facing by investors

in shares in [Bombay stock exchanges] and it is totally depends on the

purchasing shares of company. And also the making order in derivatives &

equity shares. Along with this, also to study that when we have to purchase the

shares of the company. Investment planning in MID-CAP.

2

8/11/2019 Bse (100 Marks)



1.2 METHODS OF DATA COLLECTION.

I made use of both primary and secondary data.

The primary data was collected through the visit to [KARVY BROKING

FINAPOLIS.] I have analyzed the entire trading aspects without much data but

based on the various reports and my personal meetings with the concerned share

khan.

Similarly the primary data also collected through relatives, friends who are

working in the [BSE].

The secondary data was collected through magazines [fortune India magazine],

newspaper [the economic times] and the Internet.

3

8/11/2019 Bse (100 Marks)



1.3 METHODOLOGY OF THE STUDY

The study consisted of following Parts.

Gathering the practical aspects of the study for understanding the subject.

This was mainly to know what is to be asked in the personal meeting with

the share khan.

My own experience on shares.

The purpose of the practical visit was to get true picture of the present

scenario of [BOMBAY STOCK EXCHANG] that is present online trading

of shares which is highly demand by share investors.

Also made use of the secondary data. Like various books, such as

[operating of stock exchange in India], and also visit to various Library.

4

8/11/2019 Bse (100 Marks)



1.4 LIMITATIONS OF THE STUDY

I have analyzed the entire aspects of online trading of shares without

much data but based on the various reports and my personal meetings.

Since the project is been done by the individual, it is difficult to cover the

topic on a large scale (fully).

And it was very difficult to approach to [BSE], as this information is

highly confidential.

Secondly comes the resource, which includes the manpower, money etc.

that has added constraint to the collection of data.

5

8/11/2019 Bse (100 Marks)



INTRODUCTION

OF

STOCK MARKET

6

8/11/2019 Bse (100 Marks)



7

8/11/2019 Bse (100 Marks)



INTRODUCTION:

Stock exchange plays a positive role in all capitalistic countries. They bring

investors & companies closer &facilitate investment of money in the corporate

sector through shares, debentures & other corporate securities.

Stock exchanges operate in Mumbai, Chennai, Kolkata, Delhi other big cities. We

have now National Stock Exchange (NSE) operating in Mumbai. Bombay Stock

Exchange (BSE) is the first &the formation of the Native Share & Stock Brokers

Association. It is the most active & sensitive stock exchange in India. In this

chapter, we propose to study various aspects of stock exchanges.

MEANING OF STOCK EXCHANGE

Stock exchange (also called stock market or share market) is one important

Constituent of capital market. It is an organized market for the purchase &sale of

industrial &financial securities. It is an investment intermediary & facilitates

economic & industrial development of a country. Stock exchange can be

described as an association of people organized to provide an auction market

among themselves for the purchase & sale of securities.

“stock exchange are privately organized markets which are used to facilitate

trading in securities”.

HISTORY:-

Indian stock market is one of the oldest in Asia. Its history dates back to nearly

200 years ago. The earliest record of security dealing in India is meager and

obscure. The east India Company was the dominant institution in those days and

business in its loan securities used to be transected towards the close of the

eighteenth century. Bombay becomes the major center of trading activity in

securities. This trading activity was unorganized and informal in nature.

8

8/11/2019 Bse (100 Marks)



1830In Bombay, some bank shares also entered in to the trading place. These shares

included that of commercial bank, charted mercantile bank, Agra bank, Oriental

bank, and bank of Bombay

1840-50

There were half a dozen stock brokers in Bombay recognized by bank and

merchants.

1860

The number of broker increased to 60 with the passing of joint stock companies

act in 1850, the number of companies involved in various types trades started

growing. Since Britishers were ruling the country at that time, most of provision

of the companies Act, 1850 and subsequent companies Acts closely related to

British company law2.at that time all important decision regarding Indian

economy were either taken or influenced by britishers.

1860-61

Due to the outbreak of civil war in united states of America, cotton supply to

Britain from USA was stopped totally consequently.

1863-65

Prevailing cotton price during was 5to9 times higher than price charged earlier to

this period. Since beginning, Bombay stock exchange is considered as the leader

among Indian stock exchanges. Therefore, trends and development that have

taken place at the Bombay stock exchange or that are taking place there can be

treated as broad indicators of performance of stock exchanges in the country.

9

8/11/2019 Bse (100 Marks)



ROLE OF STOCK EXCHANGE IN CAPITAL MARKET:

Stock exchange is indispensable for the orderly functioning of corporate sector.

They are also useful for the growth, expansion & diversification of the corporate

sector. Stock exchange facilitates the process of capital formation, industrial &

economic growth & the expansion of employment opportunities within the

country.

opportunities for investors

Stock exchange provide profitable channel for the investment of surplus funds in

the corporate sector. They provide safe & profitable investment opportunities to

individuals & institution with surplus funds. Saving is converted into profitable

corporate investment because of the services of stock exchange. The exchange

provides liquidity as well as profitable investment outlets to surplus funds.

ROLE OF SEBI IN MONITORING STOCK EXCHANGE:

SEBI is a regulatory organization operating in India since 1992. It essential a

regulated organization for the orderly growth of capital market & also for givingprotection to genuine investor. It regulated operation of financial intermediaries

operating on the exchanges.

• FUNCTION OF SEBI

To protect the interests of investors through proper education & guidance as

regards their investment in securities. For this, SEBI has made rules & regulation

to be followed intermediaries such as brokers, etc.

• CONTROLLING BUSINESS & STOCK EXCHANGE

To regulated & control the business on stock exchange & other security markets.

For this, SEBI keeps supervision on brokers. Registration of brokers & sub-

brokers is made compulsory & they are expected to follow certain rules &

10

8/11/2019 Bse (100 Marks)



regulations. Effective control is also maintained by SEBI on the working of stock

exchange.

To make registration & to regulate the functioning of intermediaries such as

stock brokers, merchant bankers & other intermediaries operating on thesecurities market. In addition, to provide suitable training to intermediaries. This

function is useful for healthy atmosphere on the stock exchange & for the

protection of small investors.

SUPERVISION ON REGISTRATION

One of the functions of SEBI is too regulated & controls the business or stock

exchange & other security market. For this SEBI keep supervision on brokers.Registration of brokers & sub- brokers is compulsory & they expected to follow

certain rules & regulation. Effective control is also maintained by SEBI on the

working of stock exchange operating in India. In addition, the following function

of SEBI is useful for monitoring the working of stock exchange in India.

INVESTORS MOST FAVORITE STOCK EXCHANG

EMPLOYMENTSEGMENT

OVERALL

BUSINESS(36%)

SALARIED(33%)

OTHER(31%)

%

NSE 86.11 87.88 90.32 100% BSE 13.89 12.12 9.68 12%

ANY OTHER 0 0 0 0%

OVERALL 100 100 100 100%

Higher proportion with compare to BSE & NSE 88% preference give first to NSE

due to its efficient functioning.

