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Case study on nse


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Powerpoint Slides on NSE Mumbai

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Case study on nse

  1. 1. By group 7
  2. 2. • Introduction • Purpose • Growth • Milestones • Products • Technology
  3. 3. • The National Stock Exchange of India Limited (NSE) is the leading stock exchange of India, located in Mumbai • The NSE was promoted by leading financial institution at the behest of government of India and was incorporated in November 1992 as a tax paying company • In April 1993,it was recognized as a stock exchange under the securities contract(Regulation) Act, 1956 • The capital market segment of the NSE commenced operation in November 1994 ,while operation in the derivatives segment in June 2000 • It was the first demutualized electronic exchange in the country. • NSE was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system which offered easy trading facility to the investors spread across the length and breadth of the country. • NSE has a market capitalization of more than US$1.65 trillion, making it is the world’s 12th-largest stock exchange as of 23 January 2015.
  4. 4. • Establishing a National wide trading facility for all type of securities. • Ensuring equal access to investor all over the country through an appropriate communication network. • Providing for a Fair, efficient and transparent securities market using electronic Trading system. • Enabling shorter Settlement cycles. • Meeting up with international benchmark and standard The price information which could earlier be accessed only by a handful of people could now be seen by a client in a remote location with the same ease. The paper-based settlement was replaced by electronic depository- based accounts and settlement of trades was always done on time. One of the most critical changes was that a robust risk management system was set in place, so that settlement guarantees could protect investors against broker defaults.
  5. 5. • November 1992 Incorporation • April 1993 Recognition as a stock exchange • October 1995 Became largest stock exchange in the country • April 1996 Launch of S&P CNX Nifty • November 1997 Best IT Usage award by Computer Society of India. • May 1998 Launch of NSE's Web-site:
  6. 6. BSE NSE Number of listed companies 5,163 (as of late 2012) 1,635 (as of July 2013) Market capitalization of listed companies US$ 1.32 trillion (as of Jan 2013) US$0.989 trillion (as of Jul 2013) Main Index BSE Sensex S&P CNX Nifty Index value 25,900 (as of Nov 2015) 7,840 (as of Nov 2015) Location Mumbai, India Mumbai, India Claim to fame Oldest stock exchange in Asia. Largest stock exchange in India in terms of daily turnover and number of trades. Key Person Ashish Chauhan (MD & CEO) Chitra Ramakrishna (MD and CEO) Website Geographical spread Presence in 417 cities Presence in 1,486 cities Established in 1875 1992 Name formerly Bombay Stock Exchange Limited; now simply BSE National Stock Exchange Ranking w.r.t. market capitalization(as on Nov 2014) 10th largest in world 11th largest in world
  7. 7. • Equity: • The Equity market also known as the stock market is where the listed securities are traded in the secondary market • NSE started trading in the equities segment (Capital Market segment) on November 3, 1994 and within a short span of 1 year became the largest exchange in India in terms of volumes transacted • The Capital Market (Equities) segment of NSE facilitates trading in the following instruments: • Equity Shares • Preference Shares • Partly Convertible Debentures • Fully Convertible Debentures • Non Convertible Debentures • Warrants / Coupons / Secured Premium Notes/ other Hybrids • Bonds • Units of Mutual Funds • Total trade volume is Rs7405 lakhs, with total trade value of Rs14,578 cr. • Upcoming listing is IDFC bank on 6th November 2015 • Indices: • A stock market index is a measure of the relative value of a group of stocks in numerical terms. As the stocks within an index change value, the index value changes • There are various indices based on Sectors, commodities, markets, income, index etc. • There are selection criteria for selection, weightage given to each stock in an index • Some example of indices are CNX Nifty, CNX 100, CNX Auto etc.
