Indian stock market
- 1. INDIAN STOCK MARKET PRESENTED BY: Dr MANPREET KAUR
- 2. Roadmap of Presentation • Introduction • History of Stock Market • Stock Exchange • Indian Overview • Indices of Indian Stock market
- 3. What is a Stock? • An instrument- that signifies an ownership position (called equity) in a corporation, and represents a claim on its proportional share in the corporation’s assets and profits.
- 4. Continued ….. • For example, if a company has 1000 shares of stock outstanding and a person owns 50 of them, then he/she owns 5% of the company. • Most stock also provides voting rights, which give shareholders a proportional vote in certain corporate decisions
- 5. What is Stock market? • A stock market is a market for the trading of company stock/ shares, and derivatives. • This includes securities listed on a stock exchange as well as those only traded privately.
- 6. Continued ….. • Market is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares, bonds, debentures etc. Primary markets: The primary market is that part of the capital markets that deals with the issuance of new securities
- 7. Continued ….. Secondary markets: The secondary market is the financial market for trading of securities that have already been issued in an initial private or public offering. In the secondary market, securities are sold by and transferred from one investor or speculator to another.
- 8. History of Stock Market • 11th century, courratiers de change of France, managed and regulated the debts of agricultural communities on behalf of the banks. As these men traded in debts, they were known as "brokers”
- 9. Continued… • 13th century commodity traders in Bruges gathered inside the house of a man called Van der Burse, and they institutionalized this until now informal meeting and became the "Bruges Bourse". –Belgium
- 10. Continued…. • 1602, Dutch East India company established Amsterdam Stock Exchange and they were the first company to issue stocks and bonds. • The first shares on the Amsterdam Stock Exchange . It was the first company to issue stocks and bonds
- 11. Continued…. • London Stock Exchange: This is one of the oldest stock exchanges in the world and was established in 1698. • New York Exchange: The New York Exchange is the oldest and the most well- known of all American stock markets. This was established in 1792.
- 12. What is a stock exchange? • Securities contracts act of 1956 defines, “an association, organization or body of individuals, incorporation, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities”
- 13. Continued ….. • Stock exchange is a place where buyers and sellers are come together for undertaking transactions involving sale of securities.
- 14. Two Major Stock Exchanges BSE (BOMBAY STOCK EXCHANGE ) NSE (NATIONAL STOCK EXCHANGE)
- 15. Bombay Stock Exchange (BSE) • Is the oldest Stock Exchange in Asia with a rich heritage • BSE was established in 1875 as “The Native Share & Stock Brokers • First Stock Exchange in the country to obtain permanent recognition in 1956 from GOI
- 16. Continued ….. • Around 4700 Indian companies listed with Stock Exchange. • As of 2005, it is among the five biggest Stock Exchanges in the world in terms of transactions volume. • The BSE or Bombay stock exchange sensitive Index(Sensex) is a value weighted index. Composed of 30 stocks
- 17. National Stock Exchange (NSE) • In the year 1991 Pherwani Committee recommended to establish National Stock Exchange (NSE) in India. • In National Stock Exchange there is trading of equity shares, bonds and government securities.
- 18. Continued ….. • The NSE India ranked 3rd position since last 4 years in terms of total number of trading per calendar year. • Presently there are 24 stock exchanges in India, out of which 20 have exchanges National Stock Exchange
- 19. Objectives of NSE • To establish nation wide trading facility for all types of securities. • Ensuring equal access to investors all over the country through an appropriate telecommunication network
- 20. Continued ….. • Providing fair, efficient & transparent securities market using electronic trading system • Enabling shorter settlement cycles and book entry settlements • Meeting International benchmarks and standards
- 21. Functions of Stock Exchange • It provide ready market for securities • It helps in price discovery of securities. • It insure low cost of raising finance issue of new market instruments in the market • Helps in capital generation process. • Encourages capital formation
- 22. Continued… • Provides proper direction to invest capital • Promotion of investment. • Give mobility to capital. • Exercise control over the working of companies. • Marketing of new issues.
- 23. In India Overview • India's oldest and first stock exchange: Mumbai (Bombay) Stock Exchange. Established in 1875. • More than 6,000 stocks listed. • Total number of stock exchanges in India: 22
- 24. Continued ….. • They are in: Ahmadabad, Bangalore, Calcutta, Chennai, Delhi etc. • There is also a National Stock Exchange (NSE) which is located in Mumbai.
- 25. Continued ….. • There is also an Over The Counter Exchange of India (OTCEI) which allows listing of small and medium sized companies. • The regulatory agency which oversees the functioning of stock markets is the Securities and Exchange Board of India (SEBI), which is also located in Bombay
- 26. What Is Sensex? • Sensex, in simple words, is the combined value of stocks of 30 specific companies listed on Bombay stock exchange (BSE). • BSE can revise this list of 30 over the time. • So, if Sensex fluctuates, it shows on the economy as well.
- 27. Continued ….. • For example, if Sensex goes up people become more intrigued in buying stocks because they believe that economy is going to grow. But, if Sensex goes down, people tend to stop investing in economy.
- 28. What Is Nifty? • NIFTY is abbreviated form for National Fifty. This is an index on fifty shares listed on the National Stock Exchange of India. • It covers 50 stocks from different sectors of the Indian economy. • So, this is commonly referred to as NIFTY 50 also.
- 29. Continued ….. • When you buy Nifty future, it means you have invested in 50 company’s shares which, collectively, are representing Nifty Index. It is basically automatic diversification of your investment in 50 stocks.
- 30. THANK YOU