11

8/11/2019 Bse (100 Marks)



A GUIDE TO THE STOCK TABLE

[BSE] quotes of a scrip’s are given in the first line while the

quotation in second line starting with [N] are those of [NSE] thequotation are followed by the number of shares traded number oftrades and the[BSE] scrips group. This is followed by the priceearning ratio and market capitalization 52 weeks high.

Earning per share is the ratio of a company current share price

compared to its earning per shares. The economic times calculate

[EPS] as the trailing 12 month net profit divided by the total

number of outstanding shares. The consolidated net profit of only

those companies is considered whose trailing 12 months figures are

available.

Companies other than those with a face value of Rs. 10 per shares

are indicated by their face value in after the company name.

In the event of a share quoting at a new high or low on the [BSE]the high or low prices is shown in bold type with an [H] attached to

the high volume or L to the low value. For [NSE] [H] and [L] values

are given with the 52-week H/L.

The closing price of the company will be underlined every time its

closing price falls below its last offer price on BSE

For a BSE scrips, a 3% change for a group shares and 15% change

are the rest of the scrips in the days closing value, as compared to

the previous closing are shown in bold type with plus or minus

sign, as the case may be.

12

8/11/2019 Bse (100 Marks)



MAJOR TYPES OF STOCK EXCHANGES

B

S

E

2nd

N

S

E

1st

nd

2nd position

BOMBAY STOCK EXCHANG

13

8/11/2019 Bse (100 Marks)



.

14

8/11/2019 Bse (100 Marks)



BOMBAY STOCK EXCHANGE

INTRODUCTION

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a richheritage. Popularly known as "BSE", it was established as "The Native Share &

Stock Brokers Association" in 1875. It is the first stock exchange in the country to

obtain permanent recognition in 1956 from the Government of India under the

Securities Contracts Act, 1956.

The Exchange is now a demutualised and corporative entity incorporated under

the provisions of the Companies Act, 1956, pursuant to the BSE Scheme, 2005

notified by the Securities and Exchange Board of India (SEBI).

Bombay Stock Exchange Limited received its Certificate of Incorporation on 8th

August, 2005 and Certificate of Commencement of Business on 12th August,

2005.

The Exchange is professionally managed under the overall direction of the Board

of Directors. The Board comprises eminent professionals, representatives of

Trading Members and the Managing Director of the Exchange.

THUS, BOMBAY STOCK EXCHANGE IS QUITE IMPORTANT

Yes, after going through the above discussion, it can be rightly said that the

Bombay Stock Exchange is a very important exchange not only in India but also

in the Asian Continent. It is the oldest stock exchange in Asia and at present, it isthe pillar of the capital markets in India. It has contributed greatly to the

development of capital market and has its presence in hundreds of cities across

the nation.

15

8/11/2019 Bse (100 Marks)



LOGO

The Stock Exchange, Mumbai, is now Bombay Stock

Exchange Limited. The Exchange has a new name, and an

entirely new perspective. Perspective born out of

corporatisation and demutualization. Bombay Stock

Exchange Limited is Asia’s oldest stock exchange. It

carries within itself the depth of knowledge of capital markets acquired since

its inception in 1875. Located in Mumbai, the financial capital of India, it has

been the backbone of the country’s capital markets. As a corporate entity, our

new identity reflects our new perspective. Smoother, seamless, and efficient.

Whichever way you look at it.

CAREERS

At Bombay Stock Exchange Ltd, we continuously upgrade ourselves and strive to

provide world-class service, thus adding value to the Capital Market. BSE is

committed to operating a fair and orderly market that is both technologies driven as

well as fast paced, with an edge of efficiency. The Exchange believes that employees

are the driving force for its ambitious growth plans. We at the Exchange, endeavor to

attract motivated, adaptable employees with a customer service focus, strong team

The Exchange is committed to creating and maintaining a culture that fosters an

inclusive, diverse workforce; an environment in which every employee has the

opportunity to demonstrate his or her potential by performing to meet the challenges

ahead.

We offer every employee a very congenial and vibrant working environment,

conducive to bringing out the best in every employee. If you're looking for a

challenging career, and are excited by moving financial markets and thrive in a fast-

paced environment, explore your options at the Bombay Stock Exchange Ltd. We

certainly believe that it would be a mutually rewarding relationship.

16

8/11/2019 Bse (100 Marks)



CURRENT SITUATION OF BSE

17

8/11/2019 Bse (100 Marks)



BOMBAY STOCK EXCHANGE LIMITED BOARD OF DIRECTORS

Non-Executive Chai rman Managing Direc tor & CEO

Trading Member DirectorsMr. Jagdish Capoor Chairman, HDFC Bank Limited

Mr. Rajnikant Patel

Public Interest Directors

Mr. Sudipto Sarkar Senior Advocate, Kolkata HighCourt

Mr. Vivek Kulkarni - IAS (Retd.) Chairman and CEO, BrickworkIndia Pvt. Ltd.

Mr. Jitesh Khosla Joint Secretary, Ministry of

Company Affairs, Govt. of India

Mr. Ishaat Hussain Finance Director, Tata SonsLimited

Mr. Jamshyd N. Godrej Chairman & Managing Director,Godrej & Boyce Mfg. Co. Ltd.

Mr. Shekhar Datta

Chairman, Lombardini IndiaPrivate Limited

Mr. C.M. Vasudev - IAS (Retd.) Director, ICRA ManagementConsulting Services Limited

Mr. Siddharth J. Shah Designated DirectorJ.G.A. Shah Share Brokers

Private Limited

Mr. Balkishan Mohta

Mr. Prakash R. Kacholia Designated DirectorEmkay Share and Stock BrokersLimited

18

8/11/2019 Bse (100 Marks)



TECHNOLOGY OF BSE

BSE Ltd places great deal of emphasis on Information

Technology to strengthen its functioning and performance.

'Operations & Trading Department' continuously upgrades

the hardware, software and networking systems, thus

enabling the Exchange to enhance the quality and standard

of service provided to its members and other market

intermediaries.

To facilitate smooth transaction, BSE had replaced its open outcry system with

BSE On-line Trading facility in 1995. This totally automated screen based trading

in securities was put into practice nation-wide within a record time of just

50days. The BOLT platform capacity has been enhanced to 40 lakh orders per

day by upgrading the hardware.

Exchange has also introduced the world's first centralized exchange based

Internet trading system. BSE's team of experts and professionals, along with its

strategic partners have put into place several critical systems such as DerivativesTrading & Settlement System.

Around 300 circuits are of 2Mbps capacity and rest all are of 64Kbps capacity in

year 2000 BSE set up its own VSAT Master Earth Station, which uses full

transponder on INSAT 3B satellite to cater to roughly 2000 locations in over 400

cities across the country. Regional Hubs for local fan out of leased lines within

Metros backed by high availability trunk backbone to BSE.

