Moneypalm Investment

Solutions Pvt. Ltd.

Training Session
Introduction to the Stock Exchange

Functions of Stock Exchange

Providing Liquidity and Marketability to Existing Securities:
Stock exchange is a market place where previously issued securities
are traded. Various types of securities are traded here on regular
basis.
Whenever required, an investor can invest his money through this
market into securities and can reconvert this investment into cash.
Availability of ready market for sale and purchase of securities
increases their marketability and enhances liquidity.
Pricing of Securities:
A stock exchange provides platform to deal in securities. The forces
of demand and supply work freely in the stock exchange. In this
way, prices of securities are determined.

 Safety of Transactions:
Stock exchanges are organised markets. They fully protect the
interest of investors. Each stock exchange has its own laws and
bye-laws. Each member of stock exchange has to follow them and
if any member is found violating them, his membership is
cancelled.
Contributes to Economic Growth:
Facilities provided by the share market encourage the people to
invest their money in securities. In this way, peoples money gets
invested in industries and economic development becomes
possible.
Spreading of Equity Cult:
Stock exchange encourages people to invest in ownership
securities by regulating new issues, better trading practices and
by educating public about investment.

 Economic Barometer:
A stock exchange is a reliable barometer to measure the economic
condition of a country.
Every major change in country and economy is reflected in the prices
of shares. The rise or fall in the share prices indicates the boom or
recession cycle of the economy. Stock exchange is also known as a pulse
of economy or economic mirror which reflects the economic conditions
of a country.
Providing Scope for Speculation:
To ensure liquidity and demand of supply of securities the stock
exchange permits healthy speculation of securities.
But it is advised Stock exchange need not be treated as a place for
speculation or a gambling den. It should act as a place for safe and
profitable investment, for this, effective control on the working of stock

Features of Stock Exchange

Market for securities : Stock exchange is a market, where
securities of corporate bodies, government and semi-government
bodies are bought and sold.
Regulates trade in securities : Stock exchange does not buy or sell
any securities on its own account. It merely provides the necessary
infrastructure and facilities for trade in securities to its members
and brokers who trade in securities. It regulates the trade activities
so as to ensure free and fair trade
Allows dealings only in listed securities : In fact, stock exchanges
maintain an official list of securities that could be purchased and
sold on its floor. Securities which do not figure in the official list of
stock exchange are called unlisted securities. Such unlisted
securities cannot be traded in the stock exchange.

 Transactions effected only through members : All the transactions

in securities at the stock exchange are effected only through its
authorized brokers and members. Outsiders or direct investors are
not allowed to enter in the trading circles of the stock exchange.
Investors have to buy or sell the securities at the stock exchange
through the authorized brokers only.
Working as per rules : Buying and selling transactions in
securities at the stock exchange are governed by the rules and
regulations of stock exchange as well as SEBI Guidelines. No
deviation from the rules and guidelines is allowed in any case.

Types of Market
1. Normal Market :
Order Traded in regular lot Size
For demat shares, lot size is 1 share
2. Odd Lot Market :
Used for limited physical Market
Order not traded in regular lot Size but both price &
quantity should tally with each other.

3. Spot Market :
Different settlement periods depends on normal orders
Sell & Purchases takes place on same date.
4. Auction Market :
Initiated by exchange on behalf of members
for settlement related reasons
Reasons are shortage and bad deliveries
Loss is recovered from members

Stock Market Timings in India

Trading on the equities segment takes place on all days
of the week (except Saturdays and Sundays and holidays
declared by the exchange in advance)
The market timings of the NSE and BSE Exchanges are:
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

Stock Exchanges around the world and their

major Indices
USA- New York Stock Exchange (NYSE Composite index - NYA)
NASDAQ (NASDAQ 100 index)
Japan Tokyo Stock Exchange (TOPIX index and Nikkei 225 index)
UK London Stock Exchange (oldest) (FTSE 100 index, FTSE 250 index)
China Shanghai Stock Exchange (SSE Composite and SSE 50)
Hong Kong Stock Exchange (Hang Sang index)
Canada Toronto Stock Exchange (S&P/TSX Composite)
Australia Australian Securities Exchange (S&P/ASX 50, S&P/ASX 100)
Europe Euronext (Euronext 100)
India NSE (S&P CNX Nifty) and BSE (S&P BSE Sensex)

Components of Trading in Stock Exchange

1. Cash
2. Derivatives
a) Futures
b) Options >> Call Options and Put Options

BOMBAY STOCK EXCHANGE

It is oldest and first stock exchange
of India established in the year 1875.
First it was started under baniyan
tree opposite to town hall of Bombay
over 22 stock brokers.

