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Indian Stock Market
Year Remarks
1850s Informal group of 22 stockbrokers began trading under a banyan tree opposite the Town Hall of Bombay
1860 Stock Exchange flourished with 60 brokers
1875 Informal group of stockbrokers was formally organized as the Bombay Stock Exchange (BSE).
1928 BSE building was acquired.
1930 BSE building was constructed and occupied
1956 The Government of India recognized the Bombay Stock Exchange under the Securities Contracts (Regulation) Act.
1992 BSE member - Harshad Mehta scam.
Creation of the National Stock Exchange (NSE),
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Primary Market:It is the part of the capital markets that
deals with issuing of new securities.That is the corporate and the government
looks at the primary market to raise longterm funds by issuing securities such asdebt or equity. These securities may beissued at face value, at premium or atdiscount.
The process of selling new issues toinvestors is called underwriting. In the case
of a new stock issue, this sale is an initialpublic offering (IPO).
Capital Market
Primary Market Secondary Market
Definition: “The capital market (securities markets)is the market for securities, wherecompanies and the government can raiselong-term funds. The capital marketincludes the stock market and the bondmarket”
Capital market is a market for long-termdebt and equity shares. In this market, thecapital funds comprising of both equity
and debt are issued and traded.
Secondary Market: It is the market where stocks are
traded after they are initially offered tothe investor in primary market (IPO'setc.) and get listed to stock exchange.Secondary market comprises of equitymarkets and the debt markets.
Secondary market is a platform to tradelisted equities
Stock Market
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Primary Market- Listing of Securities
Meaning of Listing:A listing refers to the company's shares being on the list (or board) of stock that are officially traded on a stock exchange.
Objectives of Listing :• It provides liquidity to securities.• To expand the existing activities of the Company or to setting up of new projects.• It helps to mobilize savings for economic development.• It protects the interest of investors by ensuring full disclosures.
Benefits of ListingIt increases the company's ability to raise debt at finer rates. The company gets a continuing window for raising more capital,
both from the domestic and overseas investors.Acquisitions also become simpler as instead of cash payouts, companies can use shares as a currency.It lends liquidity to the stock, which is very critical for the success of employee stock ownership plans, which help to attract
top talent.It carries a considerable degree of prestige for the company.
Eligibility Criteria:Net tangible assets of at least Rs. 3 crore in each of the preceding three full years.Distributable profits for at least three out of the immediately preceding five years.Net worth of at least Rs. 1 crore in each of the preceding three full years.The issue size should not exceed 5 times the pre-issue net worth.
Alternative routes:1. Issue shall be through book building route, with 50% of the offer to the Qualified Institutional Buyers (QIBs).
2. The “project” is appraised and participated to the extent of 15% by FIs/Scheduled Commercial Banks of which 10% of theProject Cost shall be from the Appraiser.
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The Process for Listing of Securities
Rest get refund orders.
Allocation of securities is made to the successful bidders.
At last the book runners & the issuer decides the final price.
On the closure of the process, the book runners evaluates the price levels.
Bids have to be entered within the specific price band.
Process normally remains for 5 days.
Bidding Process.
Appointing of Syndicate of Stock Brokers.
Disclose of securities to be issued & price band for bidding.
The company nominates lead merchant banker(s).
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Secondary Market
It is the market where stocks are traded after the listing.
Secondary market comprises of equity markets and the debt markets.
Merits Demerits
Ensure Liquidity of capital Adhere to Regulations and Compliances
Evaluation of securities Market Volatility
Mobilize Surplus Savings Higher Cost for going public.
Investment Opportunities High Accountability to various stakeholders.
Improves Corporate Governance
Builds Trust and creates Goodwill
Raising New capital
Safety In dealings
Pubic Confidence
Offers to investors liquidity for their assets.
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Stock Exchange
Functions :
1. Continuous and ready market for securities
2. Facilitates evaluation of securities
3. Encourages capital formation
4. Provides safety and security in dealings
5. Regulates company management
6. Facilitates public borrowing
7. Provides clearing house facility
8. Serves as Economic Barometer
9. Facilitates Bank Lending
The Stock exchange is a place where the buyers and sellers
meet to trade in shares in an organized manner.
Trading in the secondary market is done through stock
exchange.