19

8/11/2019 Bse (100 Marks)



20

8/11/2019 Bse (100 Marks)



MARKET INDEX

To understand the use and functioning of the index derivatives markets, it is

necessary to understand the underlying index. In the following section, In recent

years, indexes have cone to the forefront owing to direct applications in finance

in the form of index funds and index derivatives. Index derivatives allow people

to cheaply alter their risk exposure to an index (hedging) and to implement

forecasts about index movements (speculation). Hedging using index derivatives

has become a central part of risk management in the modern economy.

UNDERSTANDING THE INDEX NUMBER

An index is a number which measures the change in a set of values over a period

of time. A stock index represents the change in value of a set of stocks which

constitute the index. More specifically, a stock index number is the current

relative value of a weighted average of the prices of a pre-defined group of

equities.

A good stock market index is one which captures the behavior of the overall

equity market. It should represent the market, it should be well diversified and

yet highly liquid. Movement of the index should represent the returns obtained

by “typical” portfolios in the county.

A market index is very important for its use.

INDEX CONSTRUCTION

A good index is a trade-off between diversification and liquidity. A well

diversified index is more representative of the market/economy. However there

are diminishing returns to diversification. Going from 10 stocks to 20 stocks gives

a sharp reduction in risk. Going from 50 stocks to 100 stocks gives very little

reduction in risk. Going beyond 100 stocks gives almost zero reduction in risk.

Hence, there is little to gain by diversifying beyond a point.

21

8/11/2019 Bse (100 Marks)



TYPES OF INDEXES

Most of the commonly followed stock market indexes are of the following two

types:

• Market capitalization weighted index

• Price weighted index.

MARKET CAPITALIZATION WEIGHTES INDEX

Each stock in the index affects the index value in proportion to the market value

of all shares outstanding. A price weighted index is one that gives a weight to

each stock that is proportional to its stock price. Indexes can also be equally

weighted. Recently, major indices in the world like the S&P 500 and the FTSE-100

have shifted to a new method of index calculation called the “free float” method.

We take a look at a few methods of index calculation.

PRICE WEIGHTED INDEX CALCULATION

In the present example the base index =1000 and the index value works out to be1049.56.

2970.20Index = ------------- *1000 = 1049.56

2829.75

COMPANY SHARE PRICE ATTIME 0

(RS.)

SHARE PRICE ATTIME 1(RS.)

GRASIM INDS 351.55 340.50TELCO 329.10 350.30

SBI 274.60 280.40WIPRO 1335.25 1428.75BAJAJ 539.25

In the market capitalization weighted method.

570.25TOTAL 2829.75 2970.20

Current market capitalizationIndex = -------------------------------------- * Base value

Base market capitalization

22

8/11/2019 Bse (100 Marks)



DESIRABLE ATTRIBUTES OF AN INDEX

A good market index should have three attributes:

The S&P CNX Nifty

1. It should capture the behavior of a large variety of different portfolios in

the market.

2. The stocks included in the index should be highly liquid.

3. It should be professionally maintained.

APPLICATION OF INDEX

Besides serving as a barometer of the economy/market, the index also has other

applications in finance.

• INDEX DERIVATIVES

Index derivative are derivative contracts which have the index as the underlying.

The most popular index derivatives contracts the world over are index future

and index options. NSE’s market index, the S&P CNX Nifty was scientifically

designed to enable the launch of index-based products like index derivatives and

index funds.

• INDEX FUNDS

An index fund is a fund that tries to replicate the index returns. It does so by

investing in index stock in the proportions in which these stocks exist in the

index. The goal of the index fund is to achieve the same performance as the index

it tracks.

23

8/11/2019 Bse (100 Marks)



• EXCHANGE TRADED FUNDS

Exchange traded funds (ETFs) are innovative products, which first came into

existence in the USA in 1993. the have gained prominence over the last few year

with over $100 billion invested as of end 2001 in about 200 ETFs globally. About60% of trading volumes on the American stock exchanges are from ETFs. Among

the popular onces are SPDRs (Spiders) based on the S&P 500 index. QQQs

(cubes) based on the Nasdaq-100 Index, ISHARES based on MSCI indices and

TRAHK (Tracks) based on the Hang Seng Index.

ON-LINE COMPUTATION OF THE INDEX

During market hours, prices of the index scrip’s, at which trades are executed,

are automatically used by the trading computer to calculate the SENSEX every 15

seconds and continuously updated on all trading workstations

The arithmetic calculation involved in calculating SENSEX is simple, but

problem arises when one of the component stocks pays a bonus or issues rights

shares. If no adjustments were made, a discontinuity would arise between the

current value of the index and its previous value despite the non-occurrence of

any economic activity of substance.

INDEX REVIEW FREQUENCY:

The Index Committee meets every quarter to discuss index related issues. In case

of a revision in the Index constituents, the announcement of the incoming and

outgoing scrips is made six weeks in advance of the actual implementation of the

revision of the Index.

24

8/11/2019 Bse (100 Marks)



BSE-100 INDEX

• Background

A need was felt for a more broad-based index, which can also reflect the

movement of stock prices on a national scale because the BSE Sensitive Index has

only 30 scrips. Bombay Stock Exchange Limited, started compilation and

publication of an index series called "BSE National Index" since 3rd January,

1989.

Coverage

The equity shares of 100 companies from the "Specified" and the "Non-Specified"

list of the five major stock exchanges, viz. Mumbai, Calcutta, Delhi, Ahmedabad

and Madras have been selected for the purpose of compiling the BSE National

Index. The criteria for selection had been market activity, due representation to

various industry-groups and representation of trading activity on major stock

exchanges.

Base-Year

The financial year 1983-84 has been chosen as the base year. The price stability

during that year and proximity to the index series were the main consideration

for choice of 1983-84 as the base year.

BSE-200 INDEX

Background

The SENSEX (1978-79=100) has, to a considerable extent, been serving the

purpose of quantifying the price movements as also reflecting the sensitivity of

the market in an effective manner.

25

8/11/2019 Bse (100 Marks)



Coverage

The equity shares of 200 selected companies from the specified and non-specified

lists of this Exchange have been considered for inclusion in the sample for `BSE-

200'. The selection of companies has primarily been done on the basis of current

market capitalization of the listed scrips on the exchange.

Choice of Base Year

The financial year 1989-90 has been chosen as the base year for the price stability

exhibited during that year and due to its proximity to the current period.

26

8/11/2019 Bse (100 Marks)



TRADING SETTELMENTAND INVESTMENT IN

SHARES

27

8/11/2019 Bse (100 Marks)



TRADING AND SETTLEMENT

TRADING

Trading on the BOLT System is conducted from Monday to Friday between 9:55

a.m. and 3:30 p.m. The scrips traded on the Exchange have been classified into

groups. Trading in Govt. Securities for retail investors is done under "G" group.

The 'Z' group was introduced by the Exchange in July 1999 and includes the

companies which have failed to comply with the listing requirements of the

Exchange and/or have failed to resolve investor complaints or have not made

the required arrangements with both the Depositories, viz., Central Depository

Services (I) Ltd. (CDSL) and National Securities Depository Ltd. (NSDL) for

dematerialization of their securities.

