Bombay Stock Exchange

The roots of the stock exchange, Mumbai can be traced back to 1875, when the shares and stockbroker association (non profit organization) was established. BSE is the oldest stock exchange in Asia and is very important stock Exchange in Indian capital market. After liberalization, the stock exchange, Mumbai has witnessed a huge increase its operation on par with international standards. The board of governor pf BSE comprises 9 elected directors (1 third of them retire every year by rotation) and executive director, 3 government nominees, a reserve bank of India nominee a five public representative. A president, vice president and honorary treasurer are annually elected from among the elected director by the governing board following the election of directors. Executive director work as the chief executive officer and is responsible for day to day administration of stock exchange. INTRODUCTION

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association", as a voluntary non-profit making association. It has evolved over the years into its present status as the premier Stock Exchange in the country. It may be noted that the Stock Exchanges is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was founded in 1878. The Exchange, while providing an efficient and transparent market for trading in securities, upholds the interests of the investors and ensures redressal of their grievances, whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by making available necessary informative inputs and conducting investor education programmes. A Governing Board comprising of 9 elected directors (one third of them retire every year by rotation), two SEBI nominees, a Reserve Bank of India nominee, six public representatives and an Executive Director is the apex body, which decides the policies and regulates the affairs of the Exchange. The Executive Director as the Chief Executive Officer is responsible for the day-to-day administration of the Exchange.

The average daily turnover of the Exchange during the year 2000-2001 (April-March), was Rs.3984.19 crores and average number of daily trades was 5.69 lakhs. However, the average daily turnover of the Exchange during the year 2001- 2002 has declined to Rs. 1244.10 crores and number of average daily trades during the period to 5.17 lakhs. The ban on all deferral products like BLESS and ALBM in the Indian capital Markets by SEBI w.e.f. July 2, 2001, abolition of account period settlements, introduction of Compulsory Rolling Settlements in all scrips traded on the Exchanges w.e.f. December 31, 2001, etc. have adversely impacted the liquidity and consequently there is a considerable decline in the daily turnover at the Exchange. An example of a bond. Securities analysts may carry out research on bonds, stocks and any other type of security. Securities research is a discipline within the financial services industry. Securities research professionals are known most generally as "analysts," "research analysts," or "securities analysts;" all the foregoing terms are synonymous. Securities analysts are commonly divided between the two basic kinds of securities: equity analysts (researching stocks and their issuers) and fixed income analysts (researching bond issuers). However, there are some analysts who cover all of the securities of a particular issuer, stocks and bonds alike.

Securities analysts are usually further subdivided by industry specialization - among the industries with the most analyst coverage are biotechnology, financial services, energy, and computer hardware, software and services. Fixed income analysts are also often subdivided by asset class - among the fixed income asset classes with the most analyst coverage are convertible bonds, high yield bonds (see high-yield debt), and distressed bonds (see distressed securities). (Although technically not securities, syndicated bank loans typically fall within the domain of fixed income analysts, and are covered, as if they were bonds, by reference to the industry of their borrowers or asset class in which their credit quality would place them.)

In the broadest terms, securities analysts seek to develop, and thereafter communicate to investors, insights regarding the value, risk, and volatility of a covered security, and thus assist investors to decide whether to buy, hold, sell, sell short, or simply avoid the security in question or derivative securities (see: derivative). To gather the information required to do so, securities analysts review periodic financial disclosures (such as made by United States-listed issuers to the S.E.C.) of the issuer and other relevant companies, read industry news and use trading history and industry information databases, interview managers and customers of the issuer, and (sometimes) perform their own primary research.

Demat Trading
A depository holds securities in dematerialized form. It maintains ownership records of securities in a book entry form and also effects transfer of ownership through book entry. SEBI has introduced some degree of compulsion in trading and settlement of securities in dematerialized form. While the investors have a right to hold securities in either physical or demat form, SEBI has mandated compulsory trading and settlement of securities in dematerialized form. This was initially introduced for institutional investors and was later extended to all investors. Starting with 12 scrips on January 15, 1998, all investors are required to mandatorily trade in dematerialized form in respect of 2,335 securities as at end-June, 2001. Since the introduction of the depository system, dematerialization has progressed at a fast pace and has gained acceptance among the participants in the market. All actively traded scrips are held, traded and settled in demat form. The details of progress in dematerialization in two depositories, viz., NSDL and CDSL., are presented as below: In a SEBI working paper titled Dematerialization: A Silent Revolution in the Indian Capital Market released in April 2000, it has been observed that India has achieved a very high level of dematerialization in less than three years time, and currently more than 99%of trades settle in demand form. Competition and regulatory developments facilitated reduction in custodial charges and improvements in qualities of service standards. The paper observes that one imminent and apparent immediate benefit of competition between the two depositories is fall in settlement and other charges. Competition has been driving improvement in service standards. Depository facility has effected changes in stock market microstructure. Breadth and depth of investment culture has further got extended to interior areas of the country faster. Explicit transaction cost has been falling due to dematerialization. Dematerialization substantially contributed to the increased growth in the turnover. Dematerialization growth in India is the quickest among all emerging markets and also among developed markets excepting for the U.K and Hong Kong.