BSE : Bombay Stock Exchange

Established in 1875, BSE Ltd. (formerly known as Bombay Stock
Exchange Ltd. and established as "The Native Share and Stock
Brokers' Association") is one of Asias fastest stock exchanges, with
a speed of 200 microseconds and one of Indias leading exchange
groups. BSE is a corporatized and demutualised entity, with a
broad shareholder-base that includes two leading global
exchanges, Deutsche Bourse and Singapore Exchange, as strategic
partners.
BSE provides an efficient and transparent market for trading in
equity, debt instruments, derivatives, and mutual funds.
More than 5000 companies are listed on BSE, making it the
world's top exchange in terms of listed members.
BSEs popular equity index - the S&P BSE SENSEX (Formerly
SENSEX) - is India's most widely tracked stock market
benchmark index.

History of BSE
The Bombay Stock Exchange is the oldest exchange in Asia. It traces its history
to 1855, when four Gujarati and one Parsi stockbroker would gather under
banyan trees in front of Mumbai's Town Hall. The location of these meetings
changed many times as the number of brokers constantly increased. The group
eventually moved to Dalal Street in 1874 and in 1875 became an official
organization known as "The Native Share & Stock Brokers Association".
On 31 August 1957, the BSE became the first stock exchange to be recognized
by the Indian Government under the Securities Contracts Regulation Act. In
1980, the exchange moved to the Phiroze at Dalal Street, Fort Area. In 1986, it
developed the BSE Sensex index , giving the BSE a means to measure overall
performance of the exchange.
The Bombay Stock Exchange switched to an electronic trading system
developed by CMC Ltd in 1995. It took the exchange only fifty days to make
this transition. This automated, screen based trading platform called BSE Online trading (BOLT) had a capacity of 8 million orders per day.
The BSE has also introduced the world's first centralized exchange-based
internet trading system, BSEWEBx.co.in to enable investors anywhere in the
world to trade on the BSE platform.

Companies that constitute Sensex (BSE Index)

ACC Ltd.

Jindal Steel & Power Ltd.

Bharat Heavy Electricals Ltd.

Larsen & Toubro Ltd.

Bharti Airtel Ltd.

Mahindra & Mahindra Ltd.

Cipla Ltd.

Maruti Suzuki India Ltd.

DLF Ltd.

NTPC Ltd.

HDFC Bank Ltd.

Oil & Natural Gas Corporation Ltd.

Hero Honda Motors Ltd.

Reliance Communications Ltd.

Hindalco Industries Ltd.

Name

Hindustan Unilever Ltd.

Reliance Industries Ltd.

Housing Development Finance Corporation Ltd.

Reliance Infrastructure Ltd.

I T C Ltd.

State Bank of India

ICICI Bank Ltd.

Tata Consultancy Services Ltd.

Infosys Technologies Ltd.

Tata Motors Ltd.

Jaiprakash Associates Ltd.

Tata Power Co. Ltd.

Wipro Ltd.

Tata Steel Ltd.

NATIONAL STOCK
EXCHANGE OF INDIA(NSE
Features of NSE
OR NSE)

Nation wide coverage i.e., investors from all over country

The NSE of India is the leading stock

exchange of India, covering 370 cities and

towns in the
Screen-based trading i.e., trading in this stock country.
exchangeIt iswas
done
electronically.
established
in1994 as a TAX
company.
It was established
leading
Transparency,i.e.,the use of computer screen for
trading makes
the dealingsby
in21
securities
transparent.
financial institutions and banks like the
IDBI,ICICI,IFCI,LIC,SBI,etc.
Professionalization in trading, i.e., it brings professionalism
in its functions
Ringless i.e., it has no ring or trading floor

NSE (National Stock Exchange)

The National Stock Exchange of India Ltd. (NSE) is a stock
exchange located in the financial capital of India, Mumbai .
National Stock Exchange (NSE) was established in the mid
1990s as a demutualised electronic exchange. NSE provides a
modern, fully automated screen-based trading system, with
over two lakh trading terminals, through which investors in
every nook and corner of India can trade.
NSE and the BSE are the two most significant stock
exchanges in India, and between them are responsible for the
vast majority of share transactions.
NSE's major index, the S&P CNX Nifty, is used extensively
by investors in India and around the world to take exposure
to the Indian equities market.

History of NSE
NSE was started by a clutch of leading Indian financial
institutions at the behest of the Government of India to bring
transparency to the Indian market, and has a diversified
shareholding comprising domestic and global investors.
It is India's largest exchange, globally in cash market trades, in
currency trading and index options. As on June 2013, NSE has
1673 VSAT terminals and 2720 leaselines , spread over more than
2000 cities across India.
The exchange was incorporated in 1992 as a tax-paying company
and was recognized as a stock exchange in 1993 when Mr. P.V
Narsimha Rao was the Prime Minister of India and Dr.
Manmohan Singh was the Finance Minister.

