Introduction, Shares and Share Capital, Birth of Stock Market, Incorporation of a Company, Stock Market?, Functions of Stock Exchange, Stock Exchanges In India, Bombay Stock Exchange, National Stock Exchange, Features of National Stock Exchange of India (NSEI), Purpose of National Stock Exchange of India (NSEI), Role of National Stock Exchange of India (NSEI), Markets of NSE, Trading in Stock Exchange, DEMAT Account, Terminologies of Stock Market, Market Conditions, Calculation of SENSEX, Calculation of NIFTY, Benefits of investing in shares, Causes of Price Fluctuations, HAPPY INVESTMENT WITH LOTS OF PROFITS.

1. Stock Market
© Harshit Ahuja

2. Introduction
A company form of organization is a
business entity which is established
under provision of India`s
Companies Act 2013 or any previous
companies law, through
 Promotion
 Incorporation
 Floatation.

3. Shares and Share
Capital
The total capital of
company is estimated,
registered and divided into
units of equal value.
This units are known as
Shares and collectively
they are known as Share
Capital.
Share Capital
Shares

4. Birth of Stock Market
The amount is invested or
contributed by the investors and
then they are collectively sold and
purchased by new or existing
investors through various means
such as brokers of stock market /
companies etc. , thus directly or
indirectly giving birth or using the
STOCK MARKET
(Share Market)

5. Incorporation of a Company
The procedure for incorporating
a co. may be divided into 4
principal stages :
 Promotion
 Incorporation or Registration of
a Co.
 Capital Subscription
 Commencement of Business

6. Stock Market?
A stock market or equity
market is a public entity for the
trading of company stock
(shares) and derivatives at an
agreed price; these are securities
listed on a stock exchange.
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7. Provide central and
convenient meeting
places for sellers
and buyer of
securities.
Increase the
marketability and
liquidity of securities
Contribute to
stability of prices of
securities
Equalization of price
of securities
Help capital
formation
Help companies and
government to raise
funds from the
investors
Smoothen price
movement
Help the investors to
know the worth of
their holdings
Promote the habit
of saving and
investment
Functions of Stock Exchange

8. Stock Exchanges In India
There are 22 stock exchanges in India. But, two of them are
biggest.
NSE (National stock exchange) - is the 9th largest stock
exchange in the world by market capitalization and
largest in India by daily turnover and number of trades,
for both equities and derivative trading.
BSE (Bombay stock exchange) - is the oldest stock
exchange in Asia with a rich heritage of over 137 years
of existence.

9. Bombay Stock Exchange
► Original named as “The Native Share & Stock Brokers Association”
► Location: Mumbai
► Index: Sensex (SENSitve indEX)
► Consist of group of 30 Stock
► Members: 852
► Date of Launch: 03 January 1986
► Base period:1978-79
► Base Index Value:100
► Timing: 09.30 AM – 03.30 PM
► Listed Co. : over 6000

10. National Stock Exchange
The NSE of India is the leading stock exchange of India, covering 370 cities
and towns in the country. It was established in1994 as a TAX company. It was
established by 21 leading financial institutions and banks like the
IDBI,ICICI,IFCI,LIC,SBI,etc.
► Location: Mumbai
► Index: Nifty (National Stock Exchange Fifty)
► Consist of group of 50 Stocks
► Date of Launch: April 1994
► Base period: 1993-94
► Base index value: 1000
► Members : 726

11. Features
Nation wide coverage i.e., investors from
all over country
Screen-based trading i.e., trading in this
stock exchange is done electronically.
Transparency, i.e.,the use of computer
screen for trading makes the dealings in
securities transparent.
Professionalization in trading, i.e., it
brings professionalism in its functions
National Stock Exchange
of India (NSEI)

12. Purpose
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.
National Stock Exchange of
India

13. Role
Raising capital for businesses
Mobilizing savings for investment
Facilitating company growth
Profit sharing
Corporate governance
Indicator of the economy
National Stock Exchange of
India