• FUTURES & OPTION TRADING SYSTEM

The futures & option trading system of NSE, called NEAT- F& O trading system ,

provides a fully automated screen-based trading for Nifty futures & option &

stock futures & option on a nationwide basis as an online monitoring &

surveillance mechanism . It supports an order of driven market & provides

complete transparency of trading operation. It is similar to that of trading of

equities in the cash market segment.

The software for the F & O market has been developed to facilitate efficient &

transparent trading futures & option instruments. Keeping in view the

familiarity of trading members with the current capital market trading system ,

modifications have been performed in the existing capital market trading system

so as to make it suitable for trading futures & option.

28

8/11/2019 Bse (100 Marks)



• BASIS OF TRADING

The NEAT F & O system support an order driven market, wherein orders match

automatically. Order matching is essentially on the basis of securities, its price,time & quantity. All quantity fields are in units & price in rupees. The lot size on

the futures markets is for the 200 Nifty. The exchange notifies the regular lot size

& tick size for each of the contracts traded on this segment from time to time.

When any order enters the trading system, it is an active order. It tries to find a

match on the other side of the book. If it funds a match, a trade is generated. If it

does not find a match, the order becomes passive & gose & sits in the respective

outstanding order book in the system.

• ORDER TYPES & CONDITION

The system allows the trading members to enter orders with various conditionsattached to them as per their requirement these condition are broadly dividedinto the following category

• Price condition• Other condition

• PRICE CONDITION:

Stop loss:

This facility allows the user to the release an order into the system after the

market price of the security reaches or the crosses a threshold price e.g. if the

stop losses buy order, the trigger is 1027.00 the limit price is 1030.00 and the

market (last traded ) price is 1023.00, then this orders is released in to the system

once the market price reaches or exceeds 1027.00 this order added to the regular

lot book with time of triggering as the time stamp, as limit order of 1030.00 for

the stop – loss order, the tiggr has to be grater than the limit price.

29

8/11/2019 Bse (100 Marks)



• OTHER CONDITION

Trigger price price at which an order gets triggered from the stop-loss book.

Limit price price of the orders after triggering from stop-loss bookTrader’s workstation

Market watch window

The following windows are displayed on the trader work station screen

Title bar

Ticket window

Tool bar

Market match windowInquiry window

Snap quote

Order/’trade window

System message window

TRADE GUARANTEE FUND

While approving the proposal of the Exchange for expansion of BOLT

terminals to cities other than Mumbai, SEBI had, interalia, stipulated that the

Exchange should introduce a system of guaranteeing settlement of trades or

set up a Clearing Corporation to ensure that market equilibrium is not

disturbed in case of payment default by the members.

The Scheme is managed by the Defaulters' Committee, which is a Standing

Committee constituted by the Exchange, the constitution of which is

approved by SEBI. The declaration of a member, who is unable to meet his

settlement dues, as a defaulter is a pre-condition for invoking the provisions

of this Scheme.

30

8/11/2019 Bse (100 Marks)



BASKET TRADING SYSTEM

The Exchange has commenced trading in the Derivatives Segment with effect

from June 9, 2000 to enable the investors to, inter-alia, hedge their risks.

Initially, the facility of trading in the Derivatives Segment was confined to

Index Futures. Subsequently, the Exchange has introduced the Index Options

and Options & Futures in select individual stocks.

With a view to provide investors the facility of creating Sensex linked

portfolios and also to create a linkage of market prices of the underlying

securities of Sensex in the Cash Segment and Futures on Sensex, the

Exchange has provided to the investors as well its members, a facility of

Basket Trading System on BOLT.

The investors need not calculate the quantity of Sensex scrips to be bought or

sold for creating Sensex linked portfolios and this function is performed by

the system. The investors can also create their own baskets by deleting

certain scrips from 30 scrips in the Sensex.

To participate in this system, the members need to indicate number of Sensex

basket(s) to be bought or sold, where the value of one Sensex basket is

arrived at by the system by multiplying Rs.50 to prevailing Sensex.

For e.g., if the Sensex is 4000, then value of one basket of Sensex would be 4000 x

50= i.e., Rs. 2, 00,000/-. The investors can also place orders by entering value of

Sensex portfolio to be brought or sold with a minimum value of Rs. 50,000/-for

each order.

Sensex = 4000 * 50 = Rs.200, 000/-

The Basket Trading System provides the arbitrageurs an opportunity to take

advantage of price differences in the underlying Sensex and Futures on the

31

8/11/2019 Bse (100 Marks)



Sensex by simultaneous buying and selling of baskets comprising the Sensex

scrips in the Cash Segment and Sensex Futures.

The Basket Trading System, thus, meets the need of investors and also improvesthe depth in cash and futures markets.The facility of Basket Trading has been

introduced by the Exchange w.e.f., August 14, 2000.

INVESTMENT IN MID-CAPS

Investment in mid-cap companies is very crucial point to be discussed. These

companies tend to be under-researched and undervalued, there by providing aninvestment opportunity that is yet to be identified by the market. Mid-cap

though risky investment, high returns if the investors chooses the right stock.

While the risk reward ratio is high, the investor should also pay attention to the

timing of purchase of the scrip. Listed below are the advantages and risk

associated when one contemplates investing in mid-caps.

Mid cap stocks are more risky than large cap stocks and less than small caps

stocks. Mid-caps are generally characterized by limited liquidity. Over time

however, it is expected that mid-caps stocks will give a large returns than the

large cap stocks, and while growth stocks are expected by the market to

outperform a mature or large caps stocks this is not always the situation.

Ultimately, the decision to invest in mid-caps stock comes down to individual

investment style and preference.

32

8/11/2019 Bse (100 Marks)



OBJECTIVES OF INVESTMENT

To generate consistent long term capital by investing predominantly equity and

equity related security of companies considered to be small and mid-cap.

o BENCH MARK [BSE]-[500]

o SCHMEME TYPE [EQUITY (CLOSE-ENDED)]

o MINMUM INVESTMENT[Rs.5000]

o LIQUIDITY [MONTHLY]

PERFORMANCE OF MID-CAP SHARES

MID-CAPCOMPANIES

EARNING PERSHARE

FY05 FY06

NET PROFITMARGIN

[FOR GRAPH SEE THE ANNEXTUER]

FY05 FY06

% %

BHAGYANAGER INDIA

3.6 3.6 GROWTH-3.6

19.5 15.1 GROWTH

-22.6DISHMANPHARMA

4.7 7.4 56.1 17.1 18.3 7.5

ERACONSTRUC

T-ION

2.9 14.9 143.8 3.5 7.4 111.4

GATEWAYDISTRIPARK

S

3.7 7.9 113.5 36.2 52.2 44.2

GHCL 7.5 16.5 120.0 12.7 8.6 -32.3

GODAWARIPOWER

10.2 9.8 -4.0 10.9 7.8 -28.4

LIBERTY

SHOES

5.3 10.8 5.0 5.0 8.9 78.0

SUBEXAZURE

11.5 20.2 75.7 21.6 24.4 13.0

OPTOCIRCUIT

3.1 5.7 84.1 24.1 30.2 25.3

33

8/11/2019 Bse (100 Marks)


