The document summarizes the equity market in India, focusing on the three main stock exchanges - Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and Multi Commodity Exchange (MCX). It provides an overview of each exchange, including founding dates, number of listed companies, benchmark indices, products offered, and trading volumes from 2009-2013. It also discusses foreign institutional investor and domestic institutional investor activity over this period and defines hedging and futures and options contracts.

1. EQUITY MARKET

2. OVERVIEW
 A market that gives companies a way to raise
needed capital and
gives investors an opportunity for gain by
allowing those companies' stock shares to be traded.
Also called stock market. The Indian equity market
underwent major developments to carve a niche for
itself in the global market, including improved market
microstructure, introduction of new products and
progressive changes in the regulatory framework.

3. 3 EQUITY EXCHANGES IN
INDIA
BOMBAY STOCK EXCHANGE NATIONAL STOCK
EXCHANGE
MULTI COMMODITY EXCHANGE

4. THE BSE AND NSE
 Most of the trading in the Indian stock market takes
place on its two stock exchanges: The Bombay
Stock Exchange (BSE) and the National Stock
Exchange (NSE).
 The BSE has been in existence since 1875. The
NSE, on the other hand, was founded in 1992 and
started trading in 1994. However, both exchanges
follow the same trading mechanism, trading
hours, settlement process, etc.
 At the last count, the BSE had about 4,700 listed
firms, whereas the rival NSE had about 1,200. Out
of all the listed firms on the BSE, only about 500
firms constitute more than 90% of its market
capitalization; the rest of the crowd consists of

5. CONTINUED…
 Almost all the significant firms of India are listed
on both the exchanges. NSE enjoys a dominant
share in spot trading, with about 70% of the
market share, as of 2009, and almost a complete
monopoly in derivatives trading, with about a 98%
share in this market, also as of 2009. Both
exchanges compete for the order flow that leads
to reduced costs, market efficiency and
innovation. The presence of arbitrageurs keeps
the prices on the two stock exchanges within a
very tight range.

6. 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.
Around 4700 Indian companies listed with
Stock Exchange.

7. CONTINUED…
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 30stocks
with the base April 1979=100.
 The abbreviated from Sensex was coined by
Deepak Mohoni around 1990 while writing market
analysis columns for some business newspaper.

8. CONTINUED…
The index has increased by over ten times
from June 1990 to the present. Using
information from April 1979 onwards, the
long-run rate of return on the S&P BSE
SENSEX works out to be 18.6% per
annum, which translates to roughly 9% per
annum.

9. PRODUCTS
 Equity
 Derivatives
 Indices
 Currency Derivatives
 IRD
 Debt
 SLB
 ETFs/Mutual Funds

10. EQUITY TURNOVER (BSE)
YEAR TURNOVER
FY2009 1378809.32
FY2010 1105026.89
FY2011 667497.58
FY2012 548774.44
FY2013 521664.20
0 500000 1000000 1500000
FY2009
FY2010
FY2011
FY2012
FY2013
TURNOVER

11. NATIONAL STOCK EXCHANGE
(NSE)
In the year 1991 Pherwani Committee
recommended to establish National Stock
Exchange (NSE) in India.
 The company operates a nation-wide, electronic
market, which offers trading in derivatives
market, capital market and currency derivatives
segments including equities, equities based
derivatives, equity based exchange traded funds
(ETF), gold ETF, currency futures and options and
retail government securities.
The NSE India ranked 3rd position since last 4
years in terms of total number of trading per
calendar year.

12. CONTINUED…
 The exchange has more than 1,000 listed
members. Owned by more than 20 different
financial and insurance institutions.
 The CNX Nifty Index represents about 68.99% of
the free float market capitalization of the stocks
listed on NSE as on December 31, 2013.

13. CONTINUED…
 The base value of the index has been set at
1000, and a base capital of Rs 2.06 trillion. The
CNX Nifty Index was developed by Ajay Shah
and Susan Thomas. The CNX Nifty currently
consists of the following 50 major Indian
companies.

14. PRODUCTS
CAPITAL MKT DERIVATIVE DEBT
EQUITIES EQUITY NEW DEBT SEGMENT
MUTUAL FUNDS CURRENCY RETAIL DEBT MKT
INDICES NSE BOND FUTURES WHOLESALE DEBT
MKT
ETFs CORPORATE BONDS
IPOs
OFFER FOR SALE
INSTITUTIONAL
PLACEMENT
PROGRAMME
SECURITY LENDING
AND BORROWING
SCHEME

15. EQUITY TURNOVER (NSE)
YEAR TURNOVER
FY2009 4138024
FY2010 3577412
FY2011 2810893
FY2012 2708279
FY2013 234041
0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000
FY2009
FY2010
FY2011
FY2012
FY2013
TURNOVER

16. MCX (STOCK EXCHANGE)
 MCX-SX began trading currency derivatives on
October 7, 2008.
 MCX-SX is regulated by SEBI and the Reserve
Bank of India (RBI). MCX-SX has over 600
members using its electronic trading platform in
several trading centers throughout India.
 MCX-SX started trading in the shares of 1,116
listed companies compared to 1,665 firms on the
National Stock Exchange and 5,191 companies
on the Bombay Stock Exchange.

17. CONTINUED…
The MCX-SX benchmark index -
christened SX40 - is equivalent to the BSE
Sensex and the NSE Nifty. The SX-40
index is designed to measure the
economic performance with better
representation of various industries and
sectors based on ICB, a leading global
classification from Britain's FTSE-100.
The base value of the SX-40 is 10,000 and its
base date is March 31, 2010. The SX-40 has
given returns of 16.3 per cent from 2010-
January 31, 2013, against 15 per cent on the
Nifty and 13.5 per cent on the Sensex.

18. PRODUCTS
 Equities
 Currency Derivatives
 Equity Derivatives
 Currency Derivatives
 Initial Public Offerings
 Debt

19. FII/DII ACTIVITY
YEAR FIIs
2009-
2010
39142.1
2010-
2011
47740.84
2011-
2012
20774.09
2012-
2013
100087.8
2013-
2014
74481.55 0 20000 40000 60000 80000 100000 120000
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
FIIs

20. CONTINUED…
YEAR DIIs
2009-2010 24060.08
2010-2011 16395.41
2011-2012 -3786.27
2012-2013 -66936.4
2013-2014 -54072
-80000 -60000 -40000 -20000 0 20000 40000
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
DIIs

21. HEDGING
 Hedging means reducing or controlling risk. This
is done by taking a position in the Futures
Market that is opposite to the one in the physical
market with the objective of reducing or limiting
risks associated with price changes.

22. CONTINUED…
 Hedging is a two-step process. A gain or
loss in the cash position due to changes in
price levels will be countered by changes in
the value of a futures position. For
instance, a wheat farmer can sell wheat
futures to protect the value of his crop prior
to harvest. If there is a fall in price, the loss
in the cash market position will be
countered by a gain in futures position.

23. FUTURES
 A contractual agreement, generally made
on the trading floor of a futures
exchange, to buy or sell a particular
commodity or financial instrument at a pre-
determined price in the future. Futures
contracts detail the quality and quantity of
the underlying asset; they are standardized
to facilitate trading on a futures exchange.
Some futures contracts may call for
physical delivery of the asset, while others
are settled in cash.

24. OPTIONS
Options are standardized contracts that
allow investors to trade an underlying asset
at a specified price before a certain date
(the expiry date for the options).
There are two types of options: call and put
options. Call options give the buyer a right
(but not the obligation) to buy the underlying
asset at a pre-determined price before the
expiry date, while A put option gives the
option-buyer the right to sell the security.