STOCK EXCHANGE

WHAT IS STOCK EXCHANGE

Stock exchange is that place where trading of shares is done in terms of sale and purchase.

SECURITIES CONTRACT(REGULATIONS )ACT,1965

Any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities.
Shares,stocks,bonds,debentures, stock.

Function of stock exchange

Maintains active trading
Price may vary from transaction to transaction Increase liquidity and marketability of the shares traded

Fixation of the prices

Prices are determined by the transaction

CONTD
Ensure safe and fair dealing
Rules and regulation transparency

Aids in financing the industry

Negotiability and transferability of the securities help companies to raise funds

CONTD
Dissemination of the information
Various publication

Performance inducers
Price reflect the performance of the company

Self regulation
Monitor the integrity of the members , companies and clients Settlement of disputes

STOCK EXCHANGE -INDIA

There are 23 stock exchanges in the India. Mumbai's (earlier known as Bombay), Bombay Stock Exchange is the largest, with over 6,000 stocks listed.

The BSE accounts for over two thirds of the total trading volume in the country. Established in 1875, the exchange is also the oldest in Asia.

Among the twenty-two Stock Exchanges recognized by the Government of India under the Securities Contracts (Regulation) Act, 1956, it was the first one to be recognized and it is the only one that had the privilege of getting permanent recognition ab-initio.

NAME OF INDIAN STOCK

EXCHANGES:
1.Bombay stock exchange 2.National stock exchange(Mumbai) 3.Banglore stock exchange 4.Utter Pradesh stock exchange(kanpur) 5.Magadh stock exchange(Patna) 6.Ahmedabad stock exchange 7.vadodara stock exchange(Baroda) 8.Bhubaneswar stock exchange 9.Calcutta stock exchange(kolkata) 10.Madras stock exchange

Cont.
11.Cochin stock exchange 12.coimbatore stock exchange 13.Gauhati stock exchange 14.Hydrabad stock exchange 15.Madhya Pradesh stock exchange(indore) 16.Jaipur stock exchange 17.Ludhina stock exchange 18.Mangalore stock exchange 19.Pune stock exchange 20.saurashtrakutch stock exchange

Cont.
Bombay stock exchange : it has 30 companies scripted. Name: 1.ACC 2.BAJAJ 3.AIRTEL 4.BHEI 5.CIPLA 6.DLF 7.GRASIM 8.GUJRAT AMBUJA 9.HDFC 10.HDFC BANK

CONT
11.HERO HONDA 12.HINDALCO 13.HUL 14.ICICI BANK 15.INFICYS 16.ITC 17.L&T 18.MARUTI 19.NTPC 20.ONGC

CONT
21.RANBAXY 22.RELIANCE COMMUNICATION 23.RELIANCE ENERGY 24.RIL 25.SATYAM 26.SBI 27.TCS 28.TATA MOTERS 29.TATA STEEL 30.WIPRO

BSE CHART

NSE
The National Stock Exchange (NSE), located in Bombay, is India's first debt market. It was set up in 1993 to encourage stock exchange reform through system modernization and competition. It opened for trading in mid-1994. It was recently accorded recognition as a stock exchange by the Department of Company Affairs. The instruments traded are, treasury bills, government security and bonds issued by public sector companies

Contd..
NSE operates on the National Exchange For Automated Trading(NEAT) system Adopts the principle of order driven market. As opposed to quote driven market. Operates in 2 different segments:
Debt market Capital market

OBJECTIVES
Establishing nationwide trading facilities for all types of securities . Ensuring equal access to investors all over the country through an appropriate telecommunication network. Providing fair , efficient & transparent securities market using electronic trading system. Meeting international benchmark and standards .

