P RESENTATION O N O NLINE
T RADING AND S TUDY O F
I NDIAN S TOCK MARKET
W HAT IS A STOCK MARKET ?
Place where business of buying and selling stock
takes place
The stock market is not a specific place, though
some people use the term "Dalaal Street
W HAT IS A S TOCK ?
Stock is a share in the ownership of a company.
It represents a claim on the company's assets
and earnings
Whether you say shares, equity or stock, it all
means the same thing.
W HY C OMPANIES I SSUE
S TOCK ?
When a company would like to grow, it issues stocks
to raise funds and pay for ongoing business
activities
It is popular because:
The company does not have to repay the money
Paying dividends is optional
Dividends are distributions of earnings paid to
stockholders
H OW C OMPANIES R AISE T HE
C APITAL
By following means
Debentures
Equity
Loans
M ARKET S EGMENTS
Primary market
-Channel for creation of new securities
Secondary market
-The new securities issued in the primary
market are traded the secondary market
S TOCK EXCHANGE WORLD
WIDE
New York Stock Exchange - United States
NASDAQ (National Association of Security Dealers
Automated Quotations) - United States
Shanghai Stock Exchange - China
London Stock Exchange
- UK
S TOCK
EXCHANGE IN I NDIA
BSE
NSE
(BOMBAY STOCK EXCHANGE )
(NATIONAL STOCK EXCHANGE)
B OMBAY S TOCK E XCHANGE (BSE)
Following is the timeline on the rise
and rise of the Sensex through Indian
stock market history.
1830's Business on corporate stocks
and shares in Bank and Cotton
presses started in Bombay.
1860-1865 Cotton price bubble as a
result of the American Civil War
1870 - 90's Sharp increase in share
prices of jute industries followed by a
boom in tea stocks and coal
1978-79 Base year of Sensex,
defined to be 100.
N ATIONAL S TOCK E XCHANGE (NIFTY)
November 1992 as a tax-paying
company
In April 1993, it was recognized
as a stock exchange.
INDEX
SENSEX
Sensex is an index, an index is basically an indicator.
It gives you a general idea about whether most of the
stocks have gone up or most of the stocks have gone
down. The sensex is an indicator of all the prices of the
major companies of the BSE(Bombay stock exchange)
It includes 30 companies
NIFTY(N IFTY F IFTY )
Nifty is an indicator of all the major companies of
NSE.
The Nifty index is a composite of the top 50
stocks listed on the National stock exchange. It is
a simplified tool which helps investors & ordinary
people alike, understand what happens in the
stock market & by extension, the economy.
M ARKET T IMINGS
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 closing session is held between 15.50 hours
and 16.00 hours in NSE and 15.40 hours and
16.00 hours in BSE
NEAT- C ASH
NEAT-F&O
C IRCUIT B REAKERS
An index based market-wide circuit breaker system applies at three stages of
the index movement either way at 10%, 15% and 20%.
The breakers are triggered by movement of either S&P CNX Nifty or Sensex,
whichever is breached earlier
As an additional measure of safety, individual scrip-wise price bands has been fixed
as below:
Daily price bands of 2% (either way) on a set of specified securities
Daily price bands of 5% (either way) on a set of specified securities
Daily price bands of 10% (either way) on another set of specified securities
S ECURITIES AND E XCHANGE B OARD OF
I NDIA (SEBI)
SEBI is the Regulator
for the Securities
Market in India.
Originally set up by
the Government of
India in 1988, it
acquired statutory
form in 1992.
F UNCTIONS AND R ESPONSIBILITIES
(SEBI)
SEBI has to be responsive to the needs of three
groups, which constitute the market:
the issuers of securities
the investors
the market intermediaries.
H OW
Open Demat A/c.
Open Trading A/c.
TO
S TART ?
H OW
THE
M ARKET W ORK
NSE
Broker
Broker
Public
Public
BLUE CHIP INDIAN COMPANIES
1.
6.
2.
7.
3.
8.
4.
9.
5.
10.
30 STOCK OF SENSEX
1.
ACC
11.BHEL
21. SBI
2.
GRASIM
12.GUJ AMBUJA
22.INFOSYS
3.
HINDALCO
13.ICICI BANK
23.DR.REDYS
4.
HLL
14.RANBAXY
24.SATYAM
5.
ITC
15.REL
25.CIPLA
6.
L&T
16.R.COM
26.AIRTEL
7.
RIL
17.HDFC BANK
27.ONGC
8.
TATA MOTORS
18.HDFC
28.WIPRO
9.
TATA STEEL
19.MURTUI
29.NTPC
10.
BAJAJ AUTO
20.TCS
30.HERO HONDA
50 STOCK OF NIFTY
1.ACC
11.GUJ AMBUJA
21.JET AIRWAYS
2.BAJAJ AUTO
12.HCL
22.ITC
3.BHEL
13.HDFC
23.L&T
4.BPL
14.HDFC BANK
24.MTNL
5.BHARTI AIRTEL 15.HERO HONDA
25.M&M
6.CIPLA
16.HINDALCO
26.MARUTI
7.DABUR
17.HLL
27.ONGC
8.DR.REDDYS
18.HPL
28.OBC
9.GAIL
19.ICICIBANK
29.PNB
10.GRASIM
20.INFOSYS
30.SBI
50 STOCK OF NIFTY
31.NATIONAL ALUMINIUM
41.TATA MOTORS
32.RANBAXY
42.TATA POWER
33.R.COM
43.TATA STEEL
34.REL
44.WIPRO
35.RIL
45.ZEE
36.SATYAM
46.VSNL
37.SAIL
47.SIEMENS
38SUN PHARMA
48.INDIAN PETRO
39.SUSLON
49.ABB
40.TCS
50.GLAXO
SECTOR INDICATORS
1.
