This document provides an overview of the Indian stock market and its history. It discusses: - The difference between public and private companies, and how public companies raise money by issuing shares that are purchased by the public. - A brief history of stock exchanges in India, including the origins of the Bombay Stock Exchange under a banyan tree in 1850 and its formal organization in 1875. It also discusses the establishment of the National Stock Exchange in 1992. - Operational features of the two major Indian stock exchanges, the BSE and NSE, including their trading systems, market timings, and efforts to increase transparency and reduce investor grievances.

1. Kshitij Mohan Agarwal
(13121011)
Nityanshu Kumar Gupta
(13121013)

2. 11,538
4,578
In our daily life, everyone of us might have seen such kind of graphs in TV,
Newspapers, Computers etc.
But what they actually represent??? Why are they so important for some people
that they keep continuous watch on it??? Where did they come from??
?

3. Its all about
STOCK MARKET

4. how it
works???
BUT

5. There are two types of companies:
a) Public Company
b) Private Company

6. Private Companies are those companies which are owned privately by single
people or a group of few people. That can be a local food shop to local
vegetable vendor.
As it is not available for everyone and owned by only a small number of people,
it is not of our concern.

7. We will focus on public companies which provide ownership to everyone.
As they are not owned by single person, rather owned by many random
people, thus they are called public companies.
But how and why ownership is given to common public??
Public

8. Let’s say there is a public company which has new ideas and wants to expand
there company to increase profits.
But they doesn’t have sufficient money for it.

9. Being a public company, to raise money, it will divide
ownership of company in several parts, called ‘shares’.

10. Now these shares are purchased by common people.
People get part of ownership in company and company gets money for
investments in its plans.

11. Now as the company earns profit, value of share also increases
proportionally and vice versa.
Objective for common man is to buy share at lower price and sell it at
higher.
Therefore, people who think that new plans of company will earn profit
in future, buy its shares and those who think that company will face
losses due to its new plans tend to sell its share. Thus always there is
trading of shares in market.
Its was just a brief about how stock market works.
We will learn it in detail after knowing some terms and facts about stock
market.

12. Hmm…
Seems Interesting..
let’s know aboutit
more deeply

13. Before we study the historic volatile days of
the hundred years, let us first know what
are :
Stock Market Stock Exchange

14. Stock Market is a market where the trading of
company stock, both listed securities and unlisted
takes place. It is different from stock exchange
because it includes all the national stock exchanges
of the country. For example, we use the term, "the
stock market was up today" or "the stock market
bubble."
Stock Market

15. Stock Exchange
Stock Exchanges are an organized marketplace,
either corporation or mutual organization, where
members of the organization gather to trade
company stocks or other securities. The members
may act either as agents for their customers, or as
principals for their own accounts.

16. HISTORY
peeking into
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17. History of Indian Stock Market
Indian stock market marks to be
one of the oldest stock market in
Asia. It dates back to the close of
18th century when the East India
Company used to transact loan
securities. In the 1830s, trading on corporate
stocks and shares in Bank and Cotton presses
took place in Bombay.

18. Though the trading was broad but the brokers were hardly
half dozen during 1840 and 1850.
An informal group of 22 stockbrokers began trading under
a banyan tree opposite the Town Hall of Bombay from the
mid-1850s, each investing a (then) princely amount of
Rupee 1. This banyan tree still stands in the Horniman
Circle Park, Mumbai. In 1860, the exchange flourished
with 60 brokers. In fact the 'Share Mania' in India began
with the American Civil War broke and the cotton supply
from the US to Europe stopped. Further the brokers
increased to 250.

19. In 1928, the plot of land on which the BSE building now
stands (at the intersection of Dalal Street,
Bombay Samachar Marg and
Hammam Street in downtown
Mumbai) was acquired, and a
building was constructed and
occupied in 1930.
The informal group of stockbrokers organized
themselves as the The Native Share and Stock
Brokers Association which, in 1875, was
formally organized as the Bombay Stock
Exchange (BSE). BSE was shifted to an old
building near the Town Hall.

20. In 1956, the Government of India recognized the Bombay Stock
Exchange as the first stock exchange in the country under the
Securities Contracts (Regulation) Act.
The most decisive period in the history of the
BSE took place after 1992. In the aftermath of a
major scandal with market manipulation
involving a BSE member named Harshad
Mehta, BSE responded to calls for reform with
intransigence. The foot-dragging by the
BSE helped radicalise the position of the
government, which encouraged the creation of the
National Stock Exchange (NSE), which created an
electronic marketplace.