8/11/2019 Bse (100 Marks)



COMPARISON BETWEEN MID-CAP & LARGE-CAP

MID-CAP COMPANIESTCS

NETSALES

OPERATPROFIT

OPM(%)

NETPROFIT

ROCE(%)

FY05 71296 23350 32.8 18464 51.2

FY06 95216 30907

ASTRA MICROWAVE

32.5 24801 45.5

FY07 138930 43910 31.6 38610 46.4

NETSALES

INDIA CEMENTS

OPERATPROFIT

OPM(%)

NETPROFIT

ROCE(%)

NETSALES

OPERATPROFIT

OPM(%)

NETPROFIT

ROCE(%)

FY04 10169 1008 9.9 -12.16 1FY04 10169 1008 9.9 -12.16 1

FY05 11621 1365 11.7 -588 3FY05 11621 1365 11.7 -588 3

FY06 15418 2610 16.9 357 8FY06 15418 2610 16.9 357 8

TOTALINCOME

NIM (%) ROA(%)

NETPROFIT

ROCE(%)

FY05 42841 3.5 0.7 6768 13.4

FY06 44168 3.3 0.69 8270 12.7

FY07E 50561 3.1 0.81 9919 12.4

35

8/11/2019 Bse (100 Marks)



LARGE-CAP COMPANEYBANK OF BARODA

INFOSYS

SUN PHARMA

REVENUES OPERATPROFIT

OPM(%)

NETPROFIT

ROCE(%)


OPM(%)

NETPROFIT

ROCE(%)

FY05 71296 23350 32.8 18464 51.2FY05 71296 23350 32.8 18464 51.2

FY06 95216 30907 32.5 24801 45.5FY06 95216 30907 32.5 24801 45.5

FY07 1389 43910 31.5 38610 46.5FY07 1389 43910 31.5 38610 46.5

NET SALES OPERATPROFIT

OPM(%)

NETPROFIT

ROCE(%)

FY04 10300 3969 38.5 3448 40.1

FY05 11868 4215 35.5 3875 19.9

FY06 16380 4917 30.0 5278 17.1


OPM(%)

NETPROFIT

ROCE(%)

FY04 71227 19429 27.3 16125 79.0

FY05 97485 18138 28.9 19769 75.7

FY06 132522 36641 27.6 29667 56.7

36

8/11/2019 Bse (100 Marks)



RISKS IN INVESTMENT

1. NON COMPLIANCE OF CORPORATE RESPONSIBILITY ANDACCOUNTABILITY:

In mid-cap company there are perils of the management of the company not

following corporate responsibility and thus they do not feel the necessity of

being accountable to investor.

These companies may not follow corporate governance practices like the

quorum required for an annual general, bared and audit committee

meetings.

They may not be keep the investors informed about the ongoing

happening of the company.

The management may probably deal in insider trading and perhaps rig

the stock to push the price northward.

The board may not be adequately represented by independent directors.

The company may not be open to increase the dividend payout ratio, at

least in good times.

There is no proper treatment of minority shareholders.

2. ABSENCE OF A WELL EDUCATED MANAGEMENT:

As stated earlier the top management of these companies are family members

and close friends. These personnel usually do have high educational

qualification. In many cases, they have a maximum qualification of a graduate

and a thus may not posses skill and attribute to run the business. they may not

be willing to divulge matters relating to the business maintain transparency. On

the other hand, management of these company may have modest knowledge of

the business in which they deal

37

8/11/2019 Bse (100 Marks)



3. AMBIGUITY OF MANAGEMENT FUNCTION:

In mid-cap companies there possible threat of management functions not being

defined in a comprehensive manner. The managers in these organization aresome times gives the power along with responsibility and accountability wher

action may not be at per these world land to managers disinterest in the job

assigned to them.

4. LUCK OF DEPTH IN MEDIA COVERAGE:

These companies are not well known among the investing community due to

low capital base. Most of these stocks are not adequately covered by the media

and brokerage houses.

5. HIGH DEGREE OF COMPETITION :

The mid-cap company faces the perpetual risk of the competition for the heavy

weights, as large-cap companies can easily raise money at lower cost to fund the

expansion planes. Large-cap companies are usually well know in the financial

community, thus most of these companies enjoy high credit rating compared to

mid-cap companies.

6. LIQUIDITY CONCERNS:

Large-cap stocks have high degree of liquidity in the stock market, meaning that

the volume of shares traded on a particular day is relatively higher than that of

mid-cap stocks. Thus, mid-cap investor generally has to deal with liquidity

issues.

38

8/11/2019 Bse (100 Marks)



RISK-RETURN PROFILE:

The fund seeks to invest primarily in mid-cap and small caps stocks. Since high

volatility is associated with such a stocks, investment in this fund involves higher

degree of risk when compared to a large-cap fund. However, on the back of

growing economy and the size migration of small-cap and mid-cap to large –cap,

the fund offer higher return potential than a diversified or large fund. Hence, in

terms of risk-return parameters, the funds scores higher than equity diversified

and a pure mid-cap fund as well [REFERD GRID GIVEN BELOW].

LARGE

FUND

SMALL CAPFUND

MID-CAP

FUND

MULTI-CAP

FUND

R

E

T

U

R

N

S

RISK

LONG TERM

ADVANTAGESFUND

SUITABILITY:

Investors willing to take additional risk to achieve higher returns than equity

diversified fund can option for the fund.

PREFERRED INVESTMENT DURATION:

In order to realize true potential of the growth of mid-cap and small-cap stocks,

the fund should be held for a period of 3 years or more

39

8/11/2019 Bse (100 Marks)



RISK- RETURN ANALYSIS:

The fund has consistently outperformed its benchmark and has generally better

returns than its category average, both in short term and long-term time

horizons. At the same time, the risk associated with the fund is also lower higher

sorting ratio suggests that the fund has offered higher risk-adjusted returns than

its peers and benchmark.

RISK-RETURN ANALYSISRETURNS (%)

6-MONTHS 1YR SINCEINCEPTION

RISK

STD RATIODAVIATION

SIDE

FIDLITY EQUITY FUND 13.46 21.89 48.73 23.18 1.98 0.29

CATEGORY(DIVERSIFIEDEQUITY)

6.29 10.93 39.47 24.36 1.39 0.33

BENCHMARK(BSE200) 5.68 13.49 35.35 23.21 1.66 0.30

40

8/11/2019 Bse (100 Marks)



SENSEXOFTHE

MARKET

41

8/11/2019 Bse (100 Marks)



SENSEX- CALCULATION METHODOLOGY

SENSEX is calculated using the "Free-float Market Capitalization" methodology.

As per this methodology, the level of index at any point of time reflects the Free-

float market value of 30 component stocks relative to a base period.

The market capitalization of a company is determined by multiplying the price

of its stock by the number of shares issued by the company. This market

capitalization is further multiplied by the free-float factor.

