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 Type Stock Exchange

Location
Coordinates Founded Owner Key people Currency No. of listings MarketCap Indexes Website

Mumbai, India
19337N 725135E19.06028N 72.85972E 1992 National Stock Exchange of India Limited Mr.RAVI NARAIN Managing Director INR 1587 Rs 47,01,923 crore(2009 August) S&P CNX Nifty CNX Nifty Junior S&P CNX 500 http://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.

Type Location Coordinates Founded Owner Key people Currency

Stock Exchange Mumbai, India 185547N 725001E18.929681N 72.833589E 1875 Bombay Stock Exchange Limited Madhu Kannan (CEO) Mahesh L. Soneji (COO) INR

No. of listings
MarketCap Volume

4,700
US$ 1.1 trillion (Aug 29, 2009) US$ 980 billion (2006)

Indexes
Website

BSE Sensex
http://www.bseindia.com/