3. STOCK MARKET
• Stocks are issued by companies in order to raise capitals
and are bought by investors in order to acquire a portion
of the company.
• A Stock market is the place where buying and selling of
stocks takes place. Nowadays due to internet and
advanced technology buying and selling of stocks takes
place anywhere in India and also from foreign country,
there is no need to be physical present in exchanges like
NSE and BSE. Stock markets are perfect competitive
market.
4. Stock Exchanges in India
There are 22 stock exchanges in India. But, two of them
are biggest.
NSE (National stock exchange) - is the 11th largest
stock exchange in the world by market capitalization
(US $ 2.27 trillion )and largest in India by 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 and is the 9th largest stock exchange in
the world
5.
6.
7. Bombay Stock Exchange
• Location: Mumbai
• Index: Sensex (SENSitve indEX)
• Consist of group of 30 Stock
• Date of Launch: 01 January 1986
• Base period:1978-79
• Base Index Value:100
• Timing: 09.30 AM – 03.30 PM
• Listed Co. : 5629
8. National Stock
Exchange
• Location: Mumbai
• Index: Nifty (National Stock Exchange Fifty)
• Consist of group of 50Stocks
• Commenced operations :April 1994
• Baseperiod: 1993-94
• Baseindex value: 1000
9. Stock Broker
• A stockbroker is person who is licensed to trade
in shares.
• Brokers also have direct access to the share
market and can act as your agent in share
transactions.
• For this service they charge a fee i.e. brokerage.
• They can also offer additional services like
advice on shares, debentures, government
bonds and listed property trusts and non-listed
investment options (cash management trusts,
property and equity trusts.
10. TRADING IN STOCK MARKET
• 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 sellstocks.
• 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.
11. What is 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.
12. Important terms in stockmarket
and in stocktrading
Open- The stock price in beginning of Day(i.e.in
morning).
High - Thestock price reached at the highest levelin
aday.
Low - Thestock price reached the lowest level ina
day.
13. Important terms in stock market and in
stock trading
Close - Thestock price at which it remains after the end
of market timings or the final price of the stock when
the market closesfor aday.
Volume - Volume is nothing butquantity.
Bid - TheBuying price is called asBidprice.
Offer - Theselling price is called offerprice.
14. Stock Market Conditions
There are two ways to describe the general conditions of
the stockmarket:
1)BULLMARKET
2)BEARMARKET
Bull Market -
ABull Market indicates the constant upward movement of
the stock market. A particular stock that seems to be
increasing in value is described to bebullish.
15. Stock Market Conditions
BEAR MARKET
A bear market indicates the continuous downward
movement of the stock market. stock that seems to be
decreasing in value is described to bebearish.
16. How Sensex Index is calculated
• The formula for calculating the sensex =
(sum of Free Float Market capitalization of
30 benchmark stocks)* Index Factor
• Where;
• Index Factor = 100/market cap value in
1978-79.
17. Example on Sensex Index
calculation
• Assume sensex has only 2 stocks namely
SBI and RELIANCE. Total shares in SBI
are 500 out of 200 are held by government
and only 300 are available for public
trading. Reliance has 1000 shares out of
which 500 are held by promoters and 500
are available for trading. Assume price of
SBI stock is Rs. 100 & Reliance is RS.
200.
18. Example on Sensex Index
calculation
• Solution – Then Free Float Cap of these
two company = (300*100+500*200) =
30,000+1,00,000 = 1,30,000
• Assume market cap during the year 1978-
79 was 25000
• Then SENSEX
= 1,30,000*100/25000 = 520
19. Benefits of investing in shares
• Possibility of
increase in value of
share
• Income from dividends
• Easy liquidity
• Tax benefits