The base period of SENSEX is 1978-79 and the base value is 100 index points.

This is often indicated by the notation 1978-79=100. The calculation of SENSEX

involves dividing the Free-float market capitalization of 30 companies in the

Index by a number called the Index Divisor. The Divisor is the only link to the

original base period value of the SENSEX.

MAINTENANCE OF SENSEX

One of the important aspects of maintaining continuity with the past is to update

the base year average. The base year value adjustment ensures that replacementof stocks in Index, additional issue of capital and other corporate announcements

like 'rights issue' etc. do not destroy the historical value of the index. The beauty

of maintenance lies in the fact that adjustments for corporate actions in the Index

should not per se affect the index values.

The Index Cell of the exchange does the day-to-day maintenance of the index

within the broad index policy framework set by the Index Committee. The Index

Cell ensures that SENSEX and all the other BSE indices maintain their

benchmark properties by striking a delicate balance between frequent

replacements in index and maintaining its historical continuity.

42

8/11/2019 Bse (100 Marks)



The Index Committee of the Exchange comprises of experts on capital markets

from all major market segments. They include Academicians, Fund-managers

from leading Mutual Funds, Finance-Journalists, Market Participants,

Independent Governing Board members, and Exchange administration.

SENSEX - THE BAROMETER OF INDIAN CAPITAL MARKETS

SENSEX is not only scientifically designed but also based on globally accepted

construction and review methodology. First compiled in 1986, SENSEX is a basket of 30

constituent stocks representing a sample of large, liquid and representative companies.

The base year of SENSEX is 1978-79 and the base value is 100. The index is widely

reported in both domestic and international markets through print as well as electronicmedia

The Index was initially calculated based on the "Full Market Capitalization"

methodology but was shifted to the free-float methodology with effect from

September 1, 2003. The "Free-float Market Capitalization" methodology of index

construction is regarded as an industry best practice globally. All major index

providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-floatmethodology.

Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to

be the pulse of the Indian stock market. As the oldest index in the country, it

provides the time series data over a fairly long period of time (From 1979

onwards). Small wonder, the SENSEX has over the years become one of the most

prominent brands in the country.

43

8/11/2019 Bse (100 Marks)



BASE MARKET CAPITALISATION ADJUSTMENT:

The formula for adjusting the Base Market Capitalization is as follows

New Base Market Old Base Market New Market

Capitalization = Capitalization * Capitalization

Old Market

Capitalization

To illustrate, suppose a company issues right shares which increases the market

capitalization of the shares of that company by say, Rs.100 crores. The existingBase Market Capitalization (Old Base Market Capitalization), say, is Rs.2450

crores and the aggregate market capitalization of all the shares included in the

index before the right issue is made is, say Rs.4781 crores. The "New Base Market

Capitalization " will then be:

2450 x (4781+100) = Rs.2501.24 crores

4781

This figure of 2501.24 will be used as the Base Market Capitalization for

calculating the index number from then onwards till the next base change

becomes necessary.

44

8/11/2019 Bse (100 Marks)



SENSEX - SCRIP SELECTION CRITERIA:

The general guidelines for selection of constituents in SENSEX are as follows:

• LISTED HISTORY:

The scrip should have a listing history of at least 3 months at BSE. Exception may

be considered if full market capitalization of a newly listed company ranks

among top 10 in the list of BSE universe. In case, a company is listed on account

of merger/ demerger/ amalgamation, minimum listing history would not be

required

• TRADING FREQUENCY

The scrip should have been traded on each and every trading day in the last

three months. Exceptions can be made for extreme reasons like scrip suspension

etc.

• FINAL RANK

The scrip should figure in the top 100 companies listed by final rank. The finalrank is arrived at by assigning 75% weightage to the rank on the basis of three-

month average full market capitalisation and 25% weightage to the liquidity rank

based on three-month average daily turnover & three-month average impact

cost.

• MARKET CAPITALIZATION WEIGHTAGE:

The weight age of each scrip in SENSEX based on three-month average free-float

market capitalization should be at least 0.5% of the Index.

45

8/11/2019 Bse (100 Marks)



SENSEX TOP COMPANIES

[TAKAN FROM THE ECONOMIC TIMES NEWS PAPER (current situation)]

46

8/11/2019 Bse (100 Marks)



RISK MANAGEMENT

47

8/11/2019 Bse (100 Marks)



RISK MANAGEMENT

THE RISKS CAN BE CLASSIFIED AS UNDER

Client Risk

Lost/misplaced securities Damage to securities loss of securities in transit

Client default Client absconding Fake/ forged/stolen securities introduced by the clients

Risks associated with Paper Based Trading

NATURE OF RISKS:

The Exchange has been exposed to a large number of risks, which have been

inherently borne by the member brokers for all times. Since the introduction of

the screen based trading the nature of risks to which the members of the

Exchange are exposed to has undergone radical transformation.

At the same time the inherent risk involved with the trading of paper based

securities still remains. Though the process of dematerialization has already

begun, till such that it is made compulsory in all scrips, the risk of trading in

fake/forged shares and instances of loss of shares etc. will continue to exist. The

safe custody of these shares in physical form in the Exchange as well as in the

member broker’s offices is of prime importance.

48

8/11/2019 Bse (100 Marks)



REDUCTION AND CONTROL OF RISKS:

As a measure of the pro-active risk control several measures have been initiated

by the Exchange to reduce the risks to which the Exchange and the member

brokers are exposed. In this regard the Exchange has initiated the following

measures:

• KNOW YOUR CLIENT SCHEME :

Under the procedure the member brokers of the Exchange are compulsory

required to obtain detailed information of clients prior to commencement

of any transactions for new clients. A similar procedure followed forexisting clients.

• DATABASE OF LOST , STOLEN , MISPLACED SECURITIES :

The Exchange maintains a database on all the shares that have been

reported as lost, stolen, duplicate etc. by the Companies / registrars. The

information available through the database is time relevant thus the

database is modified on a regular basis and is downloaded by the

members through BOLT on a weekly basis.

• CLIENT CAUTION DATABASE :

The Risk Management department in conjunction with the Bad Delivery

Cell of the Exchange, the Exchange has designed and developed a client

database. All member brokers whose clients sub-brokers have introduced

fake forged shares are required to lodge a FIR Police complaint against

their clients and also report the same to the Exchange.

49

8/11/2019 Bse (100 Marks)



SAFETY OF THE

MARKET

50

8/11/2019 Bse (100 Marks)



SAFETY OF THE MARKET

• BROKERS' CONTINGENCY FUND (BCF):

The Exchange has set up a Brokers' Contingency Fund (BCF) with a view :

i. to make temporary refundable advance(s) to the members facing

temporary financial miss-match as a result of which they may not be in a

position to meet their financial obligations to the Exchange in time;

ii. to protect the interest of the investors dealing through members of the

Exchange by ensuring timely completion of settlement; and

iii. To inculcate confidence in the minds of investors regarding safety of

bonafide transactions entered into on the Exchange.

• THE SCHEME HAS COME INTO FORCE WITH EFFECT FROM

JULY 21, 1997.

