Topic- S t o c k M a r k e t

(Shares)

A Presentation By-
Trade Nivesh (Investment Advisor)
 Introduction:
• A company form of organisation is a business entity
which is established under provision of India`s
Companies Act 1956, through promotion,
incorporation and floatation.
• The total capital of company is estimated, registered
and divided into units of equal value. This units are
known as Shares and collectively they are known as
Share Capital.

Share Capital Shares

The amount is invested or contributed by the investors and then
they are collectively sold and purchased by new or existing
investors through various means such as brokers of stock
market / companies etc. , thus directly or indirectly giving birth
or using the STOCK MARKET (Share Market).
 Incorporation of a Company:
• The procedure for incorporating a co. may be
divided into 4 principal stages :
 Promotion
 Incorporation or Registration of a Co.
 Capital Subscription
 Commencement of Business
 What is Stock Market?

• A stock market or equity market is a public entity for the trading

of company stock (shares) and derivatives at an agreed price; these
are securities listed on a stock exchange as well as those only
traded privately.
 Importance of Stock Market:
• Function and purpose:
The stock market is one of the most important sources
for companies to raise money. This allows businesses to
be publicly traded, or raise additional capital for
expansion by selling shares of ownership of the
company in a public market.
 History has shown that the price of shares and other
assets is an important part of the dynamics of economic
activity, and can influence or be an indicator of social
mood.
 An economy where the stock market is on the rise is
considered to be an up-and-coming economy.
 Share prices also affect the wealth of households and their
consumption

 Exchanges also act as the clearinghouse for each transaction,

meaning that they collect and deliver the shares, and guarantee
payment to the seller of a security.
 M a j o r S t o c k Exchanges:
• New Y o r k S t o c k Exchange (NYSE- USA)
• To r o n t o S t o c k Exchange (Canada)
• A m s t e r d a m S t o c k Exchange
• L o n d o n S t o c k Exchange
• S i n g a p o r e Exchange
• To k y o S t o c k Exchange
• Hong Ko ng S t o c k Exchange
• B o m b a y S t o c k Exchange (B S E - India)
 Major Participants:
• Individual Retail Investors
• Institutional investors such as mutual funds, banks, insurance
companies and hedge funds, and also publicly traded
corporations trading in their own shares.
 The smooth functioning of all these activities facilitates
economic growth in that lower costs and enterprise risks
promote the production of goods and services as well as
employment.
In this way the financial system contributes to increased
prosperity.
Some Important Terms Relating To
‘Stock Market’
 Market Capitalisation:

Market capitalization is the measure of corporate

size of a country. It shows the current stock price
multiplied by the number of outstanding shares. It is
commonly referred to as Market cap.
 Capital Structure:
• Capital structure means the proportion of debt and equity
used for financing the operations of a business or an
enterprises.

The capital structure should be such which increases the

value of equity shares or maximises the wealth of share
holder.
 Cornering:
• In finance, to corner the market is to get sufficient control of
a particular stock, commodity, or other asset to allow the
price to be manipulated.

Corner the market to have the greatest market share in a

particular industry without having a monopoly. They may
charge higher prices for their products without fear of losing
too much business.
 Speculation:
• Speculation is the practice of engaging in risky financial
transactions in an attempt to profit from short or medium
term fluctuations in the market value of a tradable good.

• Speculation can in principle involve any tradable good or

financial instrument.
 Speculators:
• Many speculators pay little attention to the fundamental
value of a security and instead focus purely on price
movements.

Four kinds of speculators operate in the Indian Stock

Exchange. They are known as :
 Bull
 Bear
 Stag and
 Lame duck.
 Bull:
A Bull also called as Tejiwala is an operator who is hopeful
of price rise in the near future. In anticipation of price rise
he makes purchases of shares and other securities with the
intention of selling them at higher prices in future.