14. Markets of NSE
Equity
Retail
Debt
Market
Wholesale
Debt
Market
Currency
futures
Mutual
fund
Stocks
lending &
borrowing

15. The market regulator, the Securities and Exchange
Board of India (SEBI), has made it compulsory to open
the demat account if you want to buy and sell stocks.
A person want to buy/sell stocks in the stock market
has to first place his/her order with a broker or can
do themselves using online trading systems.
The stocks purchased will be sent to the your demat
account.
This process is called Rolling Settlement Cycle.
Trading in Stock
Exchange

16. DEMAT Account
DEMAT stands for
DEMATerialization.
It is process in
which physical
paper shares are
converted into
paperless
(computerized)
form.
In India there are
two Depository
organizations called
NSDL (National
Securities
Depository Ltd.) &
CDSL (Central
Depository Services
India Ltd.)
Brokers and
most of
Banks
provides
facility to
open demat
account.

17. Terminologies of Stock
Market
•The stock price in beginning of Day(i.e. in morning).Open
•The stock price reached at the highest level in a day.High
•The stock price reached the lowest level in a day.Low
•The stock price at which it remains after the end of market timings
or the final price of the stock when the market closes for a day.Close
•Volume is nothing but quantity.Volume
•The Buying price is called as Bid price.Bid
•The selling price is called offer price.Offer

18. Terminologies of Stock
Market
• Market capitalization is the measure of corporate size of a country. It shows the
current stock price multiplied by the number of outstanding shares. It is
commonly referred to as Market cap.
Market Capitalization
• Capital structure means the proportion of debt and equity used for
financing the operations of a business or an enterprises.
• The capital structure should be such which increases the value of equity
shares or maximizes the wealth of share holder.
Capital Structure
• Speculation is the practice of engaging in risky financial transactions in an
attempt to profit from short or medium term fluctuations in the market value
of a tradable good.
Speculation

19. Market Conditions
• A Bull Market indicates the constant upward movement of the
stock market. A particular stock that seems to be increasing in
value is described to be bullish.
Bull Market
• A bear market indicates the continuous downward movement
of the stock market. stock that seems to be decreasing in
value is described to be bearish.
Bear Market

20. CalculationofSENSEX
Sum of Free
Float Market
capitalization
of 30
benchmark
stocks
Index Factor
Index Factor
= 100/market
cap value in
1978-79
SENSEX
The formula for calculating the sensex

21. ► Assume sensex has only 2 stocks namely SBI and RELIANCE.
o Total shares in SBI are 500 out of 200 are held by government
and only 300 are available for public trading.
o Reliance has 1000 shares out of which 500 are held by promoters
and 500 are available for trading.
o Assume price of SBI stock is Rs. 100 & Reliance is RS. 200.
o Assume market cap during the year 1978-79 was 25000
Example

22. ► Free Float Cap of these two company
= (300*100+500*200)
= 30,000+1,00,000
= 1,30,000
o Then SENSEX = 1,30,000*100/25000
= 520
Solution

23. The National Stock Exchange (NSE) is associated with Nifty
► The calculation of Nifty is same as we calculated SENSEX.
But with two key differences.
o Base year is 1995 and base value is 1000
o Nifty is calculation based on 50 stocks.
everything else remaining the same in nifty index calculation as
well.
Calculation of NIFTY

24. Benefitsofinvestinginshares
Possibility of
increase in
value of share
Income from
dividends
Easy liquidity
Tax benefits on
income earned
such as
exemptions U/s
10(34) for
dividends, Sec
54 for
calculating
STCG & LTCG

25. Causes of Price Fluctuations
DEMAND AND SUPPLY
SPECULATIVE PRESSURE
CHANGE IN COMPANY’S BOARD
OF DIRECTORS
TRADE CYCLE
BANK RATE
ACTIONS OF UNDERWRITERS AND
OTHER FINANCIAL INSTITUTIONS
FINANCIAL POSITION OF THE
COMPANY
POLITICAL FACTORS

26. END
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INVESTMENT
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