Stock Market Mba

8/3/2019 Stock Market Mba

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INTRODUCTION :

There are 21 stock exchanges in India.

Mumbai's (earlier known as Bombay),Bombay Stock Exchange is the largest,with over 6,000 stocks listed.

The BSE accounts for over two thirds of the total trading volume in the country.Established in 1875, the exchange isalso the oldest in Asia.

Among the twenty-one Stock Exchangesrecognised by the Government of Indiaunder the Securities Contracts(Regulation) Act, 1956, it was the firstone to be recognised and it is the onlyone that had the privilege of gettingpermanent recognition ab-initio.



N AME OF INDIAN STOCK EXCHANGE:

1. Bombay stock exchange

2. National stock exchange(Mumbai)

3. OTC Exchange of India, Mumbai

Jaipur stock exchange

Madras Stock Exchange Ltd Cochin Stock Exchange Ltd

Banglore stock exchange

4. U.P. stock exchange(kanpur)

The Gauhati Stock Exchange Limited

The Ludhiana Stock Exchange Ltd Calcutta stock exchange(kolkata)

Bhubaneswar stock exchange

The Delhi Stock Exchange Ltd

Vadodara stock exchange(Baroda)



CONT««.

11. Ahmedabad Stock Exchange LtdCochin stockexchange

12. Madhya pradesh stock exchange(indore)

Pune stock exchange

MCX Stock Exchange Ltd Inter connected Sto

MCX Stock Exchange Ltdck Exchange of India Ltd.

United Stock Exchange of India Limited (USE)

Coimbatore Stock Exchange

Hyderabad Stock Exchange

Magadh Stock Exchange

Saurashtra Kutch Stock Exchange (SKSE)

Mangalore Stock Exchange



CONT««.

Bombay stock exchange : it has 30 companies sripted.

1.ACC

2.BAJAJ

3.AIRTEL

4.BHEI

5.CIPLA

6.DLF

7.GRASIM

8.GUJRAT AMBUJA

9.HDFC

10.HDFC BANK



CONT««

11.HERO HONDA

12.HINDALCO

13.HUL

14.ICICI BANK 15.INFICYS

16.ITC

17.L&T

18.MARUTI 19.NTPC

20.ONGC



CONT««

21.RANBAXY

22.RELIANCE COMMUNICATION

23.RELIANCE ENERGY

24.RIL 25.SATYAM

26.SBI

27.TCS

28.TATA MOTERS 29.TATA STEEL

30.WIPRO



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NSE

The National Stock Exchange (NSE), located in

Bombay, is India's first debt market.

It was set up in 1993 to encourage stock

exchange reform through system modernizationand competition.

It opened for trading in mid-1994. It was

recently accorded recognition as a stock

exchange by the Department of Company

Affairs.

The instruments traded are, treasury bills,

government security and bonds issued by

public sector companies




CONT«««.

The Organisation:

The National Stock Exchange of IndiaLimited has genesis in the report of the High Powered Study Group onEstablishment of New StockExchanges, which recommendedpromotion of a National StockExchange by financial institutions(FIs) to provide access to investors

from all across the country on anequal footing.




CONT«««

Based on the recommendations, NSE was promoted by leading

Financial Institutions at the behest of the Government of India

and was incorporated in November 1992 as a tax-paying

company unlike other stock exchanges in the country




CONT««««««««..SS

NSE Group:

1. India Index Services & Products Ltd. (IISL)

2. National Securities Clearing Corporation Ltd.

(NSCCL)

3. NSE.IT Ltd.

4. National Securities Depository Ltd. (NSDL)

5. DotEx International Limited




SPECULATION :

It involves the buying,holding,selling,short-term

selling of

stocks,bonds,commodities,currencies,collectibles

or any valuable financial instrument to profit

from fluctuations in its price as opposed to

buying it for use or for income via method like

dividends or interest.




K INDS OF SPECULATION

Bull Market (Tejiwala)

: In case of that they purchase the shares at

current prices to sell at a higher price in the near

future and makes a profit if his expectationscome true. He is also called a long buyer.

Bear Market (Mandiwala) :

He sells security in the hope that he will be able

to buy them back at lesser price.It is also called

´short sellingµ.