  8. 8. Mutual Funds: • It is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets • The NSE Mutual Fund Platform (NMF II) platform uses state of the art technology facilitating electronic transactions with seamless connection between NSE, NSCCL, AMC, RTA and distributors • This service has been launched on November 30, 2009 at the hands of Mr C B Bhave, Chairman, Securities Exchange Board of India (SEBI), on November 30, 2009 • On 3rd November 1160 subscription were there while 370 orders for redemption Exchange Traded Funds: • They are essentially Index Funds that are listed and traded on exchanges like stocks. An ETF is a basket of stocks that reflects the composition of an Index, like CNX Nifty. The ETFs trading value is based on the net asset value of the underlying stocks that it represents • Equity ETFs are passive investment instruments that are based on indices and invest in securities in same proportion as the underlying index • Gold ETFs are passive investment instruments that are based on gold prices and invest in gold bullion • Global Equity Exchange Traded Funds (ETFs) allow the domestic investors to take an exposure to international indices • Debt Exchange Traded Funds (ETFs) allow the investors to take an exposure to the fixed income securities
  9. 9. Initial Public Offerings: • An Initial Public Offer (IPO) is the selling of securities to the public in the primary market • NSE offer infrastructure for conducting online IPOs through the Book Building process. NSE operates a fully automated screen based bidding system called NEAT IPO that enables trading members to enter bids directly from their offices through a sophisticated telecommunication network • Latest IPO of S H Kelkar and company limited Institutional Placement Programs: • Institutional placement programme” means a further public offer of eligible securities by an eligible seller, in which the offer, allocation and allotment of such securities is made only to qualified institutional buyers • Last such transaction was done by Muthoot finance limited for total of 2.5 cr. Shares offered Security Lending and Borrowing Scheme: • Short Selling means selling of a stock that the seller does not own at the time of trade. Short selling can be done by borrowing the stock through Clearing Corporation/Clearing House of a stock exchange which is registered as Approved Intermediaries (AIs). • Securities Lending and Borrowing (SLB) is a scheme that has been launched to enable settlement of securities sold short. SLB enables lending of idle securities by the investors through the clearing corporation/clearing house of stock exchanges to earn a return through the same. Securities in the F&O segment are eligible for short selling
  10. 10. Equity Derivatives: • It is a class of derivatives whose value is at least partly derived from one or more underlying equity securities. Options and futures are by far the most common equity derivatives • NSE commenced trading in derivatives with the launch of index futures on June 12, 2000, in Index Options on June 4, 2001, in options on individual securities from July 2, 2001 and futures on individual securities were introduced on November 9, 2001 • In the Futures and Options segment, trading in CNX Nifty Index, CNX IT index, Bank Nifty Index, Nifty Midcap 50 index and single stocks are available, long term Options on CNX Nifty are also available • In total trading in Futures and Options contracts on 9 major indices and more than 100 securities is available • NSCCL is the clearing and settlement agency for all deals executed on the Derivatives segmentCurrency Derivatives: • A currency future, also known as FX future, is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the purchase date • Currency Derivatives are available on four currency pairs viz. US Dollars (USD), Euro (EUR), Great Britain Pound (GBP) and Japanese Yen (JPY) • The exchange launched its currency futures trading platform on 29th August, 2008, Currency Options was introduced on October 29, 2010 • Trading is done Indian rupees and then converted to respective currency on basis of ongoing RBI exchange rates • National Securities Clearing Corporation Limited (NSCCL) is the clearing and settlement agency for all deals executed on the Currency Derivatives segment
  11. 11. Debt Segment: • The Debt segment provides trading facilities for a variety of debt instruments including Government Securities, Treasury Bills and Bonds issued by Public Sector Undertakings/ Corporates/ Banks like Floating Rate Bonds, Zero Coupon Bonds etc. • It is implemented on negotiated trade reporting platform • All values in “Lakhs” and comply with minimum order size and multiple • Settlement is done on a rolling basis Corporate Bonds: • Corporate bonds are debt securities issued by private and public corporations • Trading is done corporate bonds reporting platforms • Acknowledgment email to the buyer as well as the seller for each trade that is reported. As per reporting rules, system will capture the IP address from which the trade is being reported. This is to ensure the authenticity of trades being reported on this platform • All the entities (participants) desirous of settling trades in corporate bonds through NSCCL shall register with NSCCL