21. NSE started trading on 4 November 1994.
Within less than a year, NSE turnover
exceeded the BSE. BSE rapidly automated,
but it never caught up with NSE spot
market turnover. The second strategic failure at BSE came in the
following two years. NSE embarked on the launch of equity
derivatives trading. BSE responded by political effort, with a
friendly SEBI chairman (D. R. Mehta) aimed at
blocking equity derivatives trading.
The BSE and D. R. Mehta succeeded in
delaying the onset of equity
derivatives trading by
roughly five years.

22. But this trading, and the accompanying
shift of the spot market to rolling
settlement, did come along in 2000 and
2001 - helped by another major scandal
at BSE involving the then President Mr.
Anand Rathi. NSE scored nearly 100%
market share in the runaway success of
equity derivatives trading, thus
consigning BSE into clearly second
place. Today, NSE has roughly 66% of equity spot turnover
and roughly 100% of equity derivatives turnover.

23. There are two leading stock exchanges in India
which help us trade :

24. National Stock Exchange incorporated in the year 1992
provides trading in the equity as well as debt market.
Maximum volumes take place on NSE and hence it
enjoys leadership position in the country today.

25. National Stock Exchange (NSE) is India's leading stock exchange
covering 364 cities and towns across the country. NSEprovides a
modern, fully automated screen-based trading system with
national reach. The Exchange has brought about unparalleled
transparency, speed & efficiency, safety and market integrity. It has
set up facilities that serve as a model for the securities industry in
terms of systems, practices and procedures.

26. BSE on the other hand was set up in the year 1875 and is the
oldest stock exchange in Asia. It has evolved in to its present
status as the premier stock exchange.
At BSE you will find some scripts listed that are not available
on NSE. Also BSE has the largest number of scripts which are
listed

27. As we read in the history of Indian stock exchange; the stock
exchange, Mumbai, popularly known as "BSE“, was established
in 1875 as "The Native Share and Stock Brokers Association". It is
the oldest one in Asia, even older than the Tokyo Stock
Exchange, which was established in 1878. It is a voluntary non-
profit making Association of Persons (AOP) and has converted
itself into demutualised and corporate entity. It has evolved over
the years into its present status as the Premier Stock Exchange in
the country. It is the first Stock Exchange in the Country to have
obtained permanent recognition in 1956 from the Govt. of India
under the Securities Contracts (Regulation) Act, 1956.

28. Capital Market
The capital market is divided into two segments viz:
a) Primary Market
b) Secondary Market

29. Primary Market
Most companies are usually started privately by their promoters. However the
promoters‘ capital and the borrowed capital from banks or financial
institutions might not be sufficient for running the business over the long
term. That is when corporate and the government looks at the primary market
to raise long term funds by issuing securities such as debt or equity.
These securities may be issued at face value, at premium or at discount. Let us
understand the meaning of these terms:
a) Face Value: Face value is the original cost of the security as shown in the
certificate/instrument. Most equity shares have a face value of Rs. 1, Rs. 5,
Rs. 10 or Rs. 100 and do not have much bearing on the actual market price
of the stock. When issuing securities, they may be offered at a discount or
at a premium.

30. b) Premium: When the security is offered at a price higher than
the face value it is called a premium
c) Discount: When the security is offered at a price lower than the
face value it is called a discount.

31. Secondary Market
The secondary market provides liquidity to the investors in the primary
market. Today we would not invest in any instrument if there was no medium
to liquidate our position. The secondary markets provide an efficient platform
for trading of those securities initially offered in the primary market. Also
those investors who have applied for shares in an IPO may or may not get
allotment. If they don‘t then they can always buy the shares (sometimes at a
discount or at a premium) in the secondary market.

32. some
nse& bse
operational
measures

33. Operational Features of BSE and NSE
These stock exchanges aim at offering the investors and traders :-
1. Better transparency
2. Genuine settlement cycle
3. Honest transaction
4. To reduce and solve investor grievances if any

34. 1) Market Timings:
Trading on the equities segment takes place on all days of
the week (except Saturdays and Sundays and holidays
declared by the Exchange in advance). The market timings of
the equities segment are:
Normal Market Open: 09:15 hours
Normal Market Close: 15:30 hours
The Post Closing Session is held between 15.50 to 16.00
hours.