Currently, NSE has the following major

segments of the capital market:
Equity
Futures and Options
Retail Debt Market
Wholesale Debt Market
Currency futures
MUTUAL FUND
STOCKS LENDING & BORROWING

Companies that Constitute Nifty (NSE Index)

ACC Ltd.

GAIL (India) Ltd.

Ambuja Cements Ltd.

Grasim Industries Ltd.

Asian Paints Ltd.

HCL Technologies Ltd.

Axis Bank Ltd.

HDFC Bank Ltd.

Bajaj Auto Ltd.

Hero Honda Motors Ltd.

Bank of Baroda

Hindalco Industries Ltd.

Bharat Heavy Electricals Ltd.

Hindustan Unilever Ltd.

Bharat Petroleum Corporation Ltd.

HDFC Ltd.

Bharti Airtel Ltd.

I T C Ltd.

Cairn India Ltd.

ICICI Bank Ltd.

Cipla Ltd.

IndusInd Bank Ltd.

Coal India Ltd

Infosys Technologies Ltd.

.
Kotak Mahindra Bank Ltd.

Sesa Sterlite Ltd.

Larsen & Toubro Ltd.

State Bank of India

Lupin Ltd.

Sun Pharmaceutical Industries Ltd.

Mahindra & Mahindra Ltd.

Tata Consultancy Services Ltd.

Maruti Suzuki India Ltd.

Tata Motors Ltd.

NMDC Ltd.

Tata Power Co. Ltd.

NTPC Ltd.

Tata Steel Ltd.

Oil & Natural Gas Corporation Ltd.

Tech Mahindra Ltd.

Power Grid Corporation of India Ltd.

UltraTech Cement Ltd.

Punjab National Bank

United Spirits Ltd.

Reliance Industries Ltd.

Wipro Ltd.

Dr. Reddy's Laboratories Ltd.

Jindal Steel & Power Ltd

DLF Ltd

Infrastructure Development Finance

Co.Ltd.

MCX Multi Commodities Exchange

The Multi Commodity Exchange of India Limited (MCX), Indias first
listed exchange, is a state-of-the-art, commodity futures exchange that
facilitates online trading, and clearing and settlement of commodity
futures transactions, thereby providing a platform for risk management.
The Exchange, which started operations in November 2003, operates
within the regulatory framework of the Forward Contracts (Regulation)
Act, 1952.
MCX offers trading in varied commodity futures contracts across
segments including bullion, ferrous and non-ferrous metals, energy and
agricultural commodities.
The Exchange focuses on providing commodity value chain participants
with neutral, secure and transparent trade mechanisms, and formulating
quality parameters and trade regulations, in conformity with the
regulatory framework.
MCX is Indias leading commodity futures exchange with a market
share of about 81%.

Commodities traded at MCX

Bullions (Precious Metals) - Platinum, Gold and Silver
Metals Aluminium , Copper, Iron, Lead, Nickel, Zinc
Energy Natural Gas , Crude oil
Fiber Kapas , Cotton
Plantations Rubber
Oil Seeds Soya bean, Crude palm oil
Cereals Barley, Wheat
Spices Cardamom , Coriander
Pulses Chana

Functions Of SEBI
Regulating the business in stock exchange and any other securities
markets.
Promoting and regulating self-regulatory organization.
Registering and regulating the work of collective investment
scheme,incluing mutual funds.
Prohibiting fraudulent and unfair trade practices relating to securities
market.
SECURITIES AND EXCHANGE
Promoting education, and training
of intermediaries
of securities
BOARD
OF INDIA(SEBI)
market

Power of SEBI

Power to approve the bye-laws of stock exchange

Power to inspect the books of accounts
Power to grant license to any person for the purpose of dealing in certain
areas.
Power to delegate powers exercisable by it.
Power to try directly the foliation of certain provision of the company
Act

Depository
and
Depository Participants (DPs)
A Depository facilitates holding of securities in the
electronic form and enables securities transactions to be
processed by book entry.
The Depository Participant (DP), who is an agent of the
depository, offers depository services to investors.
According to SEBI guidelines, financial institutions,
banks, custodians, stockbrokers, etc. are eligible to act as
DPs. The investor who is known as beneficial owner (BO)
has to open a demat account through any DP for
dematerialization of his holdings and transferring
securities.

Services provided by the Depositories

Dematerialisation (usually known as demat)
converting physical certificates to electronic form

is

Rematerialisation, known as remat, is reverse of demat,

i.e. getting physical certificates from the electronic
securities
Transfer of securities, change of beneficial ownership
Settlement of trades done on exchange connected to the
Depository

Major Depositories in India

National Securities Depository Limited (NSDL)

Central Depository Services Limited(CDSL)

NSDL
(National Securities Depository Ltd)

NSDL, the first and largest depository in India, established in

August 1996 and promoted by institutions of national stature
responsible for economic development of the country has since
established a national infrastructure of international standards
that handles most of the securities held and settled in
dematerialised form in the Indian capital market.
Although India had a vibrant capital market which is more than a
century old, the paper-based settlement of trades caused
substantial problems like bad delivery and delayed transfer of
title till recently. The enactment of Depositories Act in August
1996 paved the way for establishment of NSDL, the first
depository in India.
Using innovative and flexible technology systems, NSDL works to
support the investors and brokers in the capital market of the
country. NSDL aims at ensuring the safety and soundness of
Indian marketplaces by developing settlement solutions that
increase efficiency, minimize risk and reduce costs.