  12. 12. • NSE has main computer which is connected through Very Small Aperture Terminal (VSAT) installed at its office. The main computer runs on a fault tolerant STRATUS mainframe computer at the Exchange. Brokers have terminals installed at their premises which are connected through VSATs/leased lines/modems. An investor informs a broker to place an order on his behalf. The broker enters the order through his PC, sends signal to the Satellite via VSAT/leased line/modem. The signal is directed to mainframe computer at NSE via VSAT at NSE's office. • All orders received on the system are sorted with the best priced order getting the first priority for matching i.e., the best buy orders match with the best sell order • Similar priced orders are sorted on time priority basis, i.e. the one that came in early gets priority over the later one. Where an order does not find a match, it remains in the system and is displayed to the whole market, till a fresh order comes in or the earlier order is cancelled or modified. • The trading system provides tremendous flexibility to the users in terms of kinds of orders that can be placed on the system • The trading system also provides complete market information on-line. The market screens at any point of time provide complete information on total order depth in a security, the five best buys and sells available in the market, the quantity traded during the day in that security, the high and the low, the last traded price, etc.
  13. 13. • NSE operates on the 'National Exchange for Automated Trading' (NEAT) system, a fully automated screen based trading system, which adopts the principle of an order driven market. • The regular lot size and tick size for various securities traded is notified by the Exchange from time to time • All orders received on the system are sorted with the best priced order getting the first priority for matching i.e., the best buy orders match with the best sell order • NSE provides its customers a feature packed Trader Work Station (TWS) two Front- ends, NEAT & NEAT PLUS for all the market segments. NEATPLUS TWS is a unified frontend for multiple market segments. Apart from distributing its own front end NSE also publishes the protocol that can be used by Independent Software Vendors as well as Sell Side firms to develop their own in-house systems.
  14. 14. Factors Affecting Nifty Interest Rate: A rise in the interest rates depresses corporate profitability and also leads to increases in the discount rate applied by equity investors both of which have an adverse impact on stock price on the other hand, a fall in interest rate improves corporate profitability and also leads to a decline in the discount rate applied by equity investors, both of which have a favorable impact on the stock price Growth Rate of Gross Domestic Product of India: The higher the growth rate of GDP, other things being equal the more favorable it is for the stock market Inflation: The effect of inflation on the corporate sector tends to be uneven. While certain industries may benefit other tend to suffer. Industries that enjoy strong market for their product and which do not come under preview of price control may benefit on the other hand , industries that have a weak market and which come under the preview of price control tend to lose Foreign Institutional Investors (FII)
  15. 15. Recent Rebranding of NSE indices: : India Index Services and Products Limited (IISL), an NSE group company, announced the rebranding of all the NSE indices by including 'Nifty' in the name of the indices. NSE's flagship “CNX Nifty” index was rebranded as “Nifty 50” index. The rebranding of NSE's indices (49 in number, at present) got effective from November 9, 2015. Coffee day gets listed on BSE, NSE on 2nd November: The equity shares will be listed on the National Stock Exchange (NSE) apart from BSE as per a separate notification. It is an IPO worth Rs. 1150 crore Coffee Day Enterprises had fixed the issue price at Rs 328 per share for investors. The IPO, which was opened for subscription during October 14-16, was subscribed 1.64 times at price band of Rs 316-328 a share. NSE issues new norms on tendering and settlement of shares: Leading stock exchange NSE has issued new guidelines on tendering and settlement of shares to make delisting, buyback and takeover offers easier and transparent. This will provide a separate acquisition window in web based IPO bidding platform to facilitate placing of sell orders Under the norms, all trading members of the capital market segment are eligible to place orders in the tender offer facility.