35. 2) Automated Trading System:
Today our country has an advanced trading system which is a fully
automated screen based trading system. This system adopts the principle of
an order driven market as opposed to a quote driven system.
i) NSE operates on the 'National Exchange for Automated Trading'
(NEAT) system.
ii) BSE operates on the BSE’s Online Trading (BOLT) system.

36. Order Management in Automated Trading System
The trading system provides complete flexibility to members in the kinds
of orders that can be placed by them. Orders are first numbered and
time-stamped on receipt and then immediately processed for potential
match.
Every order has a distinctive order number and a unique time stamp on
it. If a match is not found, then the orders are stored in different 'books'.
Orders are stored in price-time priority in various books in the following
sequence: Best Price, Within Price, by time priority. Price priority means
that if two orders are entered into the system, the order having the best
price gets the higher priority. Time priority means if two orders having
the same price are entered, the order that is entered first gets the higher
priority.

37. Order Matching Rules in Automated trading system
The best buy order is matched with the best sell order. An order may match
partially with another order resulting in multiple trades. For order matching,
the best buy order is the one with the highest price and the best sell order is
the one with the lowest price. This is because the system views all buy
orders available from the point of view of a seller and all sell orders from
the point of view of the buyers in the market. So, of all buy orders available
in the market at any point of time, a seller would obviously like to sell at the
highest possible buy price that is offered. Hence, the best buy order is the
order with the highest price and the best sell order is the order with the
lowest price.

38. Order Conditions in Automated Trading System
A Trading Member can enter various types of orders depending upon
his/her requirements. These conditions are broadly classified into three
categories:
> Time Related Condition
> Price Related Condition
> Quantity Related Condition

39. Time Conditions
a) Day Order - A Day order, as the name suggests, is an order which is valid
for the day on which it is entered. If the order is not matched during the
day, the order gets cancelled automatically at the end of the trading day.
b) GTC Order - Good Till Cancelled (GTC) order is an order that remains in
the system until it is cancelled by the Trading Member. It will therefore
be able to span trading days if it does not get matched. The maximum
number of days a GTC order can remain in the system is notified by the
Exchange from time to time.

40. c) GTD - A Good Till Days/Date (GTD) order allows the Trading
Member to specify the days/date up to which the order should stay in
the system. At the end of this period the order will get flushed from
the system. Each day/date counted is a calendar day and inclusive of
holidays. The days/date counted are inclusive of the day/date on
which the order is placed. The maximum number of days a GTD order
can remain in the system is notified by the Exchange from time to
time.
d) IOC - An Immediate or Cancel (IOC) order allows a Trading Member
to buy or sell a security as soon as the order is released into the
market, failing which the order will be removed from the market.
Partial match is possible for the order, and the unmatched portion of
the order is cancelled immediately.

41. Price Conditions
a) Limit Price/Order – An order that allows the price to be specified while entering
the order into the system.
b) Market Price/Order – An order to buy or sell securities at the best price obtainable
at the time of entering the order.
c) Stop Loss (SL) Price/Order – The one that allows the Trading Member to place an
order which gets activated only when the market price of the relevant security
reaches or crosses a threshold price. Until then the order does not enter the
market.

42. Quantity Conditions
a) Disclosed Quantity (DQ)- An order with a DQ condition allows the Trading Member to
disclose only a part of the order quantity to the market. For example, an order of 1000
with a disclosed quantity condition of 200 will mean that 200 is displayed to the
market at a time. After this is traded, another 200 is automatically released and so on
till the full order is executed. The Exchange may set a minimum disclosed quantity
criteria from time to time.
b) MF - Minimum Fill (MF) orders allow the Trading Member to specify the minimum
quantity by which an order should be filled. For example, an order of 1000 units with
minimum fill 200 will require that each trade be for at least 200 units. In other words
there will be a maximum of 5 trades of 200 each or a single trade of 1000. The
Exchange may lay down norms of MF from time to time.
c) AON - All or None orders allow a Trading Member to impose the condition that only
the full order should be matched against. This may be by way of multiple trades. If the
full order is not matched it will stay in the books till matched or cancelled.
Note: Currently, AON and MF orders are not available on the system as per SEBI directives.

43. Conclusion
Stock Market is largest market which had provided employment and mode of
income to a large group of people and transformed many lives.
It had capability to make a king beggar and a beggar can become king.
It is most vital backbone to any economy and involves directly or indirectly in
everyone’s life.

44. Thank You