BANKING SECTOR
2.
CAPITAL GOODS SECTOR
3.
CEMENT SECTOR
4.
REAL ESTATE SECTOR
5.
INFRASTRUCTURE SECTOR
6.
POWER SECTOR
7.
TELECOM SECTOR
8.
AUTOMOBILES SECTOR
9.
METAL SECTOR
10.
INFORMATION TECHNOLOGY SECTOR
BANKING SECTOR
CAPITAL GOODS SECTOR
CEMENT SECTOR
REAL ESTATE SECTOR
INFRASTRUCTURE
SECTOR
POWER SECTOR
TELECOM SECTOR
AUTOMOBILES SECTOR
METAL SECTOR
INFORMATION TECHNOLOGY
SECTOR
FACTORS AFFECTING STOCK
MARKET
1.
INFLATION
2.
MARKET TRENDS
3.
GLOBAL MARKETS
4.
GOVT. POLICIES
5.
FINANCIAL STATEMENT OF COMPANIES
INFLATION
INFLATION RATE CURRENT 12.14
MAIN FACTOR CRUDE 147$ BARRAL
NOW CRUDE IS More than 105$ BARRAL
FINANCIAL STATEMENT OF
COMPANIES
PROFITS
LOSSES
GROWTH
FACTORS AFFECTING STOCK
PRICE
FINANCIAL STATEMENT OF COMPANIES
GROWTH OF CONPANIES
ORDER BOOK
MANAGEMENT
LAND BANK
POLICIES
PLANS
FIIS INVESTING IN INDIA
1.
FOREIGN ECONOMY
2.INDIAN ECONOMY
2% GROWTH RATE
8.5% GROWTH RATE
DEVELOPED
ECONOMY
DEVELOPING
ECONOMY
LESS EXPANSION
MORE Expansion
DEMAT ACCOUNT
1.
I LLEGAL T RADING S YSTEM :
Dabba System
Private Karb System
Patiya System
Badla System
DABBA TRADING :
$ The illegal practice of buy/sale of securities outside the
exchange mechanism without any documentary evidence
to relate such transactions.
$ "Dabba Trading" also known as "Bucketing" is the
process used by brokers to route their clients trades
outside the Stock/Commodity exchange.
$ In such trading, the broker either does not execute any
trade or matches and execute trades on its own terminal.
C AUGHT DABBA TRADING :
Pradeep Kumar Bansal, who was the target of the Sebi-NSE
operation, was a fairly big fish in the dabba trade. He operates from
a non-descript address at Byculla in central Mumbai, but his office,
packed with sophisticated equipment and gadgetry, acts as the hub
for his nationwide operations.
His firm, Bansal Sharevest Securities Pvt Ltd has multiple trading
memberships on Indian stock exchanges including: the National
Stock Exchange (derivatives segment), the Interconnected Stock
Exchange of India and the Calcutta Stock Exchange. He is also a subbroker to his own broking firm, earning commissions on its deals.
(Sebi has now banned promoters/directors from acting as subbrokers to their own brokerage firm after a separate investigation).
S CAMS
IN
C APITAL M ARKET
Harshad Mehta
He was known as the 'Big Bull'. However, his bull run did not last too long.
He triggered a rise in the Bombay Stock Exchange in the year 1992 by trading in shares at a
premium across many segments. Taking advantages of the loopholes in the banking system,
Harshad and his associates triggered a securities scam diverting funds to the tune of Rs 4000
crore (Rs 40 billion) from the banks to stockbrokers between April 1991 to May 1992.
Harshad Mehta worked with the New India Assurance Company before he moved ahead to try
his luck in the stock markets. Mehta soon mastered the tricks of the trade and set out on
dangerous game plan. Mehta has siphoned off huge sums of money from several banks and
millions of investors were conned in the process. His scam was exposed, the markets crashed
and he was arrested and banned for life from trading in the stock markets.
He was later charged with 72 criminal offences. A Special Court also sentenced Sudhir Mehta,
Harshad Mehta's brother, and six others, including four bank officials, to rigorous imprisonment
(RI) ranging from 1 year to 10 years on the charge of duping State Bank of India to the tune of
Rs 600 crore (Rs 6 billion) in connection with the securities scam that rocked the financial
markets in 1992. He died in 2002 with many litigations still pending against him.
S CAMS
IN
C APITAL M ARKET
Ketan Parekh
Ketan Parekh followed Harshad Mehta's footsteps to swindle corers of rupees from banks. A
chartered accountant he used to run a family business, NH Securities.
Ketan however had bigger plans in mind. He targetted smaller exchanges like the Allahabad
Stock Exchange and the Calcutta Stock Exchange, and bought shares in fictitious names.
His dealings revolved around shares of ten companies like Himachal Futuristic, Global TeleSystems, SSI Ltd, DSQ Software, Zee Telefilms, Silverline, Pentamedia Graphics and
Satyam Computer (K-10 scrips).
Ketan borrowed Rs 250 crore from Global Trust Bank to fuel his ambitions. Ketan alongwith
his associates also managed to get Rs 1,000 crore from the Madhavpura Mercantile Cooperative Bank.
According to RBI regulations, a broker is allowed a loan of only Rs 15 crore (Rs 150 million).
There was evidence of price rigging in the scrips of Global Trust Bank, Zee Telefilms, HFCL,
Lupin Laboratories, Aftek Infosys and Padmini Polymer.
A DVANTAGES OF ONLINE
TRADING .
Instant Access
Convenience
Monetary Savings
Value Added Services.
D ISADVANTAGES OF ONLINE
TRADING :
Investing alone:
Security
Personalized services