NSE

INTRODUCTION

The National Stock Exchange (NSE) is India's leading stock exchange covering around 400 cities and towns all over India. NSE introduced for the first time in India, fully automated screen based trading. It provides a modern, fully computerized trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest or liquidate investments in securities. Sponsored by the industrial development bank of India, the NSE has been co-sponsored by other development/ public finance institutions, LIC, GIC, banks and other financial institutions such as SBI Capital Market, Stockholding corporation, Infrastructure leasing and finance and so on. India has had a history of stock exchanges limited in their operating jurisdiction to the cities in which they were set up. NSE started equity trading on November 3, 1994 and within a short span of 1 year became the largest exchange in India in terms of volumes transacted. Trading volumes in the equity segment have grown rapidly with average daily turnover increasing from Rs.7 crores in November 1994 to Rs.6797 crores in February 2001 with an average of 9.6 lakh trades on a daily basis. During the year 2000-2001, NSE reported a turnover of Rs.13, 39,510 crores in the equities segment accounting for 45% of the total market. The NSE represented an attempt to overcome the fragmentation of regional markets by providing a screen-based system, which transcends geographical barriers. Having operationalised both the debt and equity markets, the NSE is planning for a derivative market, which will provide futures and options in equity. Its main objectives has been to set up comprehensive facilities for the entire range of securities under a single umbrella, namely, To set up a nation wide trading facility for equities, debt instruments and hybrids; To ensure equal access to investors across the country through an appropriate communication network;

 To provide a fair, efficient and transparent securities market to investors using the electronic trading system; To ensure shorter settlement cycles and book entry settlement systems; and To meet the current international standards prevalent in the securities Industry/markets.

THE STRUCTURE OF MARKET PRIMARY MARKET AND SECONDARY MARKET PRIMARY MARKET: Its a place where the investor have the first opportunity to subscribe to newly issued securities. It is the market where the securities are created. Companies sell their new stocks or bonds for the first time to the public in this market. It is otherwise called as initial public offering(IPO). An IPO comes into existence when the private companies sells its stock to the public for the first time. The mmost important faeturesof primary markets is the public buys the securities directly from the issuing companies. SECONDAY MARKET:The secondary market is thats segment of capital market where the outstanding securities are traded. From the investor point of view the secondary markets imparts liquidity to long term to the long term securities held by them by providing an auction market for this securities. The secondary market operates through the medium of stock exchange which regulates the trading activity in this market and ensures a measure of safety and fair dealing to the investors. The striking feature of secondary market is that the investor trades among themselves. It does not include issuing companies and investor trade previously traded securities. Secondary markets are of two types 1. Auction market: - all individual and institution assemble the trade securities at one area and announces the price at which they are willing to purchase or buy.

2. Dealer market: - individuals or companies will specialize in specific securities and buy or sell according to the demand of market. Over the counter market our grouped under dealer market g\has the demand and supply for the particular stock is not enough to meet the requirement of different investor. DIFFERENT TYPES OF STOCKS: COMMON STOCKS: generally when people talk about stock they refer to common stock. Majority of the stock is preferred common stocks. Common stock or shares represent the ownerships in the company and their holder has the right ton claim a portion of profit. Common stock yields higher returns when compared to any other investment. if a company goes bankrupt, the common shareholder will receive money until the creditors, debtors and the preferred shareholders are paid. PREFERRED STOCK: They represent some degree of preference of ownership in the company. With preferred shares investors are usually guaranteed a fixed dividend. The most advantageous feature of proffered stock is that in the event of liquidation the preferred shareholder are paid off before common shareholder. The company has the option to purchase shares from the shareholder at any time.

GROWTH STOCK: Growth stocks are the stocks that can be expected to the experience high rates of growth in operation or earning. This growth rates are to a large extent higher then the market averages. These companies usually reinvest there earnings instead of distributing them as dividend to support there high growth rates. The price of growth stock as well as there return on there stocks tends to be higher then the income stocks. They do not fit well wit a speculative approach calling for high current cash flow from investment and high degree of investment principle stability . VALUE STOCK: These are stock of companies which are considered undervalued because they may be in an industries that is out of favors, they may be experiencing

management turmoil or they may be restructuring the business operation. These stocks tend to have lower price earnings and price to book ratio then growth stocks do. Therefore there prices are cheap compared to prices required to be paid for growth stocks.

Every person takes care to streamline his current income in such a manner that inflows exceed the schedule outflow. The surplus is either saves or invested in avenue which promises subject some returns in year to come. The investment decision are based on investors future plan and his expectation from life like buying house, planning for child marriage etc therefore the investor evaluates the risk inherent in the venture. Risk associated with an investment is broadly of three types business financial risk and liquidity risk. Based on three broad parameters, the investors evaluate various investment opportunities available in the financial system. An individual or institution invest in various programmed and in one of that is equity.