Bse (100 Marks)

BOMBAY STOCK EXCHANGE
INTRODUCTION
TO
PROJECT

1

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

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

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

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

INTRODUCTION
OF

STOCK MARKET

6

7

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

1830
In 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

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 giving
protection 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

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 the
securities 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

EMPLOYMENT
SEGMENT

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

A GUIDE TO THE STOCK TABLE

[BSE] quotes of a scrips are given in the first line while the
quotation in second line starting with [N] are those of [NSE] the
quotation are followed by the number of shares traded number of
trades and the[BSE] scrips group. This is followed by the price
earning 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

MAJOR TYPES OF STOCK EXCHANGES

B
S
E

2
nd
N
S
E

1
st
2
nd
BSE

2
nd position
BOMBAY STOCK EXCHANG

13

.

14


INTRODUCTION
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich
heritage. 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 is
the 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

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 Asias 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 countrys 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

CURRENT SITUATION OF BSE

17

BOMBAY STOCK EXCHANGE LIMITED
BOARD OF DIRECTORS

Non-Executive Chairman Managing Director & CEO
Trading Member Directors
Mr. Jagdish Capoor
Chairman, HDFC Bank Limited
Mr. Rajnikant Patel
Public Interest Directors
Mr. Sudipto Sarkar
Senior Advocate, Kolkata High
Court
Mr. Vivek Kulkarni - IAS (Retd.)
Chairman and CEO, Brickwork
India Pvt. Ltd.
Mr. Jitesh Khosla
J oint Secretary, Ministry of
Company Affairs, Govt. of India
Mr. Ishaat Hussain
Finance Director, Tata Sons
Limited
Mr. Jamshyd N. Godrej
Chairman & Managing Director,
Godrej & Boyce Mfg. Co. Ltd.
Mr. Shekhar Datta
Chairman, Lombardini India
Private Limited
Mr. C.M. Vasudev - IAS (Retd.)
Director, ICRA Management
Consulting Services Limited
Mr. Siddharth J. Shah
Designated Director
J .G.A. Shah Share Brokers
Private Limited
Mr. Balkishan Mohta
Mr. Prakash R. Kacholia
Designated Director
Emkay Share and Stock Brokers
Limited

18

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 Derivatives
Trading & 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

20

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

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 be
1049.56.
2970.20
Index = ------------- *1000 = 1049.56
2829.75
COMPANY SHARE PRICE AT
TIME 0
(RS.)
SHARE PRICE AT
TIME 1
(RS.)

GRASIM INDS 351.55 340.50
TELCO 329.10 350.30
SBI 274.60 280.40
WIPRO 1335.25 1428.75
BAJAJ 539.25
In the market capitalization weighted method.
570.25
TOTAL 2829.75 2970.20

Current market capitalization
Index = -------------------------------------- * Base value
Base market capitalization
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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. NSEs 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

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. About
60% 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 scrips, 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

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

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

TRADING SETTELMENT
AND INVESTMENT IN
SHARES

27

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

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 conditions
attached to them as per their requirement these condition are broadly divided
into 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

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 book
Traders workstation
Market watch window
The following windows are displayed on the trader work station screen
Title bar
Ticket window
Tool bar
Market match window
Inquiry 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

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

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 improves
the 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 an
investment 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

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-CAP
COMPANIES
EARNING PER
SHARE
FY05 FY06
NET PROFIT
MARGIN
[FOR GRAPH SEE THE ANNEXTUER]
FY05 FY06
% %
BHAGYANA
GER INDIA
3.6 3.6 GROWTH
-3.6
19.5 15.1 GROWT
H
-22.6
DISHMAN
PHARMA
4.7 7.4 56.1 17.1 18.3 7.5
ERA
CONSTRUC
T-ION

2.9 14.9 143.8 3.5 7.4 111.4
GATEWAY
DISTRIPARK
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
GODAWARI
POWER
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
SUBEX
AZURE
11.5 20.2 75.7 21.6 24.4 13.0
OPTO
CIRCUIT
3.1 5.7 84.1 24.1 30.2 25.3
33

The Bombay stock exchange manages an index called CNX mid-cap200.the
objective of such an index is to capture the movement in the mid-cap shares
segment. According to the BSE, CNX mid-cap200 represent about 77% of the
Total market capitalization of the mid- cap universe and 75% of total traded
value. Benchmark for comparing portfolio returns in the segment.

ADVANTAGES OF INVESTMENT IN MID-CAP:

ENTREPRENEURIAL MANAGEMENT TACTICS

As the saying goes action speaks louder than world ; the mid-cap companies
believe in doing things rather than discussing about it and going through longer
reporting lines and greater bureaucracy which are the attributes of the large-cap.