Regulatory framework
Capital Issue (Control) Act ,1947 Securities Contract (Regulation) Act, 1956 SEBI Act, 1992 Depositories Act, 1996 Companies Act, 1956

SECURITIES CONTRACT (REGULATION) ACT, 1956

It provided for control on :
all aspect of securities trading and running of stock exchange to prevent undesirable transaction

It gives central government regulatory jurisdiction over;

Stock exchanges : recognition and supervision Contracts in securities Listing of securities

Contd
This act also empowers the Central government to call for periodical returns and make direct enquiries. to direct rules to be made and powers of SEBI to make or amend bye-laws of recognized stock exchanges have been laid down. to supersede governing body of recognized stock exchange and vests with the Central Government the power to suspend business of recognized stock exchanges

Stock exchanges : recognition and supervision

processing application of recognition of stock exchanges grant of recognition to stock exchange, withdrawal of recognition to stock exchange

BENEFITS OF STOCK EXCHANGE

FROM THE POINT OF VIEW OF COMMUNITY: 1.It assist the economies development by providing a body of interested investors. 2.it uploads the position of superior enterprises and assist them in raising further funds. 3.It encourages capital formation 4.Government can undertake projects of national importance and social value raising funds through the sale of its securities on the stock exchange. 5.It is the stock exchanges that central bank of a country can control credit by undertaking open market operations (purchase and sale of securities)

FROM THE COMPANY POINT OF VIEW

1.A company whose shares quoted on stock exchange they enjoy better reputation and credit. 2.The market for the shares of such a company is naturally widened. 3.The market price of securities is likely to be higher in relation to its earnings,dividends and property values.This raises the bargaining power of the company in the event of a takeover,merger or amalgamation.

FROM THE INVESTORS POINT OF VIEW

1.Liquidity of the investment is increased 2.The securities dealt on a stock exchange are good collateral security for loans. 3.The stock exchange safeguards interests of investors through strict enforcement of rules and regulations. 4.The present net worth of investments can be easily known by the daily quotations. 5.His risk is considerably less when he holds or purchases listed securities.

CAUSES OF PRICE FLUCTUATION

1.DEMAND AND SUPPLY 2.BANK RATE 3.SPECULATIVE PRESSURE 4.ACTIONS OF UNDERWRITERS AND OTHER FINANCIAL INSTITUTIONS 5.CHANGE IN COMPANYS BOARD OF DIRECTORS 6.FINANCIAL POSITION OF THE COMPANY

CONT..
7.TRADE CYCLE 8.POLITICAL FACTORS 9.SYMPATHETIC FLUCTUATIONS 10.OTHER FACTORS:
A.EXPECTED MONSOON B.PERSONAL HEALTH OF HEAD OF GOVERNMENT OR CHAIRMAN OF THE COMPANY C.OIL PRICES IN THE INTERNATIONAL MARKET.

CONT.
D.CHANGES IN EXCHANGE RATE E.BORDER TENSION F.STOCK BROKERS SCAM LIKE HARSHAD MEHTA AND KETHAN PAREKH G.STRIKES AND LOCK-OUT OF THE COMPANY. H.NEW BUDGET PROPOSALS I.LOBERLIZATION AND PRIVATIZATION OF THE COMPANY.

SEBI
It was constituted and made a statutory body by SEBI act 1992.With the coming into effect of SEBI, some of the powers and function exercised by the central government,in respect of regulation of stock exchanges were transferred to the SEBI.

OBJECTIVES OF SEBI
1.Registring and regulating the working of stock brokers,sub-brokers,share transfer agents, underwriters who may be associated securities market in any manner. 2.Registering and regulating the working of collective investment scheme including mutual funds. 3.Prohibiting insider trading in securities. 4.Regulating substantial acquisition of shares and takeovers of companies.

Cont
5.Calling for information from, undertaking inspection, conducting inquiries and audits of stock exchanges and intermediaries and self regulatory organizations in the securities market. 6.Performing such function and exercising such powers under the provisions of the Capital Issues(control) Act 1947 And SCRA 1956,as may be delegated to it by the central government. 7.Performing such other functions as may be prescribed.

HOW RATING IS GIVEN TO THE COMPANY?

Basically rating is given after see the company 'image,management quality,assets quality,auditors quality,accounting accuracy.Rating is not fixed, it may be change. The rating grades are: AAA: HIGHEST SAFTY AA: HIGH SAFTY A: ADEQUATE SAFTY BBB: MODERATE SAFTY BB: IN ADEQUATE SAFTY BC&D: HIGH RISK AND DEFAULT

CREDIT RATING AGENCY IN INDIA

1.CRISIL

2.ICRA
3.CARE 4.DPCR