The Fund is managed by a Committee comprising of the President, Executive

Director, Vice-President, Honorary Treasurer and three non-elected directors.

The Exchange has contributed a sum of Rs.9.51 crores to the corpus of the Fund.

All the active members are required to make an initial non-refundable

contribution of Rs.1,000/- to the Fund and also contribute Re. 0.125 for every one

lakh rupees of gross turnover by way of continuous contribution which is

debited to their settlement account in each settlement.

51

8/11/2019 Bse (100 Marks)



The members are eligible to get advance(s) from the Fund upto a maximum of

Rs.25 lakhs at the rate of 21% per annum.

• GUIDELINES GIVEN BY SEBI

As per the guidelines issued by SEBI, the Exchanges are required to apply a daily

Circuit Filter of 20% on all the scrips except on the scrips on which derivative

products are available or are included in the indices on which derivative

products are available. On these scrips Exchange has imposed dummy circuit

filters to avoid punching error by members, if any. The imposition of circuit

filters on scrips ensures that the price of the scrip cannot move upward or

downward beyond the limit set for a day.

• ACTION IS TO BE TAKEN

The large variation in the prices as well as the volumes of the scrips are

scrutinised and appropriate actions are taken. The scrips which reach new high

or new low and companies which have high turnover, are watched. Also the

prices and volumes in the newly listed scrips are monitored Detailed

investigations are conducted in cases where price manipulation is suspected and

disciplinary action is taken against the members concerned.

• VARIATION IN PRICE AND VOLUME

The Exchange has developed an On-line Real Time (OLRT) Surveillance System,

which has been commissioned from July 15, 1999. Under this system, alerts are

generated by the system on-line, in real time, based on certain preset parameterslike the price and volume variation in scrips, members taking unduly large

positions not commensurate with their financial position or having concentrated

position(s) in one or a few scrips, etc.

52

8/11/2019 Bse (100 Marks)



OPPORTUNITIESAVAILABLE

FOR

FOREIGN INVESTORS

53

8/11/2019 Bse (100 Marks)



OPPORTUNITIES AVAILABLE FOR FOREIGN INVESTORS

• DIRECT INVESTMENT

Foreign companies are now permitted to have a majority stake in their Indian

affiliates except in a few restricted industries. In certain specific industries,

foreigners can even have holding up to 100 percent.

• INVESTMENT THROUGH STOCK EXCHANGES

Foreign Institutional Investors (FIIs) upon registration with the Securities and

Exchange Board of India (SEBI) and Reserve Bank of India (RBI) are allowed to

operate on the Indian stock exchanges subject to the guidelines issued for the

purpose by SEBI.

• IMPORTANT GUIDELINES ARE AS UNDER:

Portfolio investment in primary or secondary market of a company by all

registered FIIs, NRIs and OCBs is subject to a ceiling of 30/40 per cent of issued

share capital. In any one company, holding by a single FII, NRI or OCB is subject

to a ceiling of 10 percent of the total issued capital.

• Foreign investors can invest in Euro issues of Indian companies and inIndia-specific funds floated abroad.

• BROKING BUSINESS

Foreign brokers upon registration with the SEBI are now allowed to route the

business of their registered FIIs clients through the members of Stock Exchanges.

Guidelines for the purpose have been issued by SEBI.

54

8/11/2019 Bse (100 Marks)



IMPACT ON INDIAN

ECONOMY

55

8/11/2019 Bse (100 Marks)



IMPACT ON ECONOMY

• INDIAN ECONOMY

Indian Economy has covered a long ground since it was liberalized in 1991.

Today, India has the fourth largest economy in terms of purchasing power parity

(PPP) behind only the USA, China, and Japan. It is slated to overtake Japan and

become the third major economic power in the next ten years. India is also one of

the few markets in the world which offers high prospects for growth and earning

potential in practically all areas of business. Indian economic growth has been

among the fastest in the world in the recent years.

India was a highly protected, semi-socialist autarkic economy till 1991. There

were numerous structural and bureaucratic impediments in setting up a new

business and foreign investment was not welcomed. The opening up of the

Indian economy in 1991, unleashed the latent entrepreneurial talent of the Indian

and in less than two decades India has established itself as the next economic

superpower of the world.

Indian Economy grew at an annual average growth of 7.6 per cent during the

Tenth Plan and has set a target of 9 per cent for the Eleventh Five Year Plan. One

of the landmark structural changes achieved by Indian economy is that today

services sector contributes more than 50% of India's GDP, which is a general

characteristic of any developed economy. For the financial year 2006-07, the

share of services, industry, and agriculture in India's GDP was 55.1 per cent, 26.4

56

8/11/2019 Bse (100 Marks)



per cent, and 18.5 per cent respectively.

One of the notable features of economic growth in India is the sharp rise in the

rate of investment in the economy. Investment, in general being a forwardlooking variable, reflects a high degree of business optimism. The sharp increase

in investment rate has sustained the industrial performance and reinforces the

outlook for growth.

The rapid economic growth of the last few years has put heavy stress on India's

infrastructural facilities. The shortage on infrastructure front such as power

shortfall, port traffic capacity mismatch, poor road conditions, and low telephone

penetration threaten to derail Indian success story. Apart from addressing the

above problems some other steps such as labour reforms and administrative

reforms need to be taken urgently if we have to sustain higher levels of economic

growth. The government also needs to ensure that the economic growth is

equitable as lopsided economic growth may result in social unrest and may undo

all the good work achieved as a result of economic reforms.

• Following are the some of the key drivers of the Indian economy

HEALTHY SAVINGS RATE

Gross domestic savings increased from 26.5% of the GDP in 2002-03 to 29.1 in

2004-05. Retail participation in the equity market increase from 0.1% of total

financial savings in 2003-04 to 4.9 in 2005-06.

GROWING CONSUMPTION:

Rising domestic demand against exports tends to reduce the impact of show

down in global demand.

STRONG CORPORATE PERFORMANCE:

57

8/11/2019 Bse (100 Marks)



High advance tax out flow of nearly Rs. 571 bn for the quarter ending Mar 07

indicate strong corporate earnings.

HIGH INFLOW OF FOREIGN CAPITAL:

Higher FDI and FII inflow in the capital market. FDI inflow in 2005 increased by

21% over the previous year. FII inflow both equity and debt market increased by

20.5% FY 2006-07 over the previous year.

• BENEFIT LADDER:

The following chart shows how the growing economy leads to growth in the

stock price:

GROWTH IN

ECONOMY

POSITIVE IMPACT

ON ECONOMY

RESULT IN THE

REFLACTION OF THE

GROWTH IN THE

STOCK

SURGE IN DEMAND

& CONSUMPTION

HIGH GROWTH POTENTIAL:

As the firm expands it start gaining profit from the economic of scale and their

sales and earning tends to grow at attractive rates.

58

8/11/2019 Bse (100 Marks)



CAPTURING NEW OPPORTUNITIES:

Firms are small in size they can be more agile in taking management decisions.