CDSL
(Central Depository Services Ltd)
CDSL was promoted by BSE Ltd. jointly with leading banks such as State Bank
of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered
Bank and Union Bank of India. CDSL was set up with the objective of
providing convenient, dependable and secure depository services at affordable
cost to all market participants.
Central Depository Services Limited (CDSL), is the second Indian central
securities depository based in Mumbai. Its main function is holding the
securities either in certificated or uncertificated (dematerialized) form, to
enable book entry transfer of securities.
The balances in the investors account recorded and maintained with CDSL can
be obtained through the DP. The DP is required to provide the investor, at
regular intervals, a statement of account which gives the details of the securities
holdings and transactions. The depository system has effectively eliminated
paper-based certificates which were prone to be fake, forged, counterfeit
resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer
of securities.

Demat account
A demat account is opened on the same lines as that of a Bank
Account.
Prescribed Account opening forms are available with the DP,
needs to be filled in.
Standard Agreements are to be signed by the Client and the DP.
In case of Corporate clients, additional attachments required are true copy of the resolution for Demat a/c opening along with
signatories to operate the account and true copy of the
Memorandum and Articles of Association is to be attached

Dematerialization
Dematerialization in short called as 'demat' is the process by which
an investor can get physical certificates converted into electronic
form maintained in an account with the Depository Participant.
The investors can dematerialize only those share certificates that
are already registered in their name and belong to the list of
securities admitted for dematerialization at the depositories.

In offline trading the investor places orders with the

stockbroker either verbally (personally or telephonically) or
in a written form (fax). This may be because he is not
comfortable in accessing the Internet.
Highlights
Trading over the phone
No access to live market watch
Absence of online Fund transfer

Online trading means trading/investing in equities, derivatives,

commodities etc through the Internet. It enables the investor to
electronically connect (through Internet) to buy or sell stocks,
derivatives etc with the other investors. In online trading, one can
access a stockbroker's website through an Internet-enabled PC and can
place orders.

Highlights
Streaming quotes
Self-execution and instant confirmation
Complete control over their trading decisions
Can access accounts Online
Convenience of trade
Wide access to historical charts and past data

Stock Broker
A stockbroker is a regulated professional individual or a brokerage
firm or a who buys and sells or facilitates buying and selling of
shares and other securities for both retail and HNI and institutional
clients, through a stock exchange, in return for a fee or commission.
Moneypalm Investment Solutions Pvt. Ltd. is a registered Stock
Broker which specializes in Discount Brokerage.

SPECULATION AND SPECULATOR

SPECULATION : It is the transaction of members to buy or sell
securities on stock exchange with a view to make profits to
anticipated raise or fall in price of securities.
SPECULATOR : The dealer in stock exchange who indulge in
speculation are called speculator . They do not take delivery of
securities purchased or sold by them , but only pay or rescue the
difference between the purchase price and sale price . The different
types of speculators are
BULL
BEAR
STAG
LAME DUCK

BULL {TEJIWALA}

He is speculator who expects the future raise in price of

securities he buys the securities to sell them at future date at
the higher price.
He is called as bull because his activities resembles as a bull ,
as the bull tends to throw its victims up in the air through its
horns. In simple the bull speculator tries to raise the price of
securities by placing a big purchase orders.

BEAR {MANDIWALA}
He is speculator who
expects future fall in prices
, he does an agreement to
sell securities at future
date at the present market
rate .
He is called as bear
because
his
altitude
resembles with bear , as
the bear tends to stamp its
victims down to earth
through its paws . In
simple the bear speculator
forces
of
prices
of
securities to fall through
his activities.

STAG {DEER}
He operates in new issue
of market . He is just like
a bull speculator . He
applies large number of
shares in the issue
market only by paying ,
application
money
,
allotment money. He is
not a genuine investor
because , he sells the
alloted securities at the
premium and makes
profit. In simple he is
cautious in his dealings .
He creates an artificial
rise in prices of new
shares and makes profits.

LAME DUCK
He is speculator when the
bear operator finds it
difficult to deliver the
securities to the consumer
on a particular day as
agreed upon , he struggles
as a lame duck in fullfilling
his commitment . This
happens when the prices do
not fall as expected by the
bear and the other party is
not willing to postpone the
settlement to the next
period.

Thank You