2013

Vincent Konadu Tawiah

PREAMBLE Stock exchange is that place where trading of shares is

done in terms of sale and purchase. It is a secondary

market for long term capital fund

There are 22 stock exchange in India. 8 are permanent

PRODUCTS OF EXCHANGE

NATIONAL STOCK EXCHANGE NSE

•India's largest financial market.

•Established in 1992,

•Ranks third in the world for transacted volume

•The best in terms of sophistication

and advancement of technology

1600 companies

Headquarters Mumbai

Branches Ahmedabad, Chennai, Delhi, Kolkata, Hyderabad

Indore, Kanpur

BOMBAY STOCK EXCHANGE

Established in 1875

Asia’s first Stock Exchange

More than 5000 companies

World's No. 1 exchange in terms of

listed members

3rd largest Leading exchange in

December 2012

LISTING ON STOCK EXCHANGE The minimum post-issue paid-up capital of the applicant

company shall be Rs. 10 crore for IPOs

The minimum issue size shall be Rs. 10 crore; and

The minimum market capitalization of the Company shall be

Rs. 25 crore

The above eligibility criteria would be in addition to the

conditions prescribed under SEBI Regulations and other Laws

and Act such as Company’s Act 1956.

STOCK INDEX

A statistical measure of change in an economy or a

securities market

index based on a statistical compilation of the share prices

of a number of representative stocks

TYPES OF STOCK INDICES IN INDIA

NATIONAL STOCK EXCHANGE

S&P CNX NIFTY, CNX NIFTY JUNOIR, NIFTY 500, THE NIFTY

MIDCAP 50, THE CNX MIDCAP 50

IT, BANK, FMCG, PSE, MNC, ENERGY, PHARMA AND REALTY.

BOMBAY STOCK EXCHANGE

SENSEX; MID-CAP, SMALL CAP, BSE 100, BSE 200, BSE

DOLLEX,

BSE IT INDEX, BSE CAPITAL GOODS INDEX, AND BSE FMCG

S&P CNX NIFTY INDEX

CNX stands for CRISIL NSE

owned and managed by IISL

Started Complied in 1995.

Is made up 50 Companies out of 1600 of NSE

covers 22 sectors of the Indian economy

a free float market capitalization weighted index

Base value is 1000

SECTORS OF NIFTYSN SECTOR WEIGHT %

1 FINANCIAL SERVICES 25.26

2 IT 16.24

3 ENERGY 15.10

4 CONSUMER GOODS 13.51

5 AUTOMOBILE 8.65

6 PHARMA 6.55

7 METALS 4.92

8 CONSTRUCTION 3.97

9 CEMENT & CEMENT

PRODUCTS

3.19

10 TELECOM 2.03

11 INDUSTRIAL

MANUFACTURING

0.58

THE 50 COMPANIES ACC

Ambuja Cements

Asian Paints

Axis Bank

Bajaj Auto

Bank of Baroda

BHEL

BPCL

Bharti Airtel

Cairn India

Cipla

Coal India

DLF

Dr. Reddy's

Laboratories

GAIL

Grasim Industries

HCL Technologies

HDFC

• HDFC Bank

• Hero MotoCorp

• Hindalco Industries

• HDFC Ltd

• Infosys

• ICICI Bank

• Induslnd Bank Ltd

• IDFC

• ITC Limited

• Jaiprakash Associates

• Jindal Steel and Power

• Kotak Mahindra Bank

• L&T

• Lupin

• Mahindra & Mahindra

• Maruti Suzuki India

• NMDC. Ltd

• NTPC

• ONGC

• Power Grid Corporation

• PNB

• Ranbaxy

Laboratories

• Reliance

Infrastructure

• Reliance Industries

• Sun Pharmaceutical

• SBI

• Sun Pharmaceutical

• TCS

• Tata Motors

• Tata Power

• Tata Steel

• Ultratech Cement

• Wipro

ELIGIBILITY CRITERIA FOR NIFTY

Liquidity (Impact Cost 0.50% of 90 observation)

Float-Adjusted Market Capitalization

Float (at least 10% of its stock available to investors

(float).

Domicile &Eligible Securities

The index is reviewed semi-annually

S&P BSE SENSEX Bombay Stock Exchange Sensitive Index

Owned and managed by BSE

Started Complied in 1986.

Is made up 30 Companies out of 5000 of BSE

covers 10 sectors of the Indian economy

Covers about 47% of float market capitalization on BSE

A free float market capitalization weighted index

Base value is 100

THE 30 COMPANIES Bajaj Auto Ltd

Bharat Airtel

Coal India Ltd

Gail India Ltd

HDFC Bank

ICICI Bank Ltd

ITC Ltd

L & T

Tata Steel

Wipro

Tata Motors

Bharat Heavy Electicals

Dr. Reddy’s Laboratories

Hero Motor Corp

Jindal Steel And Power

Mahindra & Mahindra

Reliance Industries

Tata Consultancy Services

Tata Power Company

Cipla Ltd

Hindalco Industries

HDFC Ltd

Infosys Ltd

Maruti Suzuki India

Oil & Natural Gas

Sesa Goa Ltd

State Bank Of India

Sun Pharmaceutical

Hindustan Unilever

Hindalco Ltd

ELIGIBILITY CRITERIA FOR SENSEX

Equities of companies listed on BSE Ltd

Daily trading for at least for the last 3 months

Float-Adjusted Market Capitalization

Absolute turnover

SECTORS OF SENSEX

Oil & Gas 14%

Finance 27%

Transport Equipments 10%

Capital Goods

FACTORS AFFECTING INDEX Individual stock

Demand & Supply of stock

Earnings of companies

Release of other information

government information/data

GDP

RBI Repo/interest rate

Inflation

Change of government

Global activities

Actions of developed countries like USA

Currency war

Gold Price

Rating Agency such as S&P , Wall street

FACTORS AFFECTING INDEX

USE OF INDEX

Benchmarking index for funds & derivatives

Measure of the health of the economy

Sensitivity of economy variables on companies

DEMAT ACCOUNT Demat is the short form of dematerailaization. It defined as movement

from the use of physical certificate into electronic form.

Rocketing growth in stock market trading (72.3%) mid 1995 surge in

FI, inefficient settlement system

It started in India on in 1996 with the introduction of Depository Act

There are only two depositories , National Securities Depository

Ltd and the Central Depository Services Ltd.

Demat account are opened with Depository Particiapant (DP)

It can be used for financial assets: bonds, debentures

WHY DEMAT?

Time saving (months to 4-5 days of transfer).

Reduction of cost (no stamp duty)

Liquidity of shares

Globalization (increase in foreign investors)

Paper works very rare.

Transaction can be done anywhere

HOW TO BUY AND SELL SHARES

This is done through professionals know as

stockbrokers.

They buy and sell shares on investors behalf for a

commission called there brokerages.

FUTURE & SPOT INDEX

An index future is a derivative, similar to a stock

future, whose value is dependent on the value of the

underlying, in this case, the index like the S&P CNX

Nifty or BSE Sensex

Spot index is the current or today index. The price of

stock now.

Future index is base on spot index and past data.

WRAP UP All indices including NIFTY and SENSEX are based on

speculations, estimates and averages of variables

which may or may not happen hence as financial

managers we must be cautious and exercise prudence

in making decisions with theses indices.

APPENDIX IISL - India Index Services and Products Ltd.

CRISIL - Credit Rating and Information Services of India

Ltd

S &P – Standard and Poor.

NSE – National Stock Exchange

BSE – Bombay Stock Exchange

SEBI – Stock Exchange Board of India

CNX – CRISIL NSE Index