He being a speculator has no intention of taking delivery of

securities but deals only in difference of prices.
 Bear:
A bear does not have securities at present but sells
them at higher prices in anticipation that he will
supply them business purchasing at lower prices in
the future.
Stag:
A stag is that type of speculator who treads his path
very carefully. He applies for shares in new
companies and expects to sell them at a premium if
he gets an allotment. He selects those companies
whose shares are most in demand and are likely to
carry a premium. He sells the shares before being
called to pay the allotment money.
Lame Duck:
A Lame Duck is nothing but a stressed bear. When a
bear finds it difficult to complete his promise he is
labeled as a lame duck.
 Stock Broker:
• A stockbroker is a regulated professional individual,
usually associated with a brokerage firm or broker-
dealer, who buys and sells shares and other securities for
both retail and institutional clients, through a stock
exchange or over the counter, in return for a fee or
commission.
 Stock Exchanges names and their Indices Name:

Country Stock exchange name Indices name

India National Stock Exchange S & P Nifty

India Bombay Stock Exchange Sensex

Hong Kong Hong Kong Stock Exchange Hang Seng

USA New York Stock Exchange NYSE

Korea Korean Stock Exchange KRX 100

Russia Russian Stock Exchange RTS Index

 National Stock Exchange
• The National Stock Exchange (NSE) (Rashtriya Share Bazaar) is stock exchange
located at Mumbai, Maharashtra, India. It is in the top 20 largest stock
exchanges in the world by

market capitalisation and

largest in India by daily

turnover and number of

trades, for both equities

and derivative trading.

• NSE has a market

capitalization of around

US$1 trillion and over 1,652 listings as of July 2012.

Though a number of other exchanges exist, NSE and the
Bombay Stock Exchange are the two most significant stock
exchanges in India, and between them are responsible for
the vast majority of share transactions.

The NSE's key index is the S&P CNX Nifty, known as the
NSE NIFTY (National Stock Exchange Fifty), an index of
fifty major stocks weighted by market capitalisation.
• NSE is mutually owned by a set of leading financial institutions,
banks, insurance companies and other financial intermediaries in
India but its ownership and management operate as separate entities.

• There are at least 2 foreign investors NYSE Euronext and Goldman

Sachs who have taken a stake in the NSE.

As of 2006, the NSE

VSAT terminals, 2799
in total, cover more
than 1500 cities across
India.
In 2011, NSE was the third largest stock exchange in the world
in terms of the number of contracts (1221 million) traded in
equity derivatives.

It is the second fastest growing stock exchange in the world

with a recorded growth of 16.6%.
 Major Milestones of NSE :
National Stock Exchange has achieved various milestones. Some
major milestones of NSE are :
• November 1992 Incorporation
• October 1995 Became largest stock exchange in the country
• April 1996 Launch of S&P CNX Nifty
• November 1996 Best IT
Usage award by Computer
Society of India
• December 1996 Launch
of CNX Nifty Junior
• October 1999 Setting up
of NSE.IT
• January 2000 Launch of NSE Research Initiative
• February 2000 Commencement of Internet Trading
• January 2002 Launch of Exchange Traded Funds (ETFs)
• April 2008 Launch of India VIX
• December 2009 Commencement of settlement of corporate bonds
 Bombay Stock Exchange:
• Bombay Stock Exchange, commonly referred to as the BSE, (Bombay
Share Bazaar) is a stock exchange located on Dalal
Street, Mumbai, Maharashtra, India.

It is the oldest stock exchange

in Asia. The equity market
capitalisation of the companies
listed on the BSE was US$1 trillion
as of December 2011, making it
the 6th largest stock exchange
in Asia and the 14th largest in
the world.
The BSE has the largest
number of listed companies in the
world.
As of March 2012, there are over 5,133 listed Indian companies and over
8,196 scrips on the stock exchange, the Bombay Stock Exchange has a
significant trading volume.
The BSE SENSEX, also called "BSE 30", is a widely used market index
in India and Asia. Though many other exchanges exist, BSE and the
National Stock Exchange of India account for the majority of the equity
trading in India.
While both have similar total market
capitalization (about USD 1.6 trillion),
share volume in NSE is typically
two times that of BSE.
 History of BSE:
As we read in the history of Indian stock exchange; the stock exchange, Mumbai,
popularly known as "BSE". BSE was established in 1875 as "The Native Share and
Stock Brokers Association".
It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which
was established in 1878. It is a voluntary non-profit making Association of
Persons (AOP) and has converted itself into demutualised and corporate entity.
‘It has evolved over the years into its present status as the
Premier Stock Exchange in the country. It is the first Stock
Exchange in the Country to have obtained permanent
recognition in 1956 from the Govt. of India under the
Securities Contracts (Regulation) Act, 1956.’
Operation hours of Bombay Stock
Exchange :
Session Timing

Pre-open Trading Session 09:00 - 09:15

Trading Session 09:15 - 15:30

Position Transfer Session 15:30 - 15:50

Closing Session 15:50 - 16:05

Option Exercise Session 16:05