Overview of Stock market and

Stock exchanges in India

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 Introduction
 the financial market
divided into two parts,
Money market and
capital market
 Securities market is
an important,
organized capital
market where
transaction of capital
is facilitated by
means of direct
financing using
securities as a
commodity
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 Securities market can be divided
into a primary market and
secondary market.
 The primary market  The secondary
is an intermittent and market is an on-going
discrete market market, which is
where the initially equipped and
listed shares are organized with a
traded first time, place, facilities and
changing hands from other resources
the listed company to required for trading
the investors. securities after their
initial offering.

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 Stock exchange
Stock exchange
means any body of
individuals, whether
incorporated or not,
constituted for the
purpose of regulating
or controlling the
business of buying,
selling or dealing in
securities. These
securities include:
 (i) Shares, stocks,
bonds, debentures
stock or other
marketable securities
 (ii) Government
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securities; and
 History
 The world's foremost
marketplace New York
Stock Exchange
(NYSE), started its
trading under a tree
(now known as 68
Wall Street) over 200
years ago?
 Similarly, India's
premier stock
exchange Bombay
Stock Exchange (BSE)
can also trace back its
origin to as far as 125
years when it started
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as a voluntary non-
 ORIGIN OF INDIAN STOCK MARKET
 The origin of the stock
market in India goes
back to the end of the
eighteenth century
when long-term
negotiable securities
were first issued.
However, for all
practical purposes,
the real beginning
occurred in the
middle of the
nineteenth century
after the enactment
of the companies Act
6 in 1850
  An important early
event in the
development of the
stock market in India
was the formation of
the native share and
stock brokers
'Association at
Bombay in 1875, the
precursor of the
present day Bombay
Stock Exchange
 Then the formation of
associations/exchang
es in Ahmedabad
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(1894), Calcutta
  The Bombay Stock
Exchange (BSE) and
the National Stock
Exchange of India Ltd
(NSE) are the two
primary exchanges in
India. In addition,
there are 22 Regional
Stock Exchanges.
 the BSE and NSE have
established
themselves as the two
leading exchanges
and account for about
80 per cent of the
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equity volume traded
  The NSE and BSE are
equal in size in terms
of daily traded
volume.
 The average daily
turnover at the
exchanges has
increased from Rs 851
crore in 1997-98 to Rs
1,284 crore in 1998-
99 and further to Rs
2,273 crore in 1999-
2000 (April - August
1999).
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  NSE has a market
capitalization of
around US$1.59
trillion and over 1,552
listings .
 The equity market
capitalization of the
companies listed on
the BSE was US$1.63
trillion.
 There are over 5,034
listed Indian
companies and over
7700 scrips on the
BSE
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  The markets are
closed on Saturdays
and Sundays.
 Both the exchanges
have switched over
from the open outcry
trading system to a
fully automated
computerized mode of
trading known as
BOLT (BSE on Line
Trading) and NEAT
(National Exchange
Automated Trading)
System.
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 Market Basics
 Electronic trading-
Brokers can trade from
their offices, using
fully automated
screen-based
processes. Their
workstations are
connected to a Stock
Exchange's central
computer via satellite
using Very Small
Aperture Terminus
(VSATs).
 NSE was the first to
introduce electronic
12 screen based trading.
  The Stock Exchange,
Mumbai (BSE) and the
National Stock
Exchange (NSE) are
the country's two
leading Exchanges.
There are 20 other
regional Exchanges,
connected via the
Inter-Connected Stock
Exchange (ICSE). The
BSE and NSE allow
nationwide trading via
their VSAT systems.

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 Index
 An Index is a
comprehensive
measure of market
trends
 Each stock is given a
weightage in the
Index equivalent to its
market capitalization.
 At the NSE, the
capitalization of NIFTY
(fifty selected stocks)
is taken as a base
capitalization, with
the value set at 1000.
Similarly, BSE
Sensitive Index or
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Sensex comprises 30
  Broker-As per SEBI
(Securities and
Exchange Board of
India.) regulations,
one can trade by
executing a deal only
through a registered
broker of a recognized
Stock Exchange or
through a SEBI-
registered sub-broker.
 Contract note-A
contract note
describes the rate,
date, time at which
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the trade was
 Settlement cycle
 The accounting period
for the securities
traded on the
Exchange.
 On the NSE, the cycle
begins on Wednesday
and ends on the
following Tuesday
 On the BSE the cycle
commences on
Monday and ends on
Friday.

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 Rolling settlement
 The rolling settlement
ensures that each
day's trade is settled
by keeping a fixed
gap of a specified
number of working
days between a trade
and its settlement. At
present, this gap is
five working days
after the trading day.

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 Stock & Exchange Board of India
 Under the SEBI Act,
1992, the SEBI has
been empowered to
conduct inspection of
stock exchanges. The
SEBI has been
inspecting the stock
exchanges once every
year since 1995-96.

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 SEBI is made to ascertain whether:
 the exchange
provides a fair,
equitable and growing
market to investors
 the exchange's
organization, systems
and practices are in
accordance with the
Securities Contracts
(Regulation) Act
(SC(R) Act), 1956 and
rules

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  the exchange has
implemented the
directions, guidelines
and instructions
issued by the SEBI
from time to time
 The exchange has
complied with the
conditions, if any,
imposed on it at the
time of renewal/ grant
of its recognition
under section 4 of the
SC(R) Act, 1956.
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 Dematerialization and its
advantage
 Dematerialization in
 Save 0.5% in stamp
short called as 'demat' duty
is the process by  Avoids the cost of
which an investor can courier/ notarization/
get physical the need for further
certificates converted follow-up with your
into electronic form broker for shares
maintained in an returned for company
account with the objection
Depository Participant.  No loss of certificates
 Lower interest charges in transit and saves
for loans taken against substantial expenses
demat shares as involved in obtaining
compared to the duplicate certificates,
interest for loan when the original share
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against physical certificates become