59

8/11/2019 Bse (100 Marks)



LISTING OF THE COMPANIES

• LISTING AGREEMENT

An agreement into between a stock exchange and company on the satisfactory,

where by security listing is proposed, is called as listing of the company.

• LEGAL PROVISIONS

The legal provisions relating to the security are enshrined in the security

contracts act.1956 read with the rules made their under, SEBI act, 1992 and the

companies act 1956. The various legal provision of the listing are summarized

1. SECTION 21 OF SCRA

2. SECTION 11B OF SEBI ACT

3. SECTION 73 OF THE COMPANIES ACT

The term listing refers to a process or steps involved in listing something with

some one. Listing means permission to quote shares and debentures officially on

the trading floor of the stock exchange. The listed shares appear on the official

list of security for the purpose of trading.

• SECURITY LISTING

Security listing refers to the steps that are required to register and to place on

record. The appropriate authority being the recognized stock exchange securities

are required to be listed under sec 9 of securities act 1956.

• LEGAL PROVISION

The legal provision relating to the listing of securities are enshrined in the

securities act 1956 read with rules made by SEBI the various legislative provision

of listing are summarized below.

60

8/11/2019 Bse (100 Marks)



STEPS OF LISTING OF THE COMPANY

• INITIAL LISTING

This involves making a simple application by the payment of initial listing fee asprescribed by the respective stock exchange. This is done before the offer

securities to the public and registration of prospective with the registrar of

company.

• FINAL LISTING

This involves getting the approval of the recognized stock exchange for the

listing by means of an agreement of the stock exchange.

• CONTINUED LISTING

This steps involves making efforts by the corporate enterprise for the purpose of

continuing to remain listed on the stock exchange un till it is delisted from the

records of the exchange, either at the option of the company at the option of

stock exchange concerned. Listing as regards of securities will take place long as

the existing securities remain listed on the stock exchange.

• LISTING AND CORPORATE GOVERNANCE

Listing assumes special significance in the light of the measures that have been

initiated to revamp the functioning and thus shape the culture of corporate

governance has recommended that sebi shall issue direction to stock exchange.

REFUSAL OF LISTING

It is quite possible that the securities of the corporate enterprises of the authority

of the stock exchange. In the decision of the authority to refuse listing it is

incumbent on their part to estimate the companies concerned within 15 days the

reason for refusal. This is required under section 22 of SCRA it is prerogative of

the central government either to grand or refuse to grant the permission for

61

8/11/2019 Bse (100 Marks)



listing and the decision of the central government would be informed to the

stock exchange concerned, who shall act in conformity with such a decision.

62

8/11/2019 Bse (100 Marks)



INVESTORS MOST FAVORITE STOCK EXCHANG

0

20

40

60

80

100

120

N S E

B S E

A

N Y

O T H

E R

O V E R A L L

EMPLOYMENT

SEGMENT BUSINESS -

36%

EMPLOYMENT

SEGMENT SALARIED -

33%

EMPLOYMENT

SEGMENT OTHER -

31%

OVERALL %

OVERALL %

COMPANIES PERFORMANCE

63-40

-20 3 . 6

3 . 6

G R O W

T H 1 9 . 5

1 5 . 1

G R O W

T H

0

20

40

60

80

100

120

140

160

DISHMAN PHARMA

ERA CONSTRUCT-ION

GATEWAY

DISTRIPARKS

8/11/2019 Bse (100 Marks)



BASE MARKET CAPITALISATION ADJUSTMENT

New Base Market Old Base Market New Market

Capitalization = Capitalization * Capitalization

Old Market

Capitalization

HIGHER DIVIDEND YIELD

DIVIDEND OPERAT

YIELD PROFIT

OPM(%)

FY05 71296 23350 32.8

FY06 95216 30907 32.5

FY07 138930 43910 31.6

64

8/11/2019 Bse (100 Marks)



EE THE PAGE NO.33][S

SENSEX CALCULATION MATHDOLOGY

For e.g.,

if the

Sensex is 4000, then value of one basket of Sensex would be 4000 x 50= i.e., Rs.

2,00,000/-. The investors can also place orders by entering value of Sensex

portfolio to be brought or sold with a minimum value of Rs. 50,000/-for each

order.

Sensex = 4000 * 50 = Rs.200,000/-

NO.OF M H SEX ESTONT SEN HIGH

MAY 75FAB 70

65

8/11/2019 Bse (100 Marks)



SENSEX PERFORMANCE IN THE MONTH

MARKET RISES 1, 52,000 CRORE [BIGGEST-DAY RISE]

NOV 65

AUG 60

MAY 55

NOV 50

CURRENT SITUATION16000 [SEPT 2007]

15000 [JUL6] 2007

11000 [MAR21] 2006

10000 [FEB6] 2006

14000 [DEC5] 2006

13000 [OCT30] 2006

12000 [APR21] 2006

66

8/11/2019 Bse (100 Marks)



9000 [NOV28] 2005

8000 [SEP8] 2005

7000 [JUN20] 2005

6000 [FEB] 2000

2000 [JAN3] 1992

1000 [JUL25] 1990

3000 [FEB29] 1992

5000 [OCT8] 1999

400 [MAR30 0] 1992

67

8/11/2019 Bse (100 Marks)



What is a share?

ow does one trade in shares?

ow stock markets work?

hat is Stock?

H

H

W

68

8/11/2019 Bse (100 Marks)



What is Public market?

When we have to make investment in shares?

What is nifty?

69

8/11/2019 Bse (100 Marks)



With the increasing Globalization, the Stock Exchange has tremendously affected

the financial conditions of India.

The stock markets of the future will have a redefined purpose and reinvented

architecture due to the advent and widespread use of technology. Information

and stock price quotations are available almost instantaneously, and, more

importantly, investors can act on this data by executing a trade from anywhere at

anytime. This new market will bring benefits to investors, the listed companies,

and the economies of the company. T

settlement will be simpler wit reduced risk. Raising capital for companies will

ecome easier, thereby contributing directly to the Economic Growth.

rading will become cheaper, faster and

b

70

8/11/2019 Bse (100 Marks)



Already, BSE has shown its proactive response by increasingly using leading

edge to technologies to effectively compete in the global environment. In the not

o distant future, once full capital account convertibility is permitted in India,to

one could well witness an expansion of trading volumes and its resultanteconomic benefits to the thriving and ever young metropolis of Mumbai.

In spite of all these positive predictions, the future of Stock Exchanges is likely to

be uncertain and even their survival is a major question mark...

Sr.No. Name Author

1. VISITED IN KARVY

BROKING LIMITED

2. FORTUNE INDIA

MAGAZINE----------------------------------------------

3. THE ECONOMIC ----------------------------------------------

71

8/11/2019 Bse (100 Marks)



BIBOLOGRAPHY

WEBLIOGRAPHY

WWW.BSEINDIA.COM

TIMES

4. OPRATING OF INDIANSTOCK EXCHANGE IN

INDIA

JAVAID KHAN

5. MONEY MAGAZINE

bse (100 marks)

Documents