Professional Documents
Culture Documents
IN INDIA
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6.
7.
Indian capital market is the market for long term loanable funds as
distinct from money market which deals in short-term funds.
It
Thus,
like all the markets the capital market is also composed of those who
demand funds (borrowers) and those who supply funds (lenders). An ideal
capital market at tempts to provide adequate capital at reasonable rate of
return for any business, or industrial proposition which offers a prospective
The
The
secondary market on the other hand is the market for old and already
issued securities.
Money
Unlike
An
Investment
In
theory, investment bankers are experts in their field who have their finger
on the pulse of the current investing climate, so businesses and institutions
turn to investment banks for advice on how best to plan their development, as
investment bankers can tailor their recommendations to the present state of
economic affairs.
This
makes things much easier for the company itself, as they effectively
contract out the IPO to the investment bank. Moreover, the investment bank
stands to make a profit, as it will generally price its shares at a markup from the
price it initially paid. Yet, in doing so the investment bank also takes on a
substantial amount of risk.
The
investment bank can lose money on the deal if it turns out they have
overvalued the stock, as in this case they will often have to sell the stock for less
than they initially paid for it.
4) Research
Larger
major firms have a trading department that can execute stock and bond
transactions on behalf of their clients. In the past, some banks have also engaged in
proprietary trading, where they essentially gamble their own money on securities.
6) Asset Management
The likes of J.P. Morgan and Goldman Sachs manage huge portfolios for pension
funds, foundations and insurance companies through their asset management
department. Their experts help select the right mix of stocks, debt instruments, real
estate trusts and other investment vehicles to achieve their clients unique goals.
7) Wealth Management
Some of the same banks that perform investment banking functions for Fortune 500
businesses also cater to everyday investors. Through a team of financial advisors,
they help individuals and families save for retirement and other long-term needs.
8) Securitized Products
These days, companies often pool financial assets from mortgages to credit card
receivables and sell them off to investors as a fixed-income products.
STOCK EXCHANGE
A
According
to the Securities
Contracts(Regulation)Act ,1956,which is the
main law governing stock exchanges in
India, stock exchange means 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.
In
stock exchanges , continuous trading in securities takes place and the trade
occurs at different prices. As a result even on a single day, prices of securities may
fluctuate. On any trading day, four prices can be easily identified, namely, opening
price, closing price, the highest price of the day and the lowest price of the day.
Ordinarily
Two
Bombay
Stock Exchange
National
Stock Exchange
Most
*market
As
Free
Free
float market capitalization is the total worth of all shares of a company which
are available for trading in the open market. These shares are called free float
shares and are available for trading by anyone.
USEFULNESS
Stock
market indices are useful in understanding the level of prices and the trend
of price movements of the market. A stock market index is created by selecting a
group of stocks that are capable of representing the whole market or a specified
sector or segment of the market. The change in the prices of this basket of
securities is measured with reference to a base period.
Stock
market indices are the barometer of the stock market. BSE SENSEX,NSE-50
etc are some of the market indices.
Their
usefulness:
1.
2.
The investor can use the indices to allocate the funds rationally among the
stocks.
3.
4.
Indices at BSE
BSE
30or simply theSENSEX ("Sensitivity Index"), is afree-float marketweightedstock market indexof 30 well-established and financially sound companies
listed onBombay Stock Exchange.
The
30 component companies which are some of the largest and most actively
traded stocks, are representative of variousindustrial sectorsof the Indian economy.
Published
since 1 January 1986, the S&P BSE SENSEX is regarded as the pulse of the
domestic stock markets in India. The base value of the S&P BSE SENSEX is taken
as100on 1 April 1979, and its base year as 197879.
On
Presently
Infosys,
ICICI Bank, Dr. Reddys Lab, SBI, CIPLA, Zee Telefilms, Nestle India, RIL, HCL
Tech., Bajaj Auto, BHEL, Castrol, BSES, Colgate Palmolive, Hindalco, Grasim, Glaxo,
Hero Honda, Gujarat Ambuja Cements, HLL, HPCL, ITC, L&T, MTNL, Ranbaxy, TISCO,
TELCO and Satyam.
Other
BSE indices:
BSE-100,
BSE-200, BSE -500, BSE IPO index, BSE PSU index, BSE
small-cap index, BSE mid-cap index etc.
BSE
introduced the new index series called 'BSE MID Cap' index
and BSE Small Cap' index to track the performance of companies
with relatively smaller market capitalization.
BSE-500
NSE
The
NSE
The
NIFTY
NIFTY
consists of 50 companiesfrom 24
different sectors.NIFTYstands forNational
Stock Exchanges Fifty.
Indices at NSE
'Standard And Poor's CNX Nifty (NIFTY)
A stock index endorsed by Standard & Poor's and composed of 50 of the largest and most
liquid stocks found on the National Stock Exchange (NSE) of India. It is commonly used to
represent the market for benchmarking Indian investments. Similar to other major stock
indexes like the S&P 500, companies must meet certain requirements in terms of market
capitalization and liquidity before they can be considered for inclusion in the index.
S&P CNX 500
The S&P CNX 500 represents about 96% of total market capitalization and about 93% of
the total turnover on the National Stock Exchange of India (NSE). The S&P CNX 500
companies are disaggregated into 72 industry indices.
S&P CNX Defty
It is S&P CNX Nifty, measured in dollars. It was developed to provide a benchmark of
Indian stocks to international investors, providing them with an instrument for measuring
returns on their equity investment in dollar terms. If the S&P CNX Nifty rises by 2% it
means that the Indian stock market rose by 2%, measured in rupees. If the S&P CNX
Defty rises by 2%, it means that the Indian stock market rose by 2%, measured in dollars.
The
NSE CNX Midcap Index represents about 77% of the total market capitalization of the
Mid-Cap Universe and about 75% of the total traded value of the Mid-Cap Universe
(Mid-Cap Universe is defined as stocks having average six months market
capitalization between Rs.75 crores and Rs.750 crores).
Nifty Midcap 50
The medium capitalized segment