FLEXIBLE BUSINESS OUTLOOK:-

The entrepreneurs of mid-cap companies are flexible to change their business
with the changing trends in the industry and the country. The management of
these companies is willing to shift the whole line or industry they deal in if the
opportunities on the other hand are high.

HIGHER DIVIDEND YIELD:-

Dividend yield is the % of the dividend paid by the company to the price of the
stock. Being relatively low priced, the dividend yield on mid-cap stocks tends to
be higher. "I believe that more attention will be paid to dividends and current
earnings and less to growth. By and large, companies that are paying dividends
have to have earnings. [For graph see the annexure]

34

COMPARISON BETWEEN MID-CAP & LARGE-CAP

MID-CAP COMPANIES
TCS

NET
SALES
OPERAT
PROFIT
OPM
(%)
NET
PROFIT
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

NET
SALES

INDIA CEMENTS

OPERAT
PROFIT
OPM
(%)
NET
PROFIT
ROCE
(%)
NET
SALES
OPERAT
PROFIT
OPM
(%)
NET
PROFIT
ROCE
(%)
FY04 10169 1008 9.9 -12.16 1 FY04 10169 1008 9.9 -12.16 1
FY05 11621 1365 11.7 -588 3 FY05 11621 1365 11.7 -588 3
FY06 15418 2610 16.9 357 8 FY06 15418 2610 16.9 357 8
TOTAL
INCOME
NIM (%) ROA
(%)
NET
PROFIT
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

LARGE-CAP COMPANEY
BANK OF BARODA

INFOSYS

SUN PHARMA

REVENUES OPERAT
PROFIT
OPM
(%)
NET
PROFIT
ROCE
(%)
REVENUES OPERAT
PROFIT
OPM
(%)
NET
PROFIT
ROCE
(%)
FY05 71296 23350 32.8 18464 51.2 FY05 71296 23350 32.8 18464 51.2
FY06 95216 30907 32.5 24801 45.5 FY06 95216 30907 32.5 24801 45.5
FY07 1389 43910 31.5 38610 46.5 FY07 1389 43910 31.5 38610 46.5
NET SALES OPERAT
PROFIT
OPM
(%)
NET
PROFIT
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
REVENUES OPERAT
PROFIT
OPM
(%)
NET
PROFIT
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

RISKS IN INVESTMENT

1. NON COMPLIANCE OF CORPORATE RESPONSIBILITY AND
ACCOUNTABILITY:

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

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 are
some 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

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 CAP
FUND
MID-CAP
FUND
MULTI-CAP
FUND
R
E
T
U
R
N
S
RISK
LONG TERM
ADVANTAGES
FUND
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

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 ANALYSIS
RETURNS (%)

6-MONTHS 1YR SINCE
INCEPTION
RISK

STD RATIO
DAVIATION
SIDE

FIDLITY EQUITY FUND

13.46 21.89 48.73

23.18 1.98 0.29

CATEGORY(DIVERSIFIED
EQUITY)

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

SENSEXOFTHE
MARKET

41

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 replacement
of 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

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 electronic
media

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-float
methodology.

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

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 existing
Base 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

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 final
rank 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

SENSEX TOP COMPANIES

[TAKAN FROM THE ECONOMIC TIMES NEWS PAPER (current situation)]
46

RISK MANAGEMENT

47

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 brokers offices is of prime importance.

48

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 for
existing 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

SAFETY OF THE
MARKET

50

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

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 parameters
like 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

OPPORTUNITIESAVAILABLE
FOR
FOREIGN INVESTORS

53

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 in
India-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

IMPACT ON INDIAN
ECONOMY

55

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

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 forward
looking 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

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

CAPTURING NEW OPPORTUNITIES:
Firms are small in size they can be more agile in taking management decisions.

59

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

STEPS OF LISTING OF THE COMPANY
INITIAL LISTING
This involves making a simple application by the payment of initial listing fee as
prescribed 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

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


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

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

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 EST ONT SEN HIGH
MAY 75
FAB 70

65

SENSEX PERFORMANCE IN THE MONTH

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

NOV 65
AUG 60
MAY 55
NOV 50

CURRENT SITUATION
16000 [SEPT 2007]
15000 [JUL6] 2007

11000 [MAR21] 2006
10000 [FEB6] 2006
14000 [DEC5] 2006
13000 [OCT30] 2006
12000 [APR21] 2006
66

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 [MAR3 0 0] 1992
67

What is a share?
ow does one trade in shares?
ow stock markets work?
hat is Stock?

H

H

W

68

What is Public market?

When we have to make investment in shares?

What is nifty?

69

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

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 resultant
economic 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

BIBOLOGRAPHY

WEBLIOGRAPHY
WWW.BSEINDIA.COM

TIMES
4. OPRATING OF INDIAN
STOCK EXCHANGE IN
INDIA
JAVAID KHAN
5. MONEY MAGAZINE

72

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