CONT««««««

Lame duck :When a bear has made contracts to sell securities,

find it difficult to meet his commitment due to non-

availability of security, they appears struggling like

it. Stag :

He is that type of speculator who applies for a

large number of a shares in a new issue with the

intention of selling them at a premium. He is

bullish and very cautious.



ROLE AND FUNCTIONS OF

A STOCK EXCHANGE

Established for the purpose of assisting, regulatingand controlling business of buying, selling anddealing in securities.

Provides a market for the trading of securities to

individuals and organizations seeking to invest their saving or excess funds through the purchase of securities

Provides a physical location for buying and sellingsecurities that have been listed for trading on thatexchange

Establishes rules for fair trading practices andregulates the trading activities of its membersaccording to those rules



The exchange itself does not buy or sell the

securities, nor does it set prices for them

The exchange assures that no investor will have anundue advantage over other market participants





FROM THE COMPANY POINT OF VIEW

1.A company whose shares quoted onstock exchange they enjoy betterreputation and credit.

2.The market for the shares of such acompany is naturally widened.

3.The market price of securities is likelyto be higher in relation to its

earnings,dividends and propertyvalues.This raises the bargaining power of the company in the event of atakeover,merger or amalgamation.



FROM THE INVESTORS POINT OF VIEW

1.Liquidity of the investment is increased.

2.The securities dealt on a stock exchange are

good collateral security for loans.

3.The stock exchange safeguards interests of investors through strict enforcement of rules and

regulations.

4.The present net worth of investments can be

easily known by the daily quotations.

5.His risk is considerably less when he holds or

purchases listed securities.



ROLE PLAYER

EXTERNAL:----

1.SHAREHOLDER

2.DEBENTURE HOLDER



SHAREHOLDER

Shareholders are divided into two parts

1.Preference shareholder: Preference

shareholder are those which have

preferential right to the payment of dividend during the life time of the

company,and a preferential right to the

return of the capital when the company is

wound up.



CHARACTERISTICS OF

PREF.SHAREHOLDER1.The dividend on them is fixed by the

articles of the company.

2.They get their fixed rate of dividend

before any dividend is distributed amongthe other class of shareholders.

3.At the time of winding up of the

company, the preference shareholder

must be paid back their capital before

anything is paid to the ordinary

shareholders.



KINDS OF PREF.SHAREHOLDER

1.Comulative shareholder:

These shares are entitled to fixed dividends

whether there are profits or loss. If profits

are not sufficient to pay in a particular yearthen that will pay on next year.

2.Non comulative pref.share:

These shares cannot claim arrears of dividends of any year (if not paid due to

insufficiency of profits ) out of profits of

subsequent year.



CONT««.

3.Participating pref. Shares:

These shares receives a fixed rate of dividend in priority to ordinary shares and

further, the right to participate in balanceof profits in an agreed proportion togetherwith ordinary shares.

4.Redeemable pref.shares:

These are shares which can be purchasedback by the company. The companyreserves its rights to call back or purchasedthese shares at any time .



EQUITY SHARES

All shares which are not preference shares

are equity shares.These shares do not

have a fixed rate of dividend,they are

always irredeemable and their holdershave normal voting rights.

They are also the owners of the company.

They take dividend



DEBENTURES

A document under the company seal

which provides for the payment of a

principal sum and interest there on at

regular intervals which is usually securedby a fixed or floating charge on the

company·s property or undertaking which

acknowledges a loan to the company.



INTERNAL PLAYERS

The members of the stock exchange can bedivided into two parts:Broker:

He is a commission agent who transactsbusiness in securities on behalf of non-members. They may have number of sub-brokers to canvass and secure business forthem.

Jobber:He is an independent dealer securities. Hepurchase and sells securities in his ownname. He is not allowed to deal with non-members directly. He works for profit.



T ARAWANIWALA

Non-members : The following categories of

non members are also permitted to enter

trading hall and transact business on the

behalf of members. Authorized clerks: They are the assistant

or agents.They buy or sell on the behalf of

employers.They can not transact business

on their own account.

Remisers: They are the sub-brokers. He is

also called the half commission men.



CAUSES OF PRICE FLUCTUATION

1.DEMAND AND SUPPLY

2.BANK RATE

3.SPECULATIVE PRESSURE

4.ACTIONS OF UNDERWRITERS AND

OTHER FINANCIAL INSTITUTIONS

5.CHANGE IN COMPANY·S BOARD OF

DIRECTORS6.FINANCIAL POSITION OF THE

COMPANY



CONT««..

TRADE CYCLE

POLITICAL FACTORS

SYMPATHETIC FLUCTUATIONS

OTHER FACTORS:

EXPECTED MONSOON

PERSONAL HEALTH OF HEAD OF GOVERNMENT

OR CHAIRMAN OF THE COMPANY

OIL PRICES IN THE INTERNATIONAL MARKET.



CONT««.

CHANGES IN EXCHANGE RATE BORDER TENSION

STOCK BROKERS SCAM LIKE HARSHAD

MEHTA.

STRIKES AND LOCK-OUT OF THECOMPANY.

NEW BUDGET PROPOSALS

LIBERALIZATION AND PRIVATIZATIONOF THE COMPANY.



BUY BACK SHARES

In simple term when company re-

purchase of its own shares that is called

buy back shares.



MODES OF REPURCHASE

BASICALLY THERE ARE TWO MODES OFREPURCHASE:

Open market repurchase:

Company makes an announcement regarding therepurchase of a specified number of shares. Thepurchases are made anonymously through a brokerfrom the secondary market over a specified period of time.

Tender offers:

This is basically of two types

Fixed price tender offers: company announces afixed price at which it is willing to buy its shares, amaximum number of shares that it will commit tobuy and an expiration date for the offer. The offerprice is premium over the market price to encouragethe shareholder.



CONT««««.

Dutch auction tender offers :

In a dutch auction, the company

announces the maximum number of

shares it wishes to buy and a range of prices at which it will entertain offers.

Shareholders who choose to participate

must then select a single price in this

range at which to tender their shares.



RULES FOR REPURCHASE UNDER SEBI

ACT 1988 1.Regulations cover only the listed securities of

the company

2.In case of purchase through the stock exchangean offer for buy back will not remain open for

more than 30 days. 3.Buy back through negotiated deals, spot

transactions or private arrangements is notpermitted.

4.In the purchases made through stock exchange,the details under the buy back scheme shall bemade available to the stock exchange on dailybasis:the details in turn shall be made availableto public regularly.



HOW RATING IS GIVEN TO THE

COMPANY? Basically rating is given after the company

image, management quality, assets quality,auditors quality, accounting accuracy. Rating isnot fixed, it may be change. The rating grades

are: AAA: HIGHEST SAFTY

AA: HIGH SAFTY

A: ADEQUATE SAFTY

BBB: MODERATE SAFTY BB: IN ADEQUATE SAFTY

BC&D: HIGH RISK AND DEFAULT



CREDIT RATING AGENCY IN INDIA

1.CRISIL

2.ICRA

3.CARE



DEPOSITORY

Depository is an institution or a kind of

organization which holds securities with it, in

which trading is done among shares, debentures,

mutual funds, derivatives, F&O and

commodities.



BENEFITS OF DEPOSITORY ARE AS FOLLOWS:

Holds securities in electronic form, thus reducingpaperwork

Applies for IPOs and other public offerings

Transfers securities in an immediate manner

Risks that are associated with physicalcertificates such as bad delivery and fakesecurities are absent

Reduces transaction cost

Eases nomination facility Direct transmission of securities by the DP to

avoid correspondence with companies

Records any corporate actions automatically



There are 2 depositories in India :

The National Securities Depository Limited

[NSDL] Central Depository for Securities Limited [CDSL]





Freezing of DeMat account to avoid debits from

the account

Nomination facilities for DeMat accounts

Services related to change of address Effective transmission of securities

Other facilities such as holding debt instruments

in the same account or availing stock lending /

borrowing facility



DEPOSITORY P ARTICIPANTS

Services provided by NSDL and CDSL are carried outthrough their agents known as Depository Participants[DPs]. DPs are appointed by depositories after an approvalfrom SEBI. According to SEBI regulations, 3 categories of entities such as banks, financial institutions, and SEBI

registered trading members qualify for becoming DPs Presently, there are 327 DPs in India. Few of them are:

Bank of India

Bank of Baroda

Kotak securities

Motilal Oswal Reliance Capital

UTI

Yes Bank

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Stock Market Mba

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