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Indian Stock Exchange
Indian Stock Exchange
Bombay Stock Exchange(BSE)
National Stock Exchange(NSE)
Bombay Stock Exchange (BSE):An oldest stock exchange in Asia.It is the third largest stock
exchange in south Asia and thetenth largest in the world.
A Stock Exchange is a is a place whereinvestors go to buy/sell their shares aswell as it provides services for stock brokers and traders totrade stocks, bonds, andother securities.
The National Stock Exchange (NSE):India's largest and the worlds thirdlargest stock exchange in terms of
Transaction volumes & amounts.
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INDEX
INDEX
BSE
SENSEX
NSE
NIFTY
An abbreviation of the Bombay Exchange
Sensitive Index (SENSEX) - the benchmark index
of the Bombay Stock Exchange (BSE).
It is composed of 30 of the largest and most
actively-traded stocks on the BSE.
Initially compiled in 1986, the SENSEX is the
oldest stock index in India.
NIFTY (National Stock Exchanges Fifty stocks) is
an Index computed from performance of top
stocks from different sectors listed on NSE
(National stock exchange).
NIFTY consists of 50 companies from different
sectors.
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Functions of Capital Market Regulator & SEStock Exchange/
RegulatorDate of
IncorporationFunctions
Bombay Stock Exchange
(BSE)
1875 It helps in raising finance for corporations, governments and Local Authorities.
settlement system, timely dissemination of price sensitive information and a pricingand trade reporting system.
It also provides a legal and non-legal regulatory system for its members, market
participants and listed companies.
Securities and Exchange
Board of India (SEBI)
1992 Protective functions: It checks price rigging ,prohibits Insider trading, fraudulent and
Unfair Trade Practices, educate and protect investors interest, promotes fair practices
and code of conduct in security market.Developmental functions: It promotes training of intermediaries of the securities
market, permits internet trading through registered stock brokers, making
underwriting optional to reduce the cost of issue and permit initial public offer of
primary market through stock exchange.
Regulatory functions: It has framed rules and regulations, code of conduct to
regulate the working of intermediaries such as stock brokers, sub-brokers, sharetransfer agents, trustees, merchant bankers, underwriters, etc. It registers and
regulates the working of mutual funds, takeover of the companies an conducts
inquiries and audit of stock exchanges.
National Stock Exchange
(NSE)
1993 It provides trading facility to its trader, efficient network between buyers and sellers
all over the country, transparency in efficient trading with Electronic Trading System,
shorter settlement cycles and book entry settlements.
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BULL and BEAR Market
What are Bulls?
Bull : An operator who expects the share price to rise and takes position in the market to sell at a later date.
Bull Market : A rising market where buyers far outnumber the sellers
What are Bear?
Bear : An operator who expects the share price to fall
Bear Market : A weak and falling market where buyers are absent
The stock market is affected by many economic factors. High employment levels, strong economy, and stable social and
economic conditions generally build investor confidence and encourage investors to put their money in the stock market.
Often, this can bolster bull markets.
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(BOLT) BSE Online Trading System
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Securities
A security or financial instrument is a tradable asset of any kind. Securities are broadly categorized into:
• debt securities (such as banknotes, bonds and debentures),
• equity securities, e.g., common stocks; and,
• derivative contracts, such as forwards, futures, options and swaps.
Securities may be represented by a certificate or, more typically, "non-certificated", that is in electronic or "book entry" only
form.
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Dematerialisation of Securities and the Process
Dematerialisation is the process of converting physical shares (share certificates) into an electronic form.
Shares once converted into dematerialised form are held in a Demat account.
Physical Form Demat Form
Dematerialisation Process: An investor having securities in physical form
must get them dematerialised, if he intends to
sell them. This requires the investor to fill a
Demat Request Form (DRF) which is availablewith every DP and submit the same along
with the physical certificates. Every security
has an ISIN (International Securities
Identification Number). If there is more than
one security than the equal number of DRFs
has to be filled in.It came into existence in the year 1990.
Dematerialisation
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Settlement ProcessClearing and settlement are fundamental processes in financial markets. After the trade is executed, the record is submitted to
the clearing agency, which matches the buyer and seller record and confirms that the counterparts agree to the terms.
Client/ Buyer Broker
Demat Account
has
Shares to be transferredon T+2 basis by 10.30am
In
Pool Account
Stock ExchangeClearing Department
After 10.30am
Broker
Pool Account
Shares are pulledBy the
from
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