Documente Academic
Documente Profesional
Documente Cultură
1) Introduction
2) Market Chart
3) Primary Market
-IPO
-Why Share Listed
-Procedures
-Pricing
-Red herring
-IPO Lock-ups
4) What Are Stocks? INTRODUCTION
5)History of Stock /Stock market
6) Importance of stock market
-Function& Purpose
- Relation in modern financial system / Sensitivity
7) Different Types Of Stocks STOCKS
8) How Stocks and stock market works or Trade
9) Stock market Index
10)derivative Instruments
11)Leveraged Strategies
12) What Causes Stock Prices To Change?
13) Buying Stocks
14) How to Read A Stock Table/Quote
15) The Bulls, The Bears And The Farm
16)Reliance Petroleum Limited Details
Introduction
As long as you enjoy investing, you'll be willing to do the homework and stay in the game. That's why I try to make the show so entertaining,
because if you aren't interested, you'll either miss the opportunity to make money in the market or not pay enough attention and end up losing your
shirt.
Jim Cramer
Definition describes about - Money - Stock Market - Losing - Enjoyment - Investing - Opportunity
Wouldn't you love to be a business owner without ever having to show up at work? Imagine if you could sit back, watch your
company grow, and collect the dividend cheques as the money rolls in! This situation might sound like a pipe dream, but it's closer to
reality than you might think.
Many of us would like to try our luck in the Stock markets. Yes, Why Not ? Trading stocks is one of the most lucrative methods of making
money.As you've probably guessed, we're talking about owning stocks. This fabulous category of financial instruments is, without a
doubt, one of the greatest tools ever invented for building wealth. Stocks are a part, if not the cornerstone, of nearly any investment
portfolio. When you start on your road to financial freedom, you need to have a solid understanding of stocks and how they trade on
the stock market.
Over the last few decades, the average person's interest in the stock market has grown exponentially. What was once a toy of the rich
has now turned into the vehicle of choice for growing wealth? This demand coupled with advances in trading technology has opened
up the markets so that nowadays nearly anybody can own stocks.
Despite their popularity, however, most people don't fully understand stocks. Much is learned from conversations around the water
cooler with others who also don't know what they're talking about. Chances are you've already heard people say things like, "Bob's
cousin made a killing in XYZ company, and now he's got another hot tip..." or "Watch out with stocks--you can lose your shirt in a
matter of days!" So much of this misinformation is based on a get-rich-quick mentality, which was especially prevalent during the
amazing dotcom market in the late '90s. People thought that stocks were the magic answer to instant wealth with no risk. The ensuing
dotcom crash proved that this is not the case. Stocks can (and do) create massive amounts of wealth, but they aren't without risks. The
only solution to this is education. The key to protecting yourself in the stock market is to understand where you are putting your
money.
It is for this reason that we've created this tutorial: to provide the foundation you need to make investment decisions yourself. We'll
start by explaining what a stock is and the different types of stock, and then we'll talk about how they are traded, what causes prices to
change, how you buy stocks and much more.
CHART
(MARKET)
Market Flow
Market
Initial Public Offering (IPO's) is the first sale of stocks of a company which is made available to the public to raise capital for the
company. Generally it's the smaller companies which go in for Initial public offering (IPO's) to expand their size but some large
private companies also go in for Initial public offering (IPO's) to become publicly traded. An underwriting firm is generally associated
with the company. They fix the date of issue of shares, the offer price, what kind of share to be issued like common or preferred etc.
Since only the smaller and newly formed companies generally go in for Initial public offering (IPO's) investing in them can be a risky
proposition as there is no historical data to analyze their performance. How the stock will perform in future or what will be the
opening price on the first day will be difficult to predict.
When the shares of a company are listed on the stock exchange, the capital which the company gets goes directly to the company. The
advantage of an Initial public offering (IPO's) is that the company gets a huge amount of capital from the investors for future growth
of the company. The company may again go in for a public issue to raise further capital for the company. The company doesn't pay
back the initial capital to the investors, but the investors get a share in the profits of the company. The company can also come out
with a rights issue which will further help in rising of capital at the same time increasing the value of the shares in absolute terms of
the existing shareholders.
Procedure
Generally one or more investment banks generally called underwriters are associated with the sale of shares. The issuing company
called issuer enters into a contract with the lead underwriter to sell the shares to the public. If the Initial public offering (IPO's) is a
large one, then there is a syndicate of underwriters with a lead underwriter who work on a commission basis based on the percentage
of the value of shares sold.
Since there are a lot of legal formalities also involved, the Initial public offering (IPO's) also involve one or two law firms like the
white shoe firm of New York City.
Public offerings are most sold to institutional investors but some shares are also allocated to retail investors. When there is an
over allotment of shares, the issuer allows the underwriter to increase the size of offering by 15% which is known as the green shoe
option.
In the late 1990s, in USA a lot of venture capital companies crashed in on the dotcom boom and came out with Initial public offering
(IPO's) making many millionaires in the bargain. But inspire of this the companies faced a financial crisis later on as a lot of the
companies liquidated the capital amount.
Pricing
Investment banks have to consider many options before they arrive at a correct pricing of the shares. The pricing has to be low enough
to attract investors and at the same time high enough to raise enough capital for the company. As under pricing though may prove
beneficial to the investors who will get the shares at the offer price, the company may lose out in terms of more capital money being
raised. Whereas in the case of overpricing, the underwriters may not be in a position to sell of their shares or in case of it being listed
below the market price, then the credibility of the company goes down.
So the price of the Initial public offering (IPO's) is arrived at by the company either with the help of lead managers or through a
process of book building.
Red Herring
Red Herring is the preliminary prospectus of the company, which describes the new issue of the stock and the prospects of the
company. It is a registration statement which is filed with the SEC. The Red Herring doesn't contain any issue price in it. It is called
the Red Herring as there is a paragraph is red which states that the company is not selling its shares to the public without registration
with the SEC. (Securities and Exchange Commission).
IPO Lock-up
After the company has gone public, the company usually enters into a contract with the investors say for a period of 90-180 days
wherein those holding majority stakes in the company are not permitted to sell their shares. This is done so that the market is not
flooded with too many of the company's shares which may send the share prices spiraling down. But once the lock-up period is over
then the investor can dispose his shares.
Plain and simple, stock is a share in the ownership of a company. Stock represents a claim on the company's assets and earnings. As
you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means
the same thing.
The expression 'stock market' refers to the market that enables the trading of company stocks (collective shares), other securities, and
derivatives. Bonds are still traditionally traded in an informal, over-the-counter market known as the bond market. Commodities are
traded in commodities markets, and derivatives are traded in a variety of markets (but, like bonds, mostly 'over-the-counter')
Being an Owner Holding a company's stock means that you are one of the many owners (shareholders) of a company and, as such,
you have a claim (albeit usually very small) to everything the company owns. Yes, this means that technically you own a tiny sliver of
every piece of furniture, every trademark, and every contract of the company. As an owner, you are entitled to your share of the
company's earnings as well as any voting rights attached to the stock.
A stock is represented by a stock certificate. This is a fancy piece of paper that is proof of your ownership. In today's computer age,
you won't actually get to see this document because your brokerage keeps these records electronically, which is also known as holding
shares "in street name". This is done to make the shares easier to trade. In the past, when a person wanted to sell his or her shares, that
person physically took the certificates down to the brokerage. Now, trading with a click of the mouse or a phone call makes life easier
for everybody.
Being a shareholder of a public company does not mean you have a say in the day-to-day running of the business. Instead, one vote
per share to elect the board of directors at annual meetings is the extent to which you have a say in the company. For instance, being a
Microsoft shareholder doesn't mean you can call up Bill Gates and tell him how you think the company should be run. In the same line
of thinking, being a shareholder of Anheuser Busch doesn't mean you can walk into the factory and grab a free case of Bud Light!
The management of the company is supposed to increase the value of the firm for shareholders. If this doesn't happen, the
shareholders can vote to have the management removed, at least in theory. In reality, individual investors like you and I don't own
enough shares to have a material influence on the company. It's really the big boys like large institutional investors and billionaire
entrepreneurs who make the decisions.
For ordinary shareholders, not being able to manage the company isn't such a big deal. After all, the idea is that you don't want to have
to work to make money, right? The importance of being a shareholder is that you are entitled to a portion of the company’s profits and
have a claim on assets. Profits are sometimes paid out in the form of dividends. The more shares you own, the larger the portion of the
profits you get. Your claim on assets is only relevant if a company goes bankrupt. In case of liquidation, you'll receive what's left after
all the creditors have been paid. This last point is worth repeating: the importance of stock ownership is your claim on assets and
earnings. Without this, the stock wouldn't be worth the paper it's printed on.
Another extremely important feature of stock is its limited liability, which means that, as an owner of a stock, you are not personally
liable if the company is not able to pay its debts. Other companies such as partnerships are set up so that if the partnership goes
bankrupt the creditors can come after the partners (shareholders) personally and sell off their house, car, furniture, etc. Owning stock
means that, no matter what, the maximum value you can lose is the value of your investment. Even if a company of which you are a
shareholder goes bankrupt, you can never lose your personal assets.
Why does a company issue stock? Why would the founders share the profits with thousands of people when they could keep profits to
themselves? The reason is that at some point every company needs to raise money. To do this, companies can either borrow it from
somebody or raise it by selling part of the company, which is known as issuing stock. A company can borrow by taking a loan from a
bank or by issuing bonds. Both methods fit under the umbrella of debt financing. On the other hand, issuing stock is called equity
financing. Issuing stock is advantageous for the company because it does not require the company to pay back the money or make
interest payments along the way. All that the shareholders get in return for their money is the hope that the shares will someday be
worth more than what they paid for them. The first sale of a stock, which is issued by the private company itself, is called the initial
public offering (IPO) which is discuss earlier.
It is important that you understand the distinction between a company financing through debt and financing through equity. When you
buy a debt investment such as a bond, you are guaranteed the return of your money (the principal) along with promised interest
payments. This isn't the case with an equity investment. By becoming an owner, you assume the risk of the company not being
successful - just as a small business owner isn't guaranteed a return, neither is a shareholder. As an owner, your claim on assets is less
than that of creditors. This means that if a company goes bankrupt and liquidates, you, as a shareholder, don't get any money until the
banks and bondholders have been paid out; we call this absolute priority. Shareholders earn a lot if a company is successful, but they
also stand to lose their entire investment if the company isn't successful.
Risk
It must be emphasized that there are no guarantees when it comes to individual stocks. Some companies pay out dividends, but many
others do not. And there is no obligation to pay out dividends even for those firms that have traditionally given them. Without
dividends, an investor can make money on a stock only through its appreciation in the open market. On the downside, any stock may
go bankrupt, in which case your investment is worth nothing.
Although risk might sound all negative, there is also a bright side. Taking on greater risk demands a greater return on your investment.
This is the reason why stocks have historically outperformed other investments such as bonds or savings accounts. Over the long term,
an investment in stocks has historically had an average return of around 10-12%.
History OF STOCK / STOCK MARKET
Historian Fernand Braudel suggests that in Cairo in the 11th century Muslim and Jewish merchants had already set up every form of
trade association and had knowledge of many methods of credit and payment, disproving the belief that these were invented later by
Italians. In 12th century France the courratiers de change were concerned with managing and regulating the debts of agricultural
communities on behalf of the banks. Because these men also traded with debts, they could be called the first brokers. In late 13th
century Bruges commodity traders gathered inside the house of a man called Van der Beurse, and in 1309 they became the "Brugse
Beurse", institutionalizing what had been, until then, an informal meeting. The idea quickly spread around Flanders and neighboring
counties and "Beurzen" soon opened in Ghent and Amsterdam.
In the middle of the 13th century Venetian bankers began to trade in government securities. In 1351 the Venetian government
outlawed spreading rumors intended to lower the price of government funds. Bankers in Pisa, Verona, Genoa and Florence also began
trading in government securities during the 14th century. This was only possible because these were independent city states not ruled
by a duke but a council of influential citizens. The Dutch later started joint stock companies, which let shareholders invest in business
ventures and get a share of their profits - or losses. In 1602, the Dutch East India Company issued the first shares on the Amsterdam
Stock Exchange. It was the first company to issue stocks and bonds.
The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock exchange to introduce continuous
trade in the early 17th century. The Dutch "pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts
and other speculative instruments, much as we know them" (Murray Sayle, "Japan Goes Dutch", London Review of Books XXIII.7,
April 5, 2001). There are now stock markets in virtually every developed and most developing economies, with the world's biggest
markets being in the United States, Canada, China (Hongkong), India, UK, Germany, France and Japan[1].
The Bombay Stock Exchange in India.
Market participants
Many years ag`o, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, with long family histories
(and emotional ties) to particular corporations. Over time, markets have become more "institutionalized"; buyers and sellers are
largely institutions (e.g., pension funds, insurance companies, mutual funds, hedge funds, investor groups, and banks). The rise of the
institutional investor has brought with it some improvements in market operations. Thus, the government was responsible for "fixed"
(and exorbitant) fees being markedly reduced for the 'small' investor, but only after the large institutions had managed to break the
brokers' solid front on fees (they then went to 'negotiated' fees, but only for large institutions)[citation needed].
However, corporate governance (at least in the West) has been very much adversely affected by the rise of (largely 'absentee')
institutional 'owners
The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or
raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange
provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared
to other less liquid investments such as real estate.
History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can
influence or be an indicator of social mood. Rising share prices, for instance, tend to be associated with increased business investment
and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an eye
on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial
stability is the raison d'être of central banks.
Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment
to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction.
The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the
production of goods and services as well as employment. In this way the financial system contributes to increased prosperity.
Relation of the stock market to the modern financial system
The financial system in most western countries has undergone a remarkable transformation. One feature of this development is
disintermediation. A portion of the funds involved in saving and financing flows directly to the financial markets instead of being
routed via banks' traditional lending and deposit operations. The general public's heightened interest in investing in the stock market,
either directly or through mutual funds, has been an important component of this process. Statistics show that in recent decades shares
have made up an increasingly large proportion of households' financial assets in many countries. In the 1970s, in Sweden, deposit
accounts and other very liquid assets with little risk made up almost 60 per cent of households' financial wealth, compared to less than
20 per cent in the 2000s. The major part of this adjustment in financial portfolios has gone directly to shares but a good deal now takes
the form of various kinds of institutional investment for groups of individuals, e.g., pension funds, mutual funds, hedge funds,
insurance investment of premiums, etc. The trend towards forms of saving with a higher risk has been accentuated by new rules for
most funds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to
be found in other industrialized countries. In all developed economic systems, such as the European Union, the United States, Japan
and other developed nations, the trend has been the same: saving has moved away from traditional (government insured) bank deposits
to more risky securities of one sort or another.
Riskier long-term saving requires that an individual possess the ability to manage the associated increased risks. Stock prices fluctuate
widely, in marked contrast to the stability of (government insured) bank deposits or bonds. This is something that could affect not only
the individual investor or household, but also the economy on a large scale. The following deals with some of the risks of the financial
sector in general and the stock market in particular. This is certainly more important now that so many newcomers have entered the
stock market, or have acquired other 'risky' investments (such as 'investment' property, i.e., real estate and collectables).
With each passing year, the noise level in the stock market rises. Television commentators, financial writers, analysts, and market
strategists are all overtalking each other to get investors' attention. At the same time, individual investors, immersed in chat rooms and
message boards, are exchanging questionable and often misleading tips. Yet, despite all this available information, investors find it
increasingly difficult to profit. Stock prices skyrocket with little reason, then plummet just as quickly, and people who have turned to
investing for their children's education and their own retirement become frightened. Sometimes there appears to be no
This is a quote from the preface to a published biography about the long-term value-oriented stock investor Warren Buffett.[2] Buffett
began his career with $100, and $105,000 from seven limited partners consisting of Buffett's family and friends. Over the years he has
built himself a multi-billion-dollar fortune. The quote illustrates some of what has been happening in the stock market during the end
of the 20th century and the beginning of the 21st.
From experience we know that investors may temporarily pull financial prices away from their long term trend level. Over-reactions
may occur—so that excessive optimism (euphoria) may drive prices unduly high or excessive pessimism may drive prices unduly low.
New theoretical and empirical arguments have been put forward against the notion that financial markets are efficient.
According to the efficient market hypothesis (EMH), only changes in fundamental factors, such as profits or dividends, ought to affect
share prices. (But this largely theoretic academic viewpoint also predicts that little or no trading should take place—contrary to fact—
since prices are already at or near equilibrium, having priced in all public knowledge.) But the efficient-market hypothesis is sorely
tested by such events as the stock market crash in 1987, when the Dow Jones index plummeted 22.6 percent—the largest-ever one-day
fall in the United States. This event demonstrated that share prices can fall dramatically even though, to this day, it is impossible to fix
a definite cause: a thorough search failed to detect any specific or unexpected development that might account for the crash. It also
seems to be the case more generally that many price movements are not occasioned by new information; a study of the fifty largest
one-day share price movements in the United States in the post-war period confirms this.[3] Moreover, while the EMH predicts that
all price movement (in the absence of change in fundamental information) is random (i.e., non-trending), many studies have shown a
marked tendency for the stock market to trend over time periods of weeks or longer.
Various explanations for large price movements have been promulgated. For instance, some research has shown that changes in
estimated risk, and the use of certain strategies, such as stop-loss limits and Value at Risk limits, theoretically could cause financial
markets to overreact.
Other research has shown that psychological factors may result in exaggerated stock price movements. Psychological research has
demonstrated that people are predisposed to 'seeing' patterns, and often will perceive a pattern in what is, in fact, just noise.
(Something like seeing familiar shapes in clouds or ink blots.) In the present context this means that a succession of good news items
about a company may lead investors to overreact positively (unjustifiably driving the price up). A period of good returns also boosts
the investor's self-confidence, reducing his (psychological) risk threshold.[4]
Another phenomenon—also from psychology—that works against an objective assessment is group thinking. As social animals, it is
not easy to stick to an opinion that differs markedly from that of a majority of the group. An example with which one may be familiar
is the reluctance to enter a restaurant that is empty; people generally prefer to have their opinion validated by those of others in the
group.
In one paper the authors draw an analogy with gambling.[5] In normal times the market behaves like a game of roulette; the
probabilities are known and largely independent of the investment decisions of the different players. In times of market stress,
however, the game becomes more like poker (herding behavior takes over). The players now must give heavy weight to the
psychology of other investors and how they are likely to react psychologically.
The stock market, as any other business, is quite unforgiving of amateurs. Inexperienced investors rarely get the assistance and support
they need. In the period running up to the recent Nasdaq crash, less than 1 per cent of the analyst's recommendations had been to sell
(and even during the 2000 - 2002 crash, the average did not rise above 5%). The media amplified the general euphoria, with reports of
rapidly rising share prices and the notion that large sums of money could be quickly earned in the so-called new economy stock
market. (And later amplified the gloom which descended during the 2000 - 2002 crash, so that by summer of 2002, predictions of a
DOW average below 5000 were quite common.)
Irrational behavior
Sometimes the market tends to react irrationally to economic news, even if that news has no real effect on the technical value of
securities itself. Therefore, the stock market can be swayed tremendously in either direction by press releases, rumors, euphoria and
mass panic.
Over the short-term, stocks and other securities can be battered or buoyed by any number of fast market-changing events, making the
stock market difficult to predict.
Crashes
A stock market crash is often defined as a sharp dip in share prices of equities listed on the stock exchanges. In parallel with various
economic factors, a reason for stock market crashes is also due to panic. Often, stock market crashes end up with speculative
economic bubbles.
There have been famous stock market crashes that have ended in the loss of billions of dollars and wealth destruction on a massive
scale. An increasing number of people are involved in the stock market, especially since the social security and retirement plans are
being increasingly privatized and linked to stocks and bonds and other elements of the market. There have been a number of famous
stock market crashes like the Wall Street Crash of 1929, the stock market crash of 1973–4, the Black Monday of 1987, the Dot-com
bubble of 2000. But those stock market crashes did not begin in 1929, or 1987. They actually started years or months before the crash
really hit hard.
One of the most famous stock market crashes started October 24, 1929 on Black Thursday. The Dow Jones Industrial lost 50% during
this stock market crash. It was the beginning of the Great Depression. Another famous crash took place on October 19, 1987 – Black
Monday. On Black Monday itself, the Dow Jones fell by 22.6% after completing a 5 year continuous rise in share prices. This event
not only shook the USA, but quickly spread across the world. Thus, by the end of October, stock exchanges in Australia lost 41.8%,
Canada lost 22.5%, Hong Kong lost 45.8% and Great Britain lost 26.4%. Names “Black Monday” and “Black Tuesday” are also used
for October 28-29,1929, which followed Terrible Thursday – starting day of the stock market crash in 1929. The crash in 1987 raised
some mysticism – main news or events did not predict the catastrophe and visible reasons for the collapse were not identified. This
event had put many important assumptions, of modern economics, under uncertainty, namely, the theory of rational conduct of human
being, the theory of market equilibrium and the hypothesis of market efficiency. For some time after the crash, trading in stock
exchanges worldwide was halted, since the exchange's computers did not perform well owing to enormous quantity of trades being
received at one time. This halt in trading allowed the Federal Reserve system and central banks of other countries to take measures to
control the spreading of worldwide financial crisis. In the United States the SEC introduced several new measures of control into the
stock market in an attempt to prevent a re-occurrence of the events of Black Monday. Computer systems were upgraded in the stock
exchanges to handle larger trading volumes in a more accurate and controlled manner. The SEC modified the margin requirements in
an attempt to lower the volatility of common stocks, stock options and the futures market. The New York Stock Exchange and the
Chicago Mercantile Exchange introduced the concept of a circuit breaker. The circuit breaker halts trading if the Dow declines a
prescribed number of points for a prescribed amount of time.
Robert Shiller's plot of the S&P Composite Real Price Index, Earnings, Dividends, and Interest Rates, from Irrational Exuberance, 2d
ed.[6] In the preface to this edition, Shiller warns that "[t]he stock market has not come down to historical levels: the price-earnings
ratio as I define it in this book is still, at this writing [2005], in the mid-20s, far higher than the historical average. … People still place
too much confidence in the markets and have too strong a belief that paying attention to the gyrations in their investments will
someday make them rich, and so they do not make conservative preparations for possible bad outcomes."
Price-Earnings ratios as a predictor of twenty-year returns based upon the plot by Robert Shiller (Figure 10.1[6], source). The
horizontal axis shows the real price-earnings ratio of the S&P Composite Stock Price Index as computed in Irrational Exuberance
(inflation adjusted price divided by the prior ten-year mean of inflation-adjusted earnings). The vertical axis shows the geometric
average real annual return on investing in the S&P Composite Stock Price Index, reinvesting dividends, and selling twenty years later.
Data from different twenty year periods is color-coded as shown in the key. See also ten-year returns. Shiller states that this plot
"confirms that long-term investors—investors who commit their money to an investment for ten full years—did do well when prices
were low relative to earnings at the beginning of the ten years. Long-term investors would be well advised, individually, to lower their
exposure to the stock market when it is high, as it has been recently, and get into the market when it is low."[6]
A stock market crash is often defined as a sharp dip in share prices of equities listed on the stock exchanges. In parallel with various
economic factors, a reason for stock market crashes is also due to panic. Often, stock market crashes end up with speculative
economic bubbles.
There have been famous stock market crashes that have ended in the loss of billions of dollars and wealth destruction on a massive
scale. An increasing number of people are involved in the stock market, especially since the social security and retirement plans are
being increasingly privatized and linked to stocks and bonds and other elements of the market. There have been a number of famous
stock market crashes like the Wall Street Crash of 1929, the stock market crash of 1973–4, the Black Monday of 1987, the Dot-com
bubble of 2000. But those stock market crashes did not begin in 1929, or 1987. They actually started years or months before the crash
really hit hard.
One of the most famous stock market crashes started October 24, 1929 on Black Thursday. The Dow Jones Industrial lost 50% during
this stock market crash. It was the beginning of the Great Depression. Another famous crash took place on October 19, 1987 – Black
Monday. On Black Monday itself, the Dow Jones fell by 22.6% after completing a 5 year continuous rise in share prices. This event
not only shook the USA, but quickly spread across the world. Thus, by the end of October, stock exchanges in Australia lost 41.8%,
Canada lost 22.5%, Hong Kong lost 45.8% and Great Britain lost 26.4%.
Names “Black Monday” and “Black Tuesday” are also used for October 28-29,1929, which followed Terrible Thursday – starting day
of the stock market crash in 1929. The crash in 1987 raised some mysticism – main news or events did not predict the catastrophe and
visible reasons for the collapse were not identified. This event had put many important assumptions, of modern economics, under
uncertainty, namely, the theory of rational conduct of human being, the theory of market equilibrium and the hypothesis of market
efficiency. For some time after the crash, trading in stock exchanges worldwide was halted, since the exchange's computers did not
perform well owing to enormous quantity of trades being received at one time. This halt in trading allowed the Federal Reserve system
and central banks of other countries to take measures to control the spreading of worldwide financial crisis. In the United States the
SEC introduced several new measures of control into the stock market in an attempt to prevent a re-occurrence of the events of Black
Monday. Computer systems were upgraded in the stock exchanges to handle larger trading volumes in a more accurate and controlled
manner. The SEC modified the margin requirements in an attempt to lower the volatility of common stocks, stock options and the
futures market. The New York Stock Exchange and the Chicago Mercantile Exchange introduced the concept of a circuit breaker
There are two main types of stocks: common stock and preferred stock.
Common Stock
Common stock is, well, common. When people talk about stocks they are usually referring to this type. In fact, the majority of stock is
issued is in this form. We basically went over features of common stock in the last section. Common shares represent ownership in a
company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the
major decisions made by management.
Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher
return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders
will not receive money until the creditors, bondholders and preferred shareholders are paid.
Preferred Stock
Preferred stock represents some degree of ownership in a company but usually doesn't come with the same voting rights. (This may
vary depending on the company.) With preferred shares, investors are usually guaranteed a fixed dividend forever. This is different
than common stock, which has variable dividends that are never guaranteed. Another advantage is that in the event of liquidation,
preferred shareholders are paid off before the common shareholder (but still after debt holders). Preferred stock may also be callable,
meaning that the company has the option to purchase the shares from shareholders at anytime for any reason (usually for a premium).
Some people consider preferred stock to be more like debt than equity. A good way to think of these kinds of shares is to see them as
being in between bonds and common shares.
Common and preferred are the two main forms of stock; however, it's also possible for companies to customize different classes of
stock in any way they want. The most common reason for this is the company wanting the voting power to remain with a certain
group; therefore, different classes of shares are given different voting rights. For example, one class of shares would be held by a
select group who are given ten votes per share while a second class would be issued to the majority of investors who are given one
vote per share.
When there is more than one class of stock, the classes are traditionally designated as Class A and Class B. Berkshire Hathaway
(ticker: BRK), has two classes of stock. The different forms are represented by placing the letter behind the ticker symbol in a form
like this: "BRKa, BRKb" or "BRK.A, BRK.B".
Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Some exchanges are
physical locations where transactions are carried out on a trading floor. You've probably seen pictures of a trading floor, in which
traders are wildly throwing their arms up, waving, yelling, and signaling to each other. The other type of exchange is virtual,
composed of a network of computers where trades are made electronically.
The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers, reducing the risks of investing.
Just imagine how difficult it would be to sell shares if you had to call around the neighborhood trying to find a buyer. Really, a stock
market is nothing more than a super-sophisticated farmers' market linking buyers and sellers.
Before we go on, we should distinguish between the primary market and the secondary market. The primary market is where securities
are created (by means of an IPO) while, in the secondary market, investors trade previously-issued securities without the involvement
of the issuing-companies. The secondary market is what people are referring to when they talk about the stock market. It is important
to understand that the trading of a company's stock does not directly involve that company.
The Nasdaq
The second type of exchange is the virtual sort called an over-the-counter (OTC) market, of which the
Nasdaq is the most popular. These markets have no central location or floor brokers whatsoever.
Trading is done through a computer and telecommunications network of dealers. It used to be that the
largest companies were listed only on the NYSE while all other second tier stocks traded on the other
exchanges. The tech boom of the late '90s changed all this; now the Nasdaq is home to several big
technology companies such as Microsoft, Cisco, Intel, Dell and Oracle. This has resulted in the Nasdaq
becoming a serious competitor to the NYSE.
• In the age of high-speed Internet and broadband connectivity, consumers have many facilities for
accessing their online money transfer with the aid of online trading. The Nasdaq market site in
• It has given a new facet to the investment companies in respect of online money management Times Square
and e-commerce as well.
• For private investors, it is the best gateway to avail the know-how of different ongoing market trends and large variety of
online tools.
• The feedback page either asks specific questions of the user or invites open comment is another useful means of gathering
information about the customers.
• Feedback can also be submitted via email, or a simple web-based form.
• Data entered into web-based forms gets stored into a database that enables the users to sort and summarize the information.
• Some of the benefits of this kind of trading are it helps in saving one’s money which greatly depends on the online brokerage
firm.
• Then there is instant online access which gives the consumer instant access to their account.
• A person can do this trade anytime.
• With this one controls his investments.
• But still there are some who prefer offline trading because while investing, there are experienced and professional brokerage
companies that handle their investments for them.
• . Any amateur investor while catering to decision making phase of investment, they are not exposed to any sort of challenge.
• Also, there is someone there to answer any questions that may cause concerns.
• To become a successful trader, thorough investigation and better support from a renowned online trading company makes your
goal achieved.
• Then, one also has the option of investment open for business of the customers.
• In accordance to the underlying investment, Mutual Fund Investment has its specified goal during the launching time.
• There are debt funds, equity funds, gilt funds etc. and these are for fulfilling the various needs of the investor.
• The availability of these options makes them a good option.
In order to keep the decorum of system, market trend, investment plan and different scheme are floated to the market within a certain
frequency.
The movements of the prices in a market or section of a market are captured in price indices called stock market indices, of which
there are many, e.g., the S&P, the FTSE and the Euronext indices. Such indices are usually market capitalization (the total market
value of floating capital of the company) weighted, with the weights reflecting the contribution of the stock to the index. The
constituents of the index are reviewed frequently to include/exclude stocks in order to reflect the changing business environment.
Derivative instruments
Financial innovation has brought many new financial instruments whose pay-offs or values depend on the prices of stocks. Some
examples are exchange-traded funds (ETFs), stock index and stock options, equity swaps, single-stock futures, and stock index
futures. These last two may be traded on futures exchanges (which are distinct from stock exchanges—their history traces back to
commodities futures exchanges), or traded over-the-counter. As all of these products are only derived from stocks, they are sometimes
considered to be traded in a (hypothetical) derivatives market, rather than the (hypothetical) stock market.
Leveraged Strategies
Stock that a trader does not actually own may be traded using short selling; margin buying may be used to purchase stock with
borrowed funds; or, derivatives may be used to control large blocks of stocks for a much smaller amount of money than would be
required by outright purchase or sale.
Short selling
In short selling, the trader borrows stock (usually from his brokerage which holds its clients' shares or its own shares on account to
lend to short sellers) then sells it on the market, hoping for the price to fall. The trader eventually buys back the stock, making money
if the price fell in the meantime or losing money if it rose. Exiting a short position by buying back the stock is called "covering a short
position." This strategy may also be used by unscrupulous traders to artificially lower the price of a stock. Hence most markets either
prevent short selling or place restrictions on when and how a short sale can occur. The practice of naked shorting is illegal in most (but
not all) stock markets.
Margin buying
In margin buying, the trader borrows money (at interest) to buy a stock and hopes for it to rise. Most industrialized countries have
regulations that require that if the borrowing is based on collateral from other stocks the trader owns outright, it can be a maximum of
a certain percentage of those other stocks' value. In the United States, the margin requirements have been 50% for many years (that is,
if you want to make a $1000 investment, you need to put up $500, and there is often a maintenance margin below the $500). A margin
call is made if the total value of the investor's account cannot support the loss of the trade. (Upon a decline in the value of the
margined securities additional funds may be required to maintain the account's equity, and with or without notice the margined
security or any others within the account may be sold by the brokerage to protect its loan position. The investor is responsible for any
shortfall following such forced sales.) Regulation of margin requirements (by the Federal Reserve) was implemented after the Crash
of 1929. Before that, speculators typically only needed to put up as little as 10 percent (or even less) of the total investment
represented by the stocks purchased. Other rules may include the prohibition of free-riding: putting in an order to buy stocks without
paying initially (there is normally a three-day grace period for delivery of the stock), but then selling them (before the three-days are
up) and using part of the proceeds to make the original payment (assuming that the value of the stocks has not declined in the interim).
Stock prices change every day as a result of market forces. By this we mean that share prices change because of supply and demand. If
more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a
stock than buy it, there would be greater supply than demand, and the price would fall.
Understanding supply and demand is easy. What is difficult to comprehend is what makes people like a particular stock and dislike
another stock. This comes down to figuring out what news is positive for a company and what news is negative. There are many
answers to this problem and just about any investor you ask has their own ideas and strategies.
That being said, the principal theory is that the price movement of a stock indicates what investors feel a company is worth. Don't
equate a company's value with the stock price. The value of a company is its market capitalization, which is the stock price multiplied
by the number of shares outstanding. For example, a company that trades at $100 per share and has 1 million shares outstanding has a
lesser value than a company that trades at $50 that has 5 million shares outstanding ($100 x 1 million = $100 million while $50 x 5
million = $250 million). To further complicate things, the price of a stock doesn't only reflect a company's current value, it also
reflects the growth that investors expect in the future.
The most important factor that affects the value of a company is its earnings. Earnings are the profit a company makes, and in the long
run no company can survive without them. It makes sense when you think about it. If a company never makes money, it isn't going to
stay in business. Public companies are required to report their earnings four times a year (once each quarter). Wall Street watches with
rabid attention at these times, which are referred to as earnings seasons. The reason behind this is that analysts base their future value
of a company on their earnings projection. If a company's results surprise (are better than expected), the price jumps up. If a
company's results disappoint (are worse than expected), then the price will fall.
Of course, it's not just earnings that can change the sentiment towards a stock (which, in turn, changes its price). It would be a rather
simple world if this were the case! During the dotcom bubble, for example, dozens of internet companies rose to have market
capitalizations in the billions of dollars without ever making even the smallest profit. As we all know, these valuations did not hold,
and most internet companies saw their values shrink to a fraction of their highs. Still, the fact that prices did move that much
demonstrates that there are factors other than current earnings that influence stocks. Investors have developed literally hundreds of
these variables, ratios and indicators. Some you may have already heard of, such as the price/earnings ratio, while others are extremely
complicated and obscure with names like Chaikin oscillator or moving average convergence divergence.
So, why do stock prices change? The best answer is that nobody really knows for sure. Some believe that it isn't possible to predict
how stock prices will change, while others think that by drawing charts and looking at past price movements, you can determine when
to buy and sell. The only thing we do know is that stocks are volatile and can change in price extremely rapidly.
The important things to grasp about this subject are the following:
1. At the most fundamental level, supply and demand in the market determines stock price.
2. Price times the number of shares outstanding (market capitalization) is the value of a company. Comparing just the share price of
two companies is meaningless.
3. Theoretically, earnings are what affect investors' valuation of a company, but there are other indicators that investors use to predict
stock price. Remember, it is investors' sentiments, attitudes and expectations that ultimately affect stock prices.
4. There are many theories that try to explain the way stock prices move the way they do. Unfortunately, there is no one theory that
can explain everything.
Buying Stocks
how do you actually go about buying stocks? Thankfully, you don't have to go down into the trading pit yelling and screaming your
order. There are two main ways to purchase stock:
1. Using a Brokerage
The most common method to buy stocks is to use a brokerage. Brokerages come in two different flavors. Full-service brokerages offer
you (supposedly) expert advice and can manage your account; they also charge a lot. Discount brokerages offer little in the way of
personal attention but are much cheaper.
At one time, only the wealthy could afford a broker since only the expensive, full-service brokers were available. With the internet
came the explosion of online discount brokers. Thanks to them nearly anybody can now afford to invest in the market.
2. DRIPs & DIPs
Dividend reinvestment plans (DRIPs) and direct investment plans (DIPs) are plans by which individual companies, for a minimal cost,
allow shareholders to purchase stock directly from the company. Drips are a great way to invest small amounts of money at regular
intervals.
A company "lists" its stock on an exchange. For example, the NSE has about 3,000 companies listed. According to the NSE:
Anyone who wants to buy or sell stock in any of these 3,000 or so companies goes to the New York Stock Exchange to do it.
Of course, no one wants to fly to New York to buy or sell their shares. A person therefore calls a stock broker in a firm that is
authorized to trade at the exchange. There are dozens of such brokerage houses, including such familiar names as Merrill Lynch,
Charles Schwab and Morgan Stanley. When you call up a broker at one of these companies, he or she relays your trade to the floor of
the appropriate exchange, and a representative of the company (or, more commonly, a computer representing the company) makes the
trade on your behalf. You pay the broker a commission (generally Rs.10 to Rs 100 per trade, depending on the broker) to provide this
service to you. Today, you can also trade stock online -- see this page to learn more.
Stocks that are not listed on an exchange are sold Over The Counter (OTC). OTC stocks are generally in smaller, riskier companies.
Usually, an OTC stock is stock in a company that does not meet the requirements of an exchange.
For lots more information on stock, the stock market and related topics, check out the links on the next page.
Investment strategies
One of the many things people always want to know about the stock market is, "How do I make money investing?" There are many
different approaches; two basic methods are classified as either fundamental analysis or technical analysis. Fundamental analysis
refers to analyzing companies by their financial statements found in SEC Filings, business trends, general economic conditions, etc.
Technical analysis studies price actions in markets through the use of charts and quantitative techniques to attempt to forecast price
trends regardless of the company's financial prospects. One example of a technical strategy is the Trend following method, used by
John W. Henry and Ed Seykota, which uses price patterns, utilizes strict money management and is also rooted in risk control and
diversification.
Additionally, many choose to invest via the index method. In this method, one holds a weighted or unweighted portfolio consisting of
the entire stock market or some segment of the stock market (such as the S&P 500 or Wilshire 5000). The principal aim of this
strategy is to maximize diversification, minimize taxes from too frequent trading, and ride the general trend of the stock market
(which, in the U.S., has averaged nearly 10%/year, compounded annually, since World War II).
Taxation
According to each national or state legislation, a large array of fiscal obligations must be respected regarding capital gains, and taxes
are charged by the state over the transactions, dividends and capital gains on the stock market, in particular in the stock exchanges.
However, these fiscal obligations may vary from jurisdiction to jurisdiction because, among other reasons, it could be assumed that
taxation is already incorporated into the stock price through the different taxes companies pay to the state, or that tax free stock market
operations are useful to boost economic growth.
Any financial paper has stock quotes that will look something like the image below:
Columns 1 & 2: 52-Week High and Low - These are the highest and lowest prices at which a stock has traded over the previous 52
weeks (one year). This typically does not include the previous day's trading.
Column 3: Company Name & Type of Stock - This column lists the name of the company. If there are no special symbols or letters
following the name, it is common stock. Different symbols imply different classes of shares. For example, "pf" means the shares are
preferred stock.
Column 4: Ticker Symbol - This is the unique alphabetic name which identifies the stock. If you watch financial TV, you have seen
the ticker tape move across the screen, quoting the latest prices alongside this symbol. If you are looking for stock quotes online, you
always search for a company by the ticker symbol. If you don't know what a particular company's ticker is you can search for it at:
http://finance.yahoo.com/l.
Column 5: Dividend Per Share - This indicates the annual dividend payment per share. If this space is blank, the company does not
currently pay out dividends.
Column 6: Dividend Yield - The percentage return on the dividend. Calculated as annual dividends per share divided by price per
share.
Column 7: Price/Earnings Ratio - This is calculated by dividing the current stock price by earnings per share from the last four
quarters. For more detail on how to interpret this, see our P/E Ratio tutorial.
Column 8: Trading Volume - This figure shows the total number of shares traded for the day, listed in hundreds. To get the actual
number traded, add "00" to the end of the number listed.
Column 9 & 10: Day High and Low - This indicates the price range at which the stock has traded at throughout the day. In other
words, these are the maximum and the minimum prices that people have paid for the stock.
Column 11: Close - The close is the last trading price recorded when the market closed on the day. If the closing price is up or down
more than 5% than the previous day's close, the entire listing for that stock is bold-faced. Keep in mind, you are not guaranteed to get
this price if you buy the stock the next day because the price is constantly changing (even after the exchange is closed for the day).
The close is merely an indicator of past performance and except in extreme circumstances serves as a ballpark of what you should
expect to pay.
Column 12: Net Change - This is the dollar value change in the stock price from the previous day's closing price. When you hear
about a stock being "up for the day," it means the net change was positive
.
Microsoft Performance Check for 52 weeks
INDEX WATCH
The Bulls, The Bears And The Farm
On Wall Street, the bulls and bears are in a constant struggle. If you haven't heard of these terms already, you undoubtedly will as you
begin to invest.
The Bulls
A bull market is when everything in the economy is great, people are finding jobs, gross domestic product (GDP) is growing, and
stocks are rising. Things are just plain rosy! Picking stocks during a bull market is easier because everything is going up. Bull markets
cannot last forever though, and sometimes they can lead to dangerous situations if stocks become overvalued. If a person is optimistic
and believes that stocks will go up, he or she is called a "bull" and is said to have a "bullish outlook".
The Bears
A bear market is when the economy is bad, recession is looming and stock prices are falling. Bear markets make it tough for investors
to pick profitable stocks. One solution to this is to make money when stocks are falling using a technique called short selling. Another
strategy is to wait on the sidelines until you feel that the bear market is nearing its end, only starting to buy in anticipation of a bull
market. If a person is pessimistic, believing that stocks are going to drop, he or she is called a "bear" and said to have a "bearish
outlook".
Pigs are high-risk investors looking for the one big score in a short period of time. Pigs buy on hot tips and invest in companies
without doing their due diligence. They get impatient, greedy, and emotional about their investments, and they are drawn to high-risk
securities without putting in the proper time or money to learn about these investment vehicles. Professional traders love the pigs, as
it's often from their losses that the bulls and bears reap their profits.
There are plenty of different investment styles and strategies out there. Even though the bulls and bears are constantly at odds, they
can both make money with the changing cycles in the market. Even the chickens see some returns, though not a lot. The one loser in
this picture is the pig.
Make sure you don't get into the market before you are ready. Be conservative and never invest in anything you do not understand.
Before you jump in without the right knowledge, think about this old stock market saying:
"Bulls make money, bears make money, but pigs just get slaughtered!"
RPL – EQ
As on 29-MAY-2008 14:24:29 Hours IST
Margins
• The Stocks which have traded atleast 80% of the days for the previous six months shall constitute the Group I and Group II.
• Out of the scrips identified above, the scrips having mean impact cost of less than or equal to 1% shall be categorized under
Group I and the scrips where the impact cost is more than 1, shall be categorized under Group II.
• The impact cost shall be calculated on the 15th of each month on a rolling basis considering the order book snapshots of the
previous six months. On the basis of the impact cost so calculated, the scrips shall move from one group to another group from
the 1st of the next month.
• For securities that have been listed for less than six months, the trading frequency and the impact cost shall be computed using
the entire trading history of the security.
• Categorisation of newly listed securities
For the first month and till the time of monthly review a newly listed security shall be categorised in that Group where the
market capitalization of the newly listed security exceeds or equals the market capitalization of 80% of the securities in that
particular group. Subsequently, after one month, whenever the next monthly review is carried out, the actual trading frequency
and impact cost of the security shall be computed, to determine the liquidity categorization of the security.
In case any corporate action results in a change in ISIN, then the securities bearing the new ISIN shall be treated as newly
listed security for group categorization.
Daily margin, comprising of the sum of VaR margin, Extreme Loss Margin and mark to market margin is payable.
All securities are classified into three groups for the purpose of VaR margin
For the securities listed in Group I, scrip wise daily volatility calculated using the exponentially weighted moving average
methodology shall be applied to daily returns in the same manner as in the derivatives market. The scrip wise daily VaR would be 3.5
times the volatility so calculated subject to a minimum of 7.5%.
For the securities listed in Group II, the VaR margin shall be higher of scrip VaR (3.5 sigma) or three times the index VaR, and it shall
be scaled up by root 3.
For the securities listed in Group III, the VaR margin would be equal to five times the index VaR and scaled up by root 3.
In case of securities in Trade for Trade segment (TFT segment) VaR as applicable to Group 3 (illiquid securities) shall be applicable
1. Value at Risk (VaR) based margin, which is arrived at, based on the methods stated above. The index VaR, for the purpose,
would be the higher of the daily Index VaR based on S&P CNX NIFTY or BSE SENSEX. The index VaR would be subject to
a minimum of 5%.
2. Security specific Margin: NSCCL may stipulate security specific margins for the securities from time to time.
The VaR margin rate computed as mentioned above will be charged on the net outstanding position (buy value-sell value) of the
respective clients on the respective securities across all open settlements. There would be no netting off of positions across different
settlements. The net position at a client level for a member are arrived at and thereafter, it is grossed across all the clients including
proprietary position to arrive at the gross open position.
For example, in case of a member, if client A has a buy position of 1000 in a security and client B has a sell position of 1000 in the
same security, the net position of the member in the security would be taken as 2000. The buy position of client A and sell position of
client B in the same security would not be netted. It would be summed up to arrive at the member’s open position for the purpose of
margin calculation.
The VaR margin shall be collected on an upfront basis by adjusting against the total liquid assets of the member at the time of trade.
The VaR margin so collected shall be released on completion of pay-in of the settlement.
The details of all margins (VAR, extreme loss margin and mark to market) as at end of each day will be downloaded to members in
their respective Extranet directory.
The Extreme Loss Margin for any security shall be higher of:
1. 5%, or
2. 1.5 times the standard deviation of daily logarithmic returns of the security price in the last six months. This computation shall
be done at the end of each month by taking the price data on a rolling basis for the past six months and the resulting value shall
be applicable for the next month.
The Extreme Loss Margin shall be collected/ adjusted against the total liquid assets of the member on a real time basis.
The Extreme Loss Margin shall be collected on the gross open position of the member. The gross open position for this purpose would
mean the gross of all net positions across all the clients of a member including its proprietary position.
There would be no netting off of positions across different settlements. The Extreme Loss Margin collected shall be released on
completion of pay-in of the settlement.
The details of all margins (VAR, extreme loss margin and mark to market) as at end of each day will be downloaded to members in
their respective Extranet directory.
Mark-to-Market Margin
Mark to market loss shall be calculated by marking each transaction in security to the closing price of the security at the end of
trading. In case the security has not been traded on a particular day, the latest available closing price at the NSE shall be considered as
the closing price. In case the net outstanding position in any security is nil, the difference between the buy and sell values shall be
considered as notional loss for the purpose of calculating the mark to market margin payable.
The mark to market margin (MTM) shall be collected from the member before the start of the trading of the next day.
The MTM margin shall also be collected/adjusted from/against the cash/cash equivalent component of the liquid net worth deposited
with the Exchange.
The MTM margin shall be collected on the gross open position of the member. The gross open position for this purpose would mean
the gross of all net positions across all the clients of a member including its proprietary position. For this purpose, the position of a
client would be netted across its various securities and the positions of all the clients of a broker would be grossed.
There would be no netting off of the positions and setoff against MTM profits across two rolling settlements i.e. T day and T-1 day.
However, for computation of MTM profits/losses for the day, netting or setoff against MTM profits would be permitted.
In case of Trade for Trade Segment (TFT segment) each trade shall be marked to market based on the closing price of that security.
The MTM margin so collected shall be released on completion of pay-in of the settlement.
Naming convention
C_VAR1_DDMMYYYY_N.DAT
File format
Control Record
Detail Record
This file would be generated once a month on the last trading day and would be applicable for the next month.
Naming convention
C_CATG_<MONYYYY>.Tnn
Where MONYYYY - Is the month and year for which the file is generated,T is the file indicator and nn is the batch number. The file
will be a .CSV file.
File format
Control Record
Detail Record
Margin Shortfall
Instances of
Penalty to be levied
Disablement
1st instance 0.07% per day
2nd to 5th instance of
0.07% per day +Rs.5000/- per instance from 2nd to 5th instance
disablement
6th to 10th instance of
0.07% per day+ Rs. 20000 ( for 2nd to 5th instance) +Rs.10000/- per instance from 6th to 10th instance
disablement
0.07% per day +Rs. 70,000/- (for 2nd to 10th instance) +Rs.10000/- per instance from 11th instance onwards.
11th instance onwards
Additionally, the member will be referred to the Disciplinary Action Committee for suitable action
Instances as mentioned above shall refer to all disablements during market hours in a calendar month. The penal charge of 0.07% per
day shall be applicable on all disablements due to margin violation anytime during the day.
Liquid assets
Members are required to provide liquid assets which adequately cover various margins & base minimum capital requirements. Liquid
assets of the member include their Initial membership deposits including the security deposits. Members may provide additional
collateral deposit towards liquid assets, over and above their minimum membership deposit requirements
The acceptable forms of capital towards liquid assets and the applicable haircuts are listed below:
1. Cash Equivalents:
a. Cash
b. Bank fixed deposits (FDRs) issued by approved banks and deposited with approved Custodians or NSCCL
c. Bank Guarantees (BGs) in favour of NSCCL from approved banks in the specified format.
d. Government Securities. The procedure for acceptance and list of securities is as specified in circular. Applicable haircut is
10%.
e. Units of liquid mutual funds or government securities mutual funds as decided by NSCCL from time to time. Applicable
haircut is 10%.
a. Liquid (Group I) Equity Shares in demat form, as specified by NSCCL from time to time deposited with approved Custodians.
Haircuts applied are equivalent to the VaR margin for the respective securities.
b. Mutual fund units other than those listed under cash equivalents decided by NSCCL from time to time. Haircut equivalent to the
VaR margin for the units computed using the traded price if available, or else, using the NAV of the unit treating it as a liquid security.
Margins for institutional deals
Institutional businesses i.e., transactions done by all institutional investors shall be margined in the capital market segment from T+1
day subsequent to confirmation of the transactions by the custodians. For this purpose, institutional investors shall include
• Public Financial Institutions as defined under Section 4A of the Companies Act, 1956. (DFI)
• Banks, i.e., a banking company as defined under Section 5(1)(c) of the Banking Regulations Act, 1949. (BNK)
Levy of margins:
• Institutional transactions shall be identified by the use of the participant code at the time of order entry.
• In respect of institutional transactions confirmed by the custodians the margins shall be levied on the custodians.
• In respect of institutional transactions rejected/not accepted by the custodians the margins shall be levied on the members who
have executed the transactions.
• The margins shall be computed and levied at a client (Custodial Participant code) level in respect of institutional transactions
and collected from the custodians/members.
• Reporting and other procedures regarding Institution transactions shall continue as per the current procedure.
In case of transactions which are to be settled by Retail Professional Clearing Members (PCM), all the trades with PCM code shall be
included in the trading member’s positions till the same are confirmed by the PCM. Margins shall be collected from respective trading
members until confirmation of trades by PCM.
On confirmation of trades by PCM, such trades will be reduced from the positions of trading member and included in the positions of
PCM. The PCM shall then be liable to pay margins on the same.
In cases where early pay-in of securities is made prior to the securities pay-in, such positions for which early pay-in (EPI) of securities
is made shall be exempt from margins. The EPI of securities would be allocated to clients having net deliverable position, on a random
basis unless specific client details are provided by the member/ custodian. However, member/ custodian shall ensure to pass on
appropriate early pay-in benefit of margin to the relevant clients. Additionally, member/custodian can specify the clients to whom the
early pay-in may be allocated.
In cases where early pay-in of funds is made prior to the funds pay-in, such positions for which early pay-in (EPI) of funds is made
shall be exempt from margins based on the client details provided by the member/ custodian. Early pay-in of funds specified by the
member/custodians for a specific client and for a settlement shall be allocated against the securities in the descending order of the net
buy value of outstanding position of the client.
INTRODUCTION
MUTUAL FUNDS
Introduction
As you probably know, mutual funds have become extremely popular over the last 20 years. What was once just another obscure
financial instrument is now a part of our daily lives. More than 80 million people, or one half of the households in America, invest in
mutual funds. That means that, in the United States alone, trillions of dollars are invested in mutual funds.
In fact, to many people, investing means buying mutual funds. After all, it's common knowledge that investing in mutual funds is (or
at least should be) better than simply letting your cash waste away in a savings account, but, for most people, that's where the
understanding of funds ends. It doesn't help that mutual fund salespeople speak a strange language that is interspersed with jargon that
many investors don't understand.
Originally, mutual funds were heralded as a way for the little guy to get a piece of the market. Instead of spending all your free time
buried in the financial pages of the Wall Street Journal, all you had to do was buy a mutual fund and you'd be set on your way to
financial freedom. As you might have guessed, it's not that easy. Mutual funds are an excellent idea in theory, but, in reality, they
haven't always delivered. Not all mutual funds are created equal, and investing in mutuals isn't as easy as throwing your money at the
first salesperson who solicits your business.
The Definition
A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings
together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a
portion of the holdings of the fund.
OR
Mutual Fund is a financial intermediary which collects money from many investors who have a common financial goal and invest it in
bonds and stocks etc. Thus it is a very suitable investment for common man as it is cost effective and easy
A mutual fund is not an alternative investment option to stocks and bonds, rather it pools the money of several investors and invests
this in stocks, bonds, money market instruments and other types of securities.
Buying a mutual fund is like buying a small slice of a big pizza. The owner of a mutual fund unit gets a proportional share of the
fund’s gains, losses, income and expenses.
When three Boston securities executives pooled their money together in 1924 to create the first mutual fund, they had no idea how
popular mutual funds would become.
The idea of pooling money together for investing purposes started in Europe in the mid-1800s. The first pooled fund in the U.S. was
created in 1893 for the faculty and staff of Harvard University. On March 21st, 1924 the first official mutual fund was born. It was
called the Massachusetts Investors Trust.
After one year, the Massachusetts Investors Trust grew from Rs.50,000 in assets in 1924 to Rs.392,000 in assets (with around 200
shareholders). In contrast, there are over 10,000 mutual funds in the U.S. today totaling around Rs.7 trillion (with approximately 83
million individual investors) according to the Investment Company Institute.
The stock market crash of 1929 slowed the growth of mutual funds. In response to the stock market crash, Congress passed the
Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require that a fund be registered with the SEC and
provide prospective investors with a prospectus. The SEC (U.S. Securities and Exchange Commission) helped create the Investment
Company Act of 1940 which provides the guidelines that all funds must comply with today.
With renewed confidence in the stock market, mutual funds began to blossom. By the end of the 1960s there were around 270 funds
with Rs.48 billion in assets.
In 1976, John C. Bogle opened the first retail index fund called the First Index Investment Trust. It is now called the Vanguard 500
Index fund and in November of 2000 it became the largest mutual fund ever with Rs.100 billion in assets.
One of the largest contributors of mutual fund growth was Individual Retirement Account (IRA) provisions made in 1981, allowing
individuals (including those already in corporate pension plans) to contribute Rs.2,000 a year. Mutual funds are now popular in
employer-sponsored defined contribution retirement plans (401k), IRAs and Roth IRAs.
Mutual funds are very popular today, known for ease-of-use, liquidity, and unique diversification capabilities.
Mutual Funds have a very bright future in India. As compared to the annual growth rate of 9% in last 5 years, composite rate of
growth is expected 13.4% in the next 5 years.
1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it receives over
the year to fund owners in the form of a distribution.
2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to
investors in a distribution.
3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then
sell your mutual fund shares for a profit.
Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more
shares.
5. Advantages of Mutual Funds:
• Professional Management - The primary advantage of funds (at least theoretically) is the professional management of
your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolios.
A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor
investments.
• Diversification - By owning shares in a mutual fund instead of owning individual stocks or bonds, your risk is spread
out. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is
minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you
(think about Enron). Large mutual funds typically own hundreds of different stocks in many different industries. It
wouldn't be possible for an investor to build this kind of a portfolio with a small amount of money.
• Economies of Scale - Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs
are lower than what an individual would pay for securities transactions.
• Liquidity - Just like an individual stock, a mutual fund allows you to request that your shares be converted into cash at
any time.
• Simplicity - Buying a mutual fund is easy! Pretty well any bank has its own line of mutual funds, and the minimum
investment is small. Most companies also have automatic purchase plans whereby as little as $100 can be invested on a
monthly basis.
• Professional Management - Did you notice how we qualified the advantage of professional management with the word
"theoretically"? Many investors debate whether or not the so-called professionals are any better than you or I at picking stocks.
Management is by no means infallible, and, even if the fund loses money, the manager still takes his/her cut. We'll talk about this in
detail in a later section.
• Costs - Mutual funds don't exist solely to make your life easier - all funds are in it for a profit. The mutual fund industry is masterful
at burying costs under layers of jargon. These costs are so complicated that in this tutorial we have devoted an entire section to the
subject.
• Dilution - It's possible to have too much diversification. Because funds have small holdings in so many different companies, high
returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund
getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment
for all the new money.
• Taxes - When making decisions about your money, fund managers don't consider your personal tax situation. For example, when a
fund manager sells a security, a capital-gains tax is triggered, which affects how profitable the individual is from the sale. It might
have been more advantageous for the individual to defer the capital gains liability.
All the Mutual Fund Had to get registered with Indian Trust act before proceeding for any activity
A legal Structure and Organization of MFs as laid down by SEBI Guidelines is as follows
Board Of Trustees Sponsor of Mutual Fund
Company, Bank or FI
Acting as registrars
Investors
transfer agents and
related services for the
mutual funds
• A Sponsor establishes the Mutual Fund and contributes at least 40% of net worth of Investment and fulfills criteria set by
SEBI. He is not responsible for any kind of loss from operation of Schemes. According to the Indian Trust Act, 1882, Mutual
Fund is constituted as a trust by Sponsor.
• Trustee is a company which takes care of interest of unit holders while AMC takes care of interest of Investors as per SEBI
Regulations, 1996.
• AMC is the Asset Management Company appointed by Trustee as the Investor Management and it should have a net worth of
at least 10 crores. AMC has to take approval from SEBI. At least 50% of the directors of AMC have to be independent
directors and should not be associated with Sponsors.
AMC appoints Registrar and transfer agent who communicates with investors and update their records
The fund’s objective is laid out in the fund's prospectus, which is the legal document that contains information about the fund, its
history, its officers and its performance.
The company that puts together a mutual fund is called an AMC. An AMC may have several mutual fund schemes with similar or
varied investment objectives.
The AMC hires a professional money manager, who buys and sells securities in line with the fund's stated objective.
The Securities and Exchange Board of India (SEBI) mutual fund regulations require that the fund’s objectives are clearly spelt out in
the prospectus.
In addition, every mutual fund has a board of directors that is supposed to represent the shareholders' interests, rather than the AMC’s.
Discover the different types of mutual funds, from broad categories like index funds to specific fund types, like large cap international
small value funds.
Bond Funds @
Bond Fund Investing
To understand bond funds, or fixed income funds we need to first understand what bonds are. Bonds are simply a loan, but in the form
of a security. "Who’s the borrower?" you may ask. In this case, it is usually the government (including state and local governments) or
corporations like IBM or General Motors. By issuing bonds, these borrowers can raise money from the public.
Bonds are promises to pay back the original amount (the principal) plus interest--similar to mortgage or car loans, where you were the
borrower. Bonds are considered less risky than stocks, but do carry their own risks (namely inflation, credit and prepayment risks).
A "bond fund" or "income fund" describes a mutual fund that invests primarily in bonds or other debt securities.
Bond funds are often used as a way to balance out a portfolio because the bond market behaves differently from the stock market. By
diversifying between the two, the levels of risk you take goes down significantly. Bond funds are also used to create regular income--
something that is important when you are in or close to retirement.
Bond funds are very popular because they are convenient and provide diversification. Bonds can be complex, so having a professional
fund manager manage the portfolio and pay you on a regular basis (usually monthly) is very attractive. Bond funds can also have
efficiencies and capabilities that would be nearly impossible for an individual to mimic (expect, maybe, a very wealthy individual).
People also enjoy bond funds because they can be automatically reinvested if you want and some even carry check writing privileges.
As mentioned in Different Kinds of Mutual Funds, bond funds are often categorized by as:
• Municipal Bond Funds -uses tax-exempt bonds issued by state and local governments (these funds are non-taxable).
• Corporate Bond Funds -uses the debt obligations of U.S. corporations.
• Mortgage-Backed Securities Funds - uses securities representing residential mortgages.
• U.S. Government Bond Funds -uses U.S. treasury or government securities.
• Short-term Bond Funds –usually means the holdings have up to two years left to maturity. This includes bills, CDs, and
commercial paper.
• Intermediate-term Bond Funds –usually means the holdings have between two years to ten years until maturity. This includes
notes,
• Long-term Bond Funds –usually means the holdings have over ten years left to maturity.
Portfolio Risk Reduction: As mentioned earlier, bonds are often a great way to balance out your stock or stock fund holdings.
Emergency Money: Short-term funds with check writing privileges can provide higher returns than money market funds.
Monthly Income: Bond funds often generate monthly income, which is very attractive to those in retirement. Similar to CDs, bond
funds are great for the risk-averse, but don’t require you to be locked in like CDs.
Index Funds @
Index funds are perfect for the buy-and-hold investor - the kind of person who likes to sit back and let their investment grow, rather
than moving in and out of the market in an effort to beat the market.
What is an Index Fund?
Index funds are mutual funds that attempt to copy the performance of a stock market index. The most common index fund tries to
track the S&P 500 by purchasing all 500 stocks using the same percentages as the index. Other indices that mutual funds try to copy
include: Russell 2000, Wilshire 5000, MCSI-EAFE, Lehman-Brothers Aggregate Bond, and NASDAQ 100.
Index funds can be managed by a much smaller staff than an actively managed fund. Computers do most of the work, so there is no
need to hire an expensive fund manager or research analysts.
Index funds can have expense ratios as low as 0.18%, while actively managed funds can have an expense ratios over 3.0%.
One problem with mutual funds is that they are required by law to pay out capital gains each year ( See Capital Gains or Capital
Punishment). Funds that trade more often don't have the tax advantages that index funds have. Index funds delay capital gains taxes
because they hold on to the stock much longer, which means the money that would have been paid out in taxes can keep producing
investment returns.
Over the long term, the S&P 500 beats the returns of 80% of actively managed funds (and that isn't even taking into account tax
efficiency).
Closed-end Funds
closed-end funds and how they differ from open-end funds.
Strangely enough, closed-end funds are more like stocks or ETFs than what most people consider a mutual fund. Discover the
difference between closed-end funds and open-end funds.
It helps me to think of a closed-end fund as a company. But instead of being a company that makes products, this one buys stocks of
other companies. The closed-end fund "company" still has it's own stock, which is traded on an exchange and trades above or below
its underlying value, or net asset value (NAV), in this case.
There are approximately 800 closed-end funds, valuing around Rs.371 billion in early 2005.
It's a big industry, but much smaller than the open-end, "mutual fund" industry. Closed-end funds are similar to ETFs, but they are
actively managed (ETFs are passive, index-like funds).
Closed-end funds, on the other hand, have a fixed number of shares. Much like a new publicly traded stock, closed-end funds have an
IPO. They also trade according to market demands. Every seller must have a buyer.
• Closed-end funds can sometimes be purchased at a discount, meaning they are trading below their NAV.
• Closed-end funds can sometimes be sold at a premium, meaning they can be sold for more than their NAV. Remember, buy
low, sell high.
• Closed-end funds have access to some investments and strategies that mutual funds shy away from. Examples include buying
illiquid securities or using leverage.
• As mentioned above, the fund shares could be trading at a discount or premium, which could work against you.
• Closed-end funds are plagued with broker trading fees.
• Closed-end funds are generally riskier.
• Closed-end funds are less liquid, meaning they are much harder to sell. Unlike mutual funds, the shares are not redeemable
(meaning the company does not have to buy the shares back)
• Closed-end funds tend to charge between 1-2 percent a year for management fees.
• Closed-end fund price information is not always available.
• As a general rule, open-end funds attract better managment talent because they can grow by attracting new investors over time.
Lifecycle Funds
Lifecycle funds (also known as age-based funds or target-date funds) were first introduced in the 90s, but didn't become popular until
recently. They are commonly found in 401(k) plans as they are geared towards those who are investing for retirement.
Lifecycle Funds Make Life Easier
It's no surprise that lifecycle funds came into existence. Investing properly for retirement can be a pain. Investors have to determine
their asset allocation, rebalance, and adjust their asset allocation over time.
For example, Joe might decide that he wants 80% of his money in stock mutual funds and 20% in bond mutual funds. Then each year
he rebalances his portfolio because the stocks may outperform the bonds one year, causing his allocation to be 82% stocks and 18%
bonds or the opposite could happen in other years.
Then, as he approaches retirement, he might reduce his stock holdings to 20% and increase his bond holdings to 80%. This is a
simplified example as there is more to asset allocation then just choosing between stocks and bonds.
Many investors are attracted to lifecycle funds because they take care of all the asset allocation and rebalancing issues. There are
hundreds of lifecycle funds to choose from - I've even created a list of 127 no-load lifecycle funds you might want to consider. There
are basically two varities of lifecycle funds: target-date and target-risk.
If you did deeper into the asset allocation of lifecycle funds, you might not like what you see. For example, I believe most of these
funds don't invest enough in international funds (many invest 30% or less in international funds), don't put enough into value stocks,
don't put enough in small companies and put too much money in cash. They tend to sell to the path of least resistance, which for many
investors means mostly U.S. and mostly large growth stocks, even though most professionals who study the numbers would say that
you are short-changing yourself.
Other flaws include: retirement year (the nearest fund to your retirement year might be over 5 years off), active investing (active
investing isn't the flaw, but the lack of a choice is - many of the lifecycle funds tend to use active mutual funds rather than index
funds), and narrow fund selection (many lifecycle funds only invest in funds in the fund family, rather than the entire universe of over
10,000 mutual funds).
Summary
For those who aren't willing to spend the time making the appropriate adjustments to their portfolio over time, lifecycle funds might
suit them well. For those who are willing spend more time to create an appropriate retirement portfolio for themselves, lifecycle funds
should be avoided.
Hedge Funds
Definition: A hedge fund operates similar to a mutual fund, but is used & restricted to wealthy individuals and institutions. Hedge
funds do not face the same strict regulations that mutual funds do, which allows them to use more aggressive investing strategies
including higher leverage, more short selling, alternative investments, arbitrage and derivatives. Hedge funds typically carry
performance fees. Due to the more aggressive nature of hedge funds, they are typically riskier than mutual funds and, due to less
regulation, are much more susceptible to fraud
No-Load Funds
• Front-end load (usually class A shares) - you pay the sales fee up front.
• Back-end load or deferred load (usually class B shares) - you pay the sales fee on your way out.
• Constant load fund (usually class C shares) - you pay the sales fees every year and might even have to pay a full load when
you sell.
Some writers will advise people that it is usually best to buy the front-end load if you are going to buy a loaded fund, but I won't do
that because I believe you should never buy a loaded fund.
Starting Two Steps Behind
The no-load mutual fund gets to start on the regular start line (see the race track image on the right). The loaded mutual fund must start
a number of strides back. Assuming both these funds travel at equal speeds, which fund will cross the finish line first?
The answer is obvious - the no-load fund! When you pay a commission for the purchase of your fund, you automatically start off with
a loss. For example, if you start off by investing Rs.10,000/-, but you put it into a loaded fund with a 5% front-end load, you are really
only investing Rs. 9,500/-. What do you get for your Rs.500? Absolutely nothing. A salesperson might try to convince you otherwise,
but I have never - I repeat NEVER - heard one good reason why you should ever purchase a loaded fund. The commission is not going
towards the management of the fund. The commission doesn't buy you special privileges. For every type of loaded fund, there are
many no-load alternatives that perform as well or better.
Use No-load Mutual Funds
By using no-load mutual funds, you avoid paying unnecessary fees. The one exception is 12b-1 fees which you should also avoid.
There are thousands of no load mutual funds available to investors. You can buy them directly from the fund family or through a
broker.
Now that you know that buying loaded funds is bad, I'm here to help you determine if a fund carries a load or not.
Classy Funds
Mutual funds that have a class - have no class. Stay away from mutual funds that have "Class A", "Class B" or "Class C" in their title.
There are other classes you should look out for as well, but these are the most common. As mentioned before, loaded mutual funds try
to charge you in a variety of ways (front-end, back end and constant loads)
Look for anything referring to a load and make sure it says zero or none. Common areas to look for are:
• Actual Fees
• 12b-1 Fees
• Deferred Load
• Front End Load
• Front End Sales Charge
• Deferred Sales Charge
You can ignore expense ratios and management fees for now - those are a separate more complicated topic (all mutual funds carry
some sort of of management fee to run the funds). If any of the above fees or charges say anything other than "none" or "0", then you
are most likely dealing with a loaded mutual fund. Most quoting services will allow you to screen out funds that charge a load. If you
discover you own a loaded mutual fund, you may want to find a no load alternative using this tool: Explode Loads.
Salespeople are very good at steering people in the wrong direction for their own benefit. If you see any of these arguments, you can
be sure that they are lying and trying to sell you a loaded mutual fund:
• "Loaded funds make up for their fees by outperforming no-load mutual funds." This is simply not true.
• "Loaded fund companies provide better customer service." Wrong again.
• "You can't buy these funds without going through us." Translation: "Only people that bought our sales pitch are in this fund."
• "Load funds have better managers - you get what you pay for." Not true: no-load funds have been proven to out produce
loaded funds when the sales charge is taken into account.
• "Don't worry, you don't pay me a dime in commission - it comes from the fund company" Finally a true statement. However,
where do you think the fund company got that money? They took it from you to pay the salesperson.
• "If you hold the fund for five years, you won't pay a load." Many load funds are set up like this. It's a great way to keep you
from selling their poor mutual fund.
• "I'll give you free investment advice, a no-load fund company won't do that for you." I'd rather have no advice than advice
from a biased salesperson
•
What is an ETF? In short, they are similar to index mutual funds, but are traded more like a stock. As their name implies, Exchange
Traded Funds (ETFs) represent a basket of securities that are traded on an exchange. As with all investment products, exchange traded
funds have their share of advantages and disadvantages.
Disadvantages of ETFs
• Commissions - like stocks, trading exchange traded funds will cost you.
• Only institutions and the extremely wealthy can deal directly with the ETF companies (must buy through a broker).
• Unlike mutual funds, ETFs don't necessarily trade at the net asset values of their underlying holdings, meaning an ETF could
potentially trade above or below the value of the underlying portfolios.
• Slippage - as with stocks, there is a bid-ask spread, meaning you might buy the ETF for 15 1/8 but can only sell it for 15
(which is basically a hidden charge).
After comparing the advantages and disadvantages to using ETFs, you might conclude that they are a better deal than mutual funds -
not true. Commissions make ETFs unattractive. If your portfolio is a tax deferred investment, like a 401(k) or an IRA, then you can
avoid paying commissions by investing directly with a mutual fund company. Even in a taxable account, commissions make exchange
traded funds look bad.
Morningstar provides a great example: a lump-sum investment of Rs.10,000 in the iShares S&P 500 Index, with a very low trading
cost of Rs.8, would need to be held for two years to beat out the Vanguard 500 Index's costs. If you are investing less than Rs.10,000
and are paying more than Rs.8 commissions, or you are investing more than once, this example would make ETFs look much worse.
Investing directly with a mutual fund company generally beats out ETFs, especially in these situations:
• Non-taxable accounts
• Small investments - if you invest a certain amount each month or are on some sort of automatic investment plan (ETF
commissions would kill your investment).
• Active traders - although ETFs are primarily geared towards active traders, an active trader might be better off with mutual
funds which don't charge commissions (most mutual funds discourage active trading, but some, like Rydex, Profunds and
Potomac Funds encourage it).
Index Funds Outperform Over the long term, the S&P 500 beats the returns of 80% of actively managed funds (and that isn't even
taking into account tax efficiency).
The Costs
Costs are the biggest problem with mutual funds. These costs eat into your return, and they are the main reason why the majority of
funds end up with sub-par performance.
What's even more disturbing is the way the fund industry hides costs through a layer of financial complexity and jargon. Some critics
of the industry say that mutual fund companies get away with the fees they charge only because the average investor does not
understand what he/she is paying for.
• The cost of hiring the fund manager(s) - Also known as the management fee, this cost is between 0.5% and 1% of assets on average.
While it sounds small, this fee ensures that mutual fund managers remain in the country's top echelon of earners. Think about it for a
second: 1% of 250 million (a small mutual fund) is $2.5 million - fund managers are definitely not going hungry! It's true that paying
managers is a necessary fee, but don't think that a high fee assures superior performance.
• Administrative costs - These include necessities such as postage, record keeping, customer service, cappuccino machines, etc. Some
funds are excellent at minimizing these costs while others (the ones with the cappuccino machines in the office) are not.
• The last part of the ongoing fee (in the United States anyway) is known as the 12B-1 fee. This expense goes toward paying
brokerage commissions and toward advertising and promoting the fund. That's right, if you invest in a fund with a 12B-1 fee, you are
paying for the fund to run commercials and sell itself!
On the whole, expense ratios range from as low as 0.2% (usually for index funds) to as high as 2%. The average equity mutual fund
charges around 1.3%-1.5%. You'll generally pay more for specialty or international funds, which require more expertise from
managers.
Are high fees worth it? You get what you pay for, right?
Wrong.
Just about every study ever done has shown no correlation between high expense ratios and high returns. This is a fact. If you want
more evidence, consider this quote from the Securities and Exchange Commission's website:
"Higher expense funds do not, on average, perform better than lower expense funds."
In case you are still curious, here is how certain loads work:
• Front-end loads - These are the most simple type of load: you pay the fee when you purchase the fund. If you invest $1,000 in a
mutual fund with a 5% front-end load, $50 will pay for the sales charge, and $950 will be invested in the fund.
• Back-end loads (also known as deferred sales charges) - These are a bit more complicated. In such a fund you pay the a back-end
load if you sell a fund within a certain time frame. A typical example is a 6% back-end load that decreases to 0% in the seventh year.
The load is 6% if you sell in the first year, 5% in the second year, etc. If you don't sell the mutual fund until the seventh year, you don't
have to pay the back-end load at all.
A no-load fund sells its shares without a commission or sales charge. Some in the mutual fund industry will tell you that the load is the
fee that pays for the service of a broker choosing the correct fund for you. According to this argument, your returns will be higher
because the professional advice put you into a better fund. There is little to no evidence that shows a correlation between load funds
and superior performance. In fact, when you take the fees into account, the average load fund performs worse than a no-load fund.
(For related reading, see Start Investing With Only Rs.1,000/-.)
NAV is the total asset value (net of expenses) per unit of the fund and is calculated by the AMC at the end of every business day.
The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted and the resultant value divided
by the number of units in the fund is the fund’s NAV.
That being said, more and more funds can be purchased through no-transaction fee programs that offer funds of many companies.
Sometimes referred to as a "fund supermarket," this service lets you consolidate your holdings and record keeping, and it still allows
you to buy funds without sales charges from many different companies. Popular examples are Schwab's OneSource, Vanguard's
FundAccess, and Fidelity's FundsNetwork. Many large brokerages have similar offerings.
Selling a fund is as easy as purchasing one. All mutual funds will redeem (buy back) your shares on any business day. In the United
States, companies must send you the payment within seven days.
Finding Funds
The Mutual Fund Education Alliance™ is the not-for-profit trade association of the no-load mutual fund industry.
Column 3: Fund Name - This column lists the name of the mutual fund. The company that manages the fund is written above in bold
type.
Column 4: Fund Specifics - Different letters and symbols have various meanings. For example, "N" means no load, "F" is front end
load, and "B" means the fund has both front and back-end fees. For other symbols see the legend in the newspaper in which you found
the table.
Column 5: Dollar Change -This states the dollar change in the price of the mutual fund from the previous day's trading.
Column 6: % Change - This states the percentage change in the price of the mutual fund from the previous day's trading.
Column 7: Week High - This is the highest price the fund traded at during the past week.
Column 8: Week Low - This is the lowest price the fund traded at during the past week.
Column 9: Close - The last price at which the fund was traded is shown in this column.
Column 10: Week's Dollar Change - This represents the dollar change in the price of the mutual fund from the previous week.
Perhaps you've noticed all those mutual fund ads that quote their amazingly high one-year rates of return. Your first thought is "wow,
that mutual fund did great!" Well, yes it did great last year, but then you look at
Column 11: Week's % Change - This shows the percentage change in the price of the mutual fund from the previous week.
Perhaps you've noticed all those mutual fund ads that quote their amazingly high one-year rates of return. Your first thought is "wow,
that mutual fund did great!" Well, yes it did great last year, but then you look at the three-year performance, which is lower, and the
five year, which is yet even lower. What's the underlying story here? Let's look at a real example. These figures came from a local
paper:
It gets worse when we look at the five-year performance. We know that in the last year the fund returned 53% and in years 2 and 3 we
are guessing it returned around 3.5%. So what happened in years 4 and 5 to bring the average return down to 11%? Again, by doing
some simple calculations we find that the fund must have lost money, an average of -2.5% each year of those two years: 11% = (53%
+ 3.5% + 3.5% - 2.5% - 2.5%)/5. Now the fund's performance doesn't look so good!
It should be mentioned that, for the sake of simplicity, this example, besides making some big assumptions, doesn't include calculating
compound interest. Still, the point wasn't to be technically accurate but to demonstrate how misleading mutual fund ads can be. A fund
that loses money for a few years can bump the average up significantly with one or two strong years.
• Mutual funds cannot invest more than 10 per cent of the total net assets of a scheme in the short-term deposits of a single bank,
the Securities and Exchange Board of India said on Monday.
• Announcing guidelines for parking of funds in short-term deposits of scheduled commercial banks (SCBs) by mutual funds,
the regulator said that investment cap would also take into account the deposit schemes of the bank's subsidiaries.
• The Sebi has also defined 'short term' for funds' investment purposes as a period not exceeding 91 days.
• Besides, the parking of funds in short-term deposits of all SCBs has been capped at 15 per cent of the net asset value (NAV) of
a scheme, which can be raised to 20 per cent with prior approval of the trustees.
• The parking of funds in short-term deposits of associate and sponsor SCBs together should not exceed 20 per cent of total
deployment by the MF in short-term deposits, it added.
• The Sebi said that these guidelines are aimed at ensuring that funds collected in a scheme are invested as per the investment
objective stated in the offer document of an MF scheme.
• The new guidelines would be applicable to all fresh investments whether in a new scheme or an existing one. In cases of an
existing scheme, where the scheme has already parked funds in short-term deposits, the asset management company have been
given three-months time to conform with the new guidelines.
• The Sebi has also asked the trustees of a fund to ensure that no funds are parked by a scheme in short term deposit of a bank,
which has invested in that particular scheme.
• The Sebi guidelines say that asset management companies (AMCs) shall not be permitted to charge any investment and
advisory fees for parking of funds in short-term deposits of banks in case of liquid and debt-oriented schemes.
• It has also asked the trustees to disclose details of all such funds parked in short-term deposits in half-yearly portfolio
statements under a separate heading and has said that AMCs should also certify the same in its bi-monthly compliance test
report.
• All the short-term deposits by mutual funds should be held in the name of the scheme concerned only, it added.
Compression of Funds
PERIOD: 1 YEAR
Scheme SBI Magnum Equity Fund (G) UTI Equity Fund (G)
SBI Funds Management Private
Mutual Fund Family UTI Asset Mgmt Company Pvt. Ltd.
Limited
AMC Assets (Rs in cr) 30394.73 52549.40
Fund Class Equity Diversified Equity Diversified
Scheme Assets (Rs in cr) 354.32 1762.51
Inception Date Jan-01-1991 May-18-1992
Latest NAV (Rs/Unit) 34.990 39.790
Last dividend (Rs/Unit) 0.000 as on -00-0000 -
Minimum Investment (Rs) 1000 5000
Entry Load 2.25% 2.25%
Exit Load 1.00% 0.00%
Abstract:
The case gives a detailed insight into the 2000-01 Indian stock market
scam.
The case traces the events that led to the scam and also tries to study
the role of the regulatory authorities in the scam.
The case also analyses the steps taken by SEBI after the scam.
Issues:
Contents:
Page No.
The Crash that Shook the Nation 1
The Man who Trigerred the Crash 2
The Factors that Helped the Man 3
The System that Bred These Factors 4
The People that the System Duped 6
Exhibits 7
Keywords:
Detailed, insight,2000-01, Indian stock market scam, events, scam, study, role, regulatory authorities, analyses, steps, SEBI
"All my lifetime's savings are gone. I don't know how to feed my family."
The 176-point1 Sensex2 crash on March 1, 2001 came as a major shock for the Government of India, the stock markets and the
investors alike.
More so, as the Union budget tabled a day earlier had been
acclaimed for its growth initiatives and had prompted a 177-point
increase in the Sensex.
SEBI also decided to inspect the books of several brokers who were
suspected of triggering the crash. Meanwhile, the Reserve Bank of
India (RBI) ordered some banks to furnish data related to their
capital market exposure.
This was after media reports appeared regarding a private sector bank3 having exceeded its prudential norms of capital exposure,
thereby contributing to the stock market volatility.
The panic run on the bourses continued and the Bombay Stock
Exchange (BSE) President Anand Rathi's (Rathi) resignation added
to the downfall. Rathi had to resign following allegations that he had
used some privileged information, which contributed to the crash.
The scam shook the investor's confidence in the overall functioning
of the stock markets. By the end of March 2001, at least eight people
were reported to have committed suicide and hundreds of investors
were driven to the brink of bankruptcy. The scam opened up the
debate over banks funding capital market operations and lending
funds against collateral security. It also raised questions about the
validity of dual control of co-operative banks4...
KP was a chartered accountant by profession and used to manage a family business, NH Securities started by his father.
The rise of ICE (Information, Communications, and Entertainment) stocks all over the world in early 1999 led to a rise of the Indian
stock markets as well.
The dotcom boom6 contributed to the Bull Run7 led by an upward trend in the NASDAQ.8 The companies in which KP held stakes
included Amitabh Bachchan Corporation Limited (ABCL), Mukta Arts, Tips and Pritish Nandy Communications.
He also had stakes in HFCL, Global Telesystems (Global), Zee Telefilms, Crest Communications, and PentaMedia Graphics KP
selected these companies for investment with help from his research team, which listed high growth companies with a small capital
base. According to media reports, KP took advantage of low liquidity in these stocks, which eventually came to be known as the 'K-
10' stocks...
Excerpts
According to market sources, though KP was a successful broker, he did not have the money to buy large stakes.
The small investors who lost their life's savings felt that all parties in the functioning of the market were responsible for the scams.
They opined that the broker-banker-promoter nexus, which was deemed to have the acceptance of the SEBI itself, was the main
reason for the scams in the Indian stock markets.
SEBI's measures were widely criticized as being reactive rather than proactive. The market regulator was blamed for being lax in
handling the issue of unusual price movement and tremendous volatility in certain shares over an 18-month period prior to February
2001.
Analysts also opined that SEBI's market intelligence was very poor...
KP was released on bail in May 2001. The duped investors could do nothing knowing that the legal proceedings would drag on,
perhaps for years.
Observers opined that in spite of the corrective measures that were implemented, the KP scam had set back the Indian economy by
at least a year. Reacting to the scam, all KP had to say was, "I made mistakes."
It was widely believed that more than a fraud, KP was an example of the rot that was within the Indian financial and regulatory
systems.
Analysts commented that if the regulatory authorities had been alert, the huge erosion in values could have been avoided or at least
controlled...
List of recessions in the United Kingdom
GDP
Name Dates Duration Causes Other data
reduction
10.9% 1919 Deflation ~10%
1919-21
1919-21 ~3 years 6.0% 1920 The end of the First World War in 1921, and
depression
8.1% 1921[1] ~14% in 1922.[2]
UK came off
This is a list of (recent) recessions (and depressions) that have affected the economy of the United Kingdom. gold standard
Sept 1931. 3-5%
deflation pa. UK
much less
0.7% 1930 US Depression. Reducing demand for UK exports, also high affected than US.
Great Depression 1930-1 ~2years
5.1% 1931[1] interest rate defending the gold standard.[3] Took 16 quarters
for GDP to
recover to that at
start of
recession[4] after
a 'double dip'.
Took 14 quarters
for GDP to
2 years recover to that at
Mid 1970s 3.9%[2] [5]
1973-5 (6 out of 9 1973 oil crisis start of
recession 3.37%[6]
Qtr) recession[2][4]
after a 'double
dip'[7].
Company
earnings decline
35%.
Unemployment
rises 124% from
5.3% of the
working
population in
Aug 1979 to
Early 1980s ~2 years 5.8%[8] Cause - possibly monetarist government policies to reduce
1980-2 11.9% in 1984[9]
recession (6 - 7 Qtr) 5.9%[7] inflation ? See 1979-1983
Took 13 quarters
for GDP to
recover to that at
start of 1980[2]
Took 18 quarters
for GDP to
recover to that at
start of
recession.[4]
US recessions, Free Banking Era to the Great Depression
Time since Trade &
Business activity [nb industrial
Name Dates[nb 2] Duration previous 3] Characteristics
recession activity[nb 3]
1926–27 recession Oct 1926 – 1 year 2 years −12.2% −10.0% This was an unusual
Nov 1927 1 month 3 months and mild recession,
thought to be caused
largely because
Henry Ford closed
production in his
factories for six
months to switch
from production of
the Model T to the
Model A. Charles P.
Kindleberger says the
period from 1925 to
the start of the Great
Depression is best
thought of as a boom,
and this minor
recession just proof
that the boom "was
not general,
uninterrupted or
extensive".[28]
GDP growth 1923-2009.jpg
English: A crowd forms on Wall Street during the Bankers Panic of 1907.[1] From the New York Public Library’s Digital Gallery, in
the Irma and Paul Milstein Division of United States History, Local History and Genealogy
Gold, two steps ahead: how the richkeep getting richer. New gold rpt Ads by Google
• Story
• Stock Quotes
• Stock Advice
•
Share4
The initial public offering of Hydropower generator Satluj Jal Vidyut Nigam (SJVN) has opened for
subscription. The government is offering 41.5 crore equity shares through SJVN issue. The issue will
close on May 3, 2010. The price band is fixed at Rs 23-26 per share.
Experts as well as brokerage houses were positive on the public issue. Investment Advisor, SP Tulsian
has recommended investors to subscribe to the issue. "Effective cost per share, to retail investor will be
Rs.24.70 per share, at the upper band." Manish Bhatt of Prabhudas Lilladher has also advised
subscribing to the issue.
According to Aditya Birla Money's report, "By considering the factors such as : being one of the
largest hydro power company trading at a relatively lower valuation compared to its peers, consistence
financial performance & growing power demand, the issue price looks attractive. So, we recommend subscribe on the issue for long-
term perspective."
Tags: Satluj Jal Vidyut Nigam IPO, SJVN IPO, SP Tulsian, Prabhudas Lilladher, Manish Bhatt
Motilal Oswal Financial Services said issue looked fairly priced. "At the price band of Rs 23-26/share, SJVNL is valued at 10.2-
11.5x FY12E EPS and 1.2-1.4x FY12E BV. This compares favorably with NHPC (14x FY12E EPS and 1.4x FY12E BV). SJVNL's
reported RoE is superior compared with NHPC in the near term, given (1) return on Naptha Jhakri (1,500MW) project on 50:50 DER
(v/s 70:30 for most of NHPC's projects), (2) CWIP at 8% of FY09 capital employed (v/s 28% of CE for NHPC), and (3) higher
treasury yield," according to its report.
Mehta Equities is positive on company's growth prospects. "In SJVNL IPO Government has left significant upsides on table to the
investor to gain the national asset into the portfolio. We believe companies execution strength in earlier project will be the key element
to look forward for better delivery in upcoming power plants. Hydro projects come with inherited risks like (geological, hydrological
etc) & require a long gestation period which can be a concern for it scheduled execution program. Where as the operating cost of its
projects is considerably lesser than that of the conventional thermal power stations like which SJVNL has. Hence, we are positive on
its growth prospects owing to which we are ‘positive’ on the IPO proceeds and recommend investors to subscribe."
Hem Securities in its report said, "Looking at various financial parameters like net profit margin, ROE, Debt to Equity the company
has posted strong numbers. Also with respect to pricing, issue seems to be at reasonable discount as compare to its peers. Hence we
recommend investor to “subscribe” the issue."
Retail investors will get shares at 5% discount to offer price through IPO.
The offer comprises a net offer to the public of 411,650,000 equity shares and a reservation of 3,350,000 equity shares for purchase by
eligible employees at the offer price. The offer shall constitute 10.03% of the paid-up equity capital of company..
The shareholding stake of President of India, acting through the Ministry of Power, Government of India will be reduced to 64.47%
from 74.50% post issue. The Governor, State of Himachal Pradesh holds 25.50% stake in the company.
The purpose of the offer is to achieve the benefits of listing and the company will not receive any proceeds from the offer.
It is a hydroelectric power generation company originally established as a joint venture between the Government and the state
government of Himachal Pradesh to develop and operate the NJHPS. Based on information published by the CEA, the NJHPS is
currently the largest operational hydroelectric power generation facility in India based on installed capacity, with an aggregate
generation capacity of 1,500 MW, and is located on the Sutlej River in the state of Himachal Pradesh.
Tags: Satluj Jal Vidyut Nigam IPO, SJVN IPO, SP Tulsian, Prabhudas Lilladher, Manish Bhatt
Bear
Name Dates Market Comments References
Duration
Banque Royale
by John Law
stopped
payments of its
note in
The Mississippi Bubble 1720 exchange for
specie and as
result caused
economic
collapse in
France.
South Sea Bubble of 1720 1720 Affected early
European stock
markets, during
early days of
chartered joint
stock
companies
Primarily
caused by the
British East
India
Company,
Bengal Bubble of 1769 1769
whose shares
fell from £276
in December
1768 to £122 in
1784
Panic of 1796–1797
Panic of 1819
Panic of 1837 May 10, 1837
Panic of 1847
Panic of 1857
Black Friday September 24, 1869
Initiated the
Long
Depression in
Panic of 1873 May 9, 1873 the United
States and
much of
Europe
Paris Bourse crash of 1882 January 19, 1882
Panic of 1884
Panic of 1893
Panic of 1896
The market
was spooked
by the
assassination of
President
Panic of 1901 (U.S.) May 17, 1901 3 years
McKinley in
1901, coupled
with a severe
drought later
the same year.
Markets took
fright after U.S.
President
Theodore
Roosevelt had
threatened to
Panic of 1907 1 year rein in the
monopolies
that flourished
in various
industrial
sectors, notably
railways.
Wall Street Crash of 1929 4 years The bursting of
the speculative
• Black Thursday - October 24, bubble in
1929 shares led to
further selling
as people who
had borrowed
money to buy
shares had to
• Black Monday - October 28, cash them in,
1929 when their
loans were
• Black Tuesday - October 29, called in. Also
1929 called the Great
Crash or the
Wall Street
Crash, leading
to the Great
Depression.
This share
price fall was
triggered by an
economic
recession
within the
Great
Recession of 1937–1938 (U.S.) 1 year Depression and
doubts about
the
effectiveness of
Franklin D
Roosevelt's
New Deal
policy.
Dramatic rise
in oil prices,
the miners'
1973–1974 stock market crash (U.K.) 1 year strike and the
downfall of the
Heath
government.
Silver price
Silver Thursday March 27, 1980
crash
Souk Al-Manakh stock market crash
Black Monday October 19, 1987
Failed
leveraged
Friday the 13th mini-crash October 13, 1989 buyout of
United Airlines
causes crash
Share and
property price
bubble bursts
Japanese asset price bubble 13 years and turns into a
long
deflationary
recession.
United
Black Wednesday September 16, 1992
Kingdom
1997 Asian Financial Crisis Investors
deserted
emerging
Asian shares,
including an
overheated
Hong Kong
stock market.
Crashes occur
in Thailand,
Hong Kong,
South Korea,
and elsewhere,
reaching a
climax in the
October 27,
1997 mini-
crash.
1997 mini-crash October 27, 1997
1998 Russian financial crisis August 17, 1998
Collapse of a
technology
bubble, world
economic
effects arising
dot-com bubble March 10, 2000 3 years from the
September 11
attacks and the
stock market
downturn of
2002.
September 11 September 11, 2001
Stock market downturn of 2002
The SSE
Composite
Index of the
Shanghai Stock
Exchange
tumbles 9%
from
(Forbes) (BBC) (Xinhua). (February
Chinese correction February 27, 2007 unexpected
27, 2007)
selloffs, the
largest drop in
10 years,
triggering
major drops in
worldwide
stock markets.
The Dow Jones
Industrial
Average,
Nasdaq
Composite and
October 11, 2007 – June S&P 500 all [1]
United States bear market of 2007–2009
2009 experienced
declines of
greater than
20% from their
peaks in late
2007
Dubai debt standstill November 27, 2009 Dubai requests [2]
a debt
deferment
following its
massive
renovation and
development
projects, as
well as the late
2000s
economic
crisis. The
announcement
causes global
stock markets
to drop.
[3][3][4]
European sovereign debt crisis April 27, 2010 Standard &
Poor's
downgrades
Greece's
sovereign
credit rating to
junk four days
after the
activation of a
€45-billion
EU–IMF
bailout,
triggering the
decline of stock
markets
worldwide and
of the Euro's
value, and
furthering a
European
sovereign debt
crisis.
The Dow Jones
Industrial
Average
suffers its
worst intra-day
[5]
May 6, 2010 Flash Crash May 6, 2010 point loss,
dropping
nearly 1,000
points before
partially
recovering.
Also of note is BATS. They consistently trade in volumes right below NASDAQ and NYSE, ranking in the #3 or #4 position.
Exchange Name Time Zone Opening Time Closing Time Closed for Lunch
Australian Securities Exchange (ASX) AEST (UTC+10, DST) 10:00 16:10 No
Vienna Stock Exchange CET (UTC+1, DST) 8:55 17:35 No
Euronext Amsterdam (AMS) CET (UTC+1, DST) 9:00 17:40 No
Euronext Paris (EPA) CET (UTC+1, DST) 9:00 17:30 No
8:00 (Eurex) 22:00 (Eurex)
Frankfurt Stock Exchange (FSX) / Xetra / Eurex CET (UTC+1, DST) 9:00 (floor) 20:00 (floor) No
9:00 (Xetra) 17:30 (Xetra)
Spanish Stock Exchange (BME) CET (UTC+1, DST) 9:00 17:30 No
Helsinki Stock Exchange (OMX) EET (UTC+2, DST) 10:00 18:30 No
Hong Kong Stock Exchange (HKEX) HKT (UTC+8) 09:30 16:00 12:00 to 13:30
Bombay Stock Exchange (BSE) IST (UTC+5.5) 9:00 15:30 No
National Stock Exchange of India (NSE) IST (UTC+5.5) 9:00 15:30 No
Johannesburg Securities Exchange (JSE) CAT (UTC+2) 9:00 17:00 No
London Stock Exchange (LSE) GMT (UTC+0, DST) 8:00 16:30 No
Irish Stock Exchange (ISE) GMT (UTC+0, DST) 8:00 16:30 No
NASDAQ ET (UTC-5, DST) 9:30 16:00 No
New York Stock Exchange (NYSE) ET (UTC-5, DST) 9:30 16:00 No
New Zealand Stock Market (NZSX) NZST (UTC+12, DST) 10:00 17:00 No
Nigerian Stock Exchange (NSE) GMT (UTC+0, DST) 10:00 16:00 No
Oslo Stock Exchange (OSE) CET (UTC+1, DST) 9:00 17:30 No
Shanghai Stock Exchange (SSE) CSE (UTC+8) 9:30 15:00 11:30 to 13:00
Shenzhen Stock Exchange (SZSE) CSE (UTC+8) 9:30 15:00 11:30 to 13:00
Singapore Exchange (SGX) SGT (UTC+8) 9:00 17:00 12:30 to 14:00
Stockholm Stock Exchange (OMX) (CET+1, UTC+1) 9:00 17:30 No
Swiss Exchange (SIX) CET (UTC+1, DST) 9:00 17:30 No
Berne eXchange (BX) CET (UTC+1, DST) 9:00 16:30 No
Amman Stock Exchange (ASE) (CET+1, UTC+2) 10:00 12:00 No
Bolsa de Valores de São Paulo (Bovespa) BRST (UTC-2, GMT) 11:00 18:00 No
Taiwan Stock Exchange (TSE) CST (UTC+8) 9:00 13:30 No
Toronto Stock Exchange (TSX) ET (UTC-5, DST) 9:30 16:00 No
Tokyo Stock Exchange (TSE) JST (UTC+9) 9:00 15:00 11:00 to 12:30
Copenhagen Stock Exchange (CSE) CST (UTC+1, DST) 9:00 17:00 No
Milan Stock Exchange (MTA) CET (UTC+1, DST) 9:00 17:25 No
The London Stock Exchange.