1. EQUITY MARKET

2. OVERVIEW A market that gives companies a way to raise needed capital and gives investors an opportunity for gain by allowing those companies' stock shares to be traded. Also called stock market. The Indian equity market underwent major developments to carve a niche for itself in the global market, including improved market microstructure, introduction of new products and progressive changes in the regulatory framework. 3. 3 EQUITY EXCHANGES IN INDIA BOMBAY STOCK EXCHANGE NATIONAL STOCK EXCHANGE MULTI COMMODITY EXCHANGE 4. THE BSE AND NSE Most of the trading in the Indian stock market takes place on its two stock exchanges: The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE has been in existence since 1875. The NSE, on the other hand, was founded in 1992 and started trading in 1994. However, both exchanges follow the same trading mechanism, trading hours, settlement process, etc. At the last count, the BSE had about 4,700 listed firms, whereas the rival NSE had about 1,200. Out of all the listed firms on the BSE, only about 500 firms constitute more than 90% of its market capitalization; the rest of the crowd consists of 5. CONTINUED Almost all the significant firms of India are listed on both the exchanges. NSE enjoys a dominant share in spot trading, with about 70% of the market share, as of 2009, and almost a complete monopoly in derivatives trading, with about a 98% share in this market, also as of 2009. Both exchanges compete for the order flow that leads to reduced costs, market efficiency and innovation. The presence of arbitrageurs keeps the prices on the two stock exchanges within a very tight range. 6. BOMBAY STOCK EXCHANGE (BSE) Is the oldest Stock Exchange in Asia with a rich heritage. BSE was established in 1875 as The Native Share & Stock Brokers. First Stock Exchange in the country to obtain permanent recognition in 1956 from GOI. Around 4700 Indian companies listed with Stock Exchange. 7. CONTINUED As of 2005, it is among the five biggest Stock Exchanges in the world in terms of transactions volume. The BSE or Bombay stock exchange sensitive Index(Sensex) is a value weighted index. Composed of 30stocks with the base April 1979=100. The abbreviated from Sensex was coined by Deepak Mohoni around 1990 while writing market analysis columns for some business newspaper. 8. CONTINUED The index has increased by over ten times from June 1990 to the present. Using information from April 1979 onwards, the long-run rate of return on the S&P BSE SENSEX works out to be 18.6% per annum, which translates to roughly 9% per annum. 9. PRODUCTS Equity Derivatives Indices Currency Derivatives IRD Debt SLB ETFs/Mutual Funds 10. EQUITY TURNOVER (BSE) YEAR TURNOVER FY2009 1378809.32 FY2010 1105026.89 FY2011 667497.58 FY2012 548774.44 FY2013 521664.20 0 500000 1000000 1500000 FY2009 FY2010 FY2011 FY2012 FY2013 TURNOVER 11. NATIONAL STOCK EXCHANGE (NSE) In the year 1991 Pherwani Committee recommended to establish National Stock Exchange (NSE) in India. The company operates a nation-wide, electronic market, which offers trading in derivatives market, capital market and currency derivatives segments including equities, equities based derivatives, equity based exchange traded funds (ETF), gold ETF, currency futures and options and retail government securities. The NSE India ranked 3rd position since last 4 years in terms of total number of trading per calendar year. 12. CONTINUED The exchange has more than 1,000 listed members. Owned by more than 20 different financial and insurance institutions. The CNX Nifty Index represents about 68.99% of the free float market capitalization of the stocks listed on NSE as on December 31, 2013. 13. CONTINUED The base value of the index has been set at 1000, and a base capital of Rs 2.06 trillion. The CNX Nifty Index was developed by Ajay Shah and Susan Thomas. The CNX Nifty currently consists of the following 50 major Indian companies. 14. PRODUCTS CAPITAL MKT DERIVATIVE DEBT EQUITIES EQUITY NEW DEBT SEGMENT MUTUAL FUNDS CURRENCY RETAIL DEBT MKT INDICES NSE BOND FUTURES WHOLESALE DEBT MKT ETFs CORPORATE BONDS IPOs OFFER FOR SALE INSTITUTIONAL PLACEMENT PROGRAMME SECURITY LENDING AND BORROWING SCHEME 15. EQUITY TURNOVER (NSE) YEAR TURNOVER FY2009 4138024 FY2010 3577412 FY2011 2810893 FY2012 2708279 FY2013 234041 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 FY2009 FY2010 FY2011 FY2012 FY2013 TURNOVER 16. MCX (STOCK EXCHANGE) MCX-SX began trading currency derivatives on October 7, 2008. MCX-SX is regulated by SEBI and the Reserve Bank of India (RBI). MCX-SX has over 600 members using its electronic trading platform in several trading centers throughout India. MCX-SX started trading in the shares of 1,116 listed companies compared to 1,665 firms on the National Stock Exchange and 5,191 companies on the Bombay Stock Exchange. 17. CONTINUED The MCX-SX benchmark index - christened SX40 - is equivalent to the BSE Sensex and the NSE Nifty. The SX-40 index is designed to measure the economic performance with better representation of various industries and sectors based on ICB, a leading global classification from Britain's FTSE-100. The base value of the SX-40 is 10,000 and its base date is March 31, 2010. The SX-40 has given returns of 16.3 per cent from 2010- January 31, 2013, against 15 per cent on the Nifty and 13.5 per cent on the Sensex. 18. PRODUCTS Equities Currency Derivatives Equity Derivatives Currency Derivatives Initial Public Offerings Debt 19. FII/DII ACTIVITY YEAR FIIs 2009- 2010 39142.1 2010- 2011 47740.84 2011- 2012 20774.09 2012- 2013 100087.8 2013- 2014 74481.55 0 20000 40000 60000 80000 100000 120000 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 FIIs 20. CONTINUED YEAR DIIs 2009-2010 24060.08 2010-2011 16395.41 2011-2012 -3786.27 2012-2013 -66936.4 2013-2014 -54072 -80000 -60000 -40000 -20000 0 20000 40000 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 DIIs 21. HEDGING Hedging means reducing or controlling risk. This is done by taking a position in the Futures Market that is opposite to the one in the physical market with the objective of reducing or limiting risks associated with price changes. 22. CONTINUED Hedging is a two-step process. A gain or loss in the cash position due to changes in price levels will be countered by changes in the value of a futures position. For instance, a wheat farmer can sell wheat futures to protect the value of his crop prior to harvest. If there is a fall in price, the loss in the cash market position will be countered by a gain in futures position. 23. FUTURES A contractual agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a pre- determined price in the future. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. 24. OPTIONS Options are standardized contracts that allow investors to trade an underlying asset at a specified price before a certain date (the expiry date for the options). There are two types of options: call and put options. Call options give the buyer a right (but not the obligation) to buy the underlying asset at a pre-determined price before the expiry date, while A put option gives the option-buyer the right to sell the security.