Stock Market

(Stock exchange)
Meaning:
 Stock exchange is a place where any body who wants to buy a
particular “security” can find an immediate seller or any body
who wants to sell his holdings can find a buyer at a reasonable
and fair place.

 The securities contracts Regulation Act 1956 defines stock

exchange as an association, organization or body of individuals
whether incorporated or not, established for the purpose of
assisting, regulating and controlling business in buying, selling
and dealing in securities.
Features of Stock Market
 Stock Market is an organized market, where securities of govt. and semi
govt. bodies and corporate enterprises or bought and sold.

 Stock Market deals in second hand or existing securities.

 Individuals alone can buy and sell securities.

 The Stock Market does not provide this facility to corporation and
partnership firms.

 In the Stock Market only those securities which are listed in the Stock
Market or transacted.

 Unlisted Securities or not permitted to be dealt in the market.

 The Stock Exchange to regulate its day-to-day operations.

Functions & Services of Stock
Exchange:
Provides ready and continuous market

Facilitates regular violation of securities

Encourages capital formation

Provides proper direction to invest capital

Ensure wide ownership of securities

Facilitates distribution of new securities

Ensure safety of funds

Regulates company management and performance

Disseminates information

Facilitates speculation

Mirror of Business cycle

Stock exchange in India

The organized Stock Exchange in the country

started at Bombay in 1877. By 1939 there
were 8 Stock Exchanges. By 1945 they
increased to 21, operation of too many Stock
exchanges was considered undesirable.
 Following are some of the Stock
exchanges:
► Bombay Stock exchange

► Calcutta Stock exchange

► Madras Stock exchange

► Delhi Stock exchange

► Ahmadabad Stock exchange

► Hyderabad Stock exchange

► Indore Stock exchange

► Bangalore Stock exchange

Membership of the Stock
exchange
 Trading in Securities on any Stock exchange
is open to members only.
Who can become members and how..?
 Only men of integrity and competence are admitted as members of Stock
exchange.

 Members have to buy a share if the Stock exchange concerned is a corporate

body having a share capital.

 He also to pay Rs.5,000/- as an entrance fee and deposit Rs.20,000/- either in

cash or approved Securities.

 The application for membership is to be made in prescribed form sponsored by

two members of five years standing as members.

 S/E : After, the Board decides upon accepting his application, a membership
Card is issued to the applicant.
 Methods of Trading:
 A person who wants to purchase or
sell Securities cannot do it himself.
He is not allowed to enter into the
hall of the Stock exchange and thus
he can not carry a transaction
personally.

 He has to depend up on the Brokers.

 There are 2 types of Trading in
the Stock exchange viz,
 Ready Delivery Contracts

 Forward Delivery Contracts

These are also called as Cash transaction or Cash trading and

forward or dealing for the account.

There are some important points of distinction between R.D.C & F.D.C

The R.D.C are settled either on the date of the transaction or with in
14days from the date of contract.

The R.D.C must be settled with in the specified time limit where as
the forward contracts can be carried forward to the next settlement
day.
Trading Procedure:
It is of four types

 Choice of a Broker

 Placing the Order

 Settlement Transaction

 Executing the Order

 Meaning of Speculation:
 Anticipation changes in prices of securities in future is
known as Speculation.

Different types of Speculation activities:

 Bull

 Bear

 Lame Duck

 Stag
 Bull:
A Bull is Speculator who excepts a rise
in the price of shares of a company.
 He is an optimist.
 He aims at making profit out of
expected rise in the price of a particular
share.
 For this purpose he purchases the
security for future delivery.
 Bear:
A Bear is Speculator who expects a
fall in the price of a Security
 He is pessimist
 He aims at making profit out of an
expected fall in the price of a
particular share
 For this purpose he sell the security
for future delivery
 Lame Duck:

In case the Bear is unable to

strike the bargain
immediately, he is said to be
struggling like a Lame Duck
 Stag:

Stag is person who applies

for shares of a new company
with a view to selling the
shares allotted to him at a
profit.
The First Stock exchange

 In 11th century France the courtiers de change were concerned

with managing and regulating the debts of agricultural
communities on behalf of the banks. As these men also traded in
debts, they could be called the first brokers.
NATIONAL STOCK EXCHANGE
The National Stock exchange is the centralized
Stock exchange of India situated in Delhi
National Stock Exchange of India

National Stock Exchange Limited

TypeStock Exchange
LocationMumbai, India
Coordinates19°3′37″N 72°51′35″E19.06028°N 72.85972°E

Founded1992
OwnerNational Stock Exchange of India Limited
Key peopleMr.RAVI NARAIN Managing Director
CurrencyINR
No. of listings1587
MarketCapRs 47,01,923 crore(2009 August)
IndexesS&P CNX Nifty
CNX Nifty Junior
S&P CNX 500
Websitehttp://www.nse-india.com/
 Bombay Stock exchange

The Bombay/Mumbai Stock Exchange, or BSE) is the

oldest stock exchange in Asia and has the greatest
number of listed companies in the world. It is located
Dalal street, Mumbai, India.
 TypeStock Exchange

LocationMumbai, India

Coordinates18°55′47″N 72°50′01″E18.929681°N 72.833589°E

Founded1875

OwnerBombay Stock Exchange Limited

Key peopleMadhu Kannan (CEO)

Mahesh L. Soneji (COO)

CurrencyINR

No. of listings4,700

MarketCapUS$ 1.1 trillion (Aug 29, 2009)

VolumeUS$ 980 billion (2006)

IndexesBSE Sensex

Websitehttp://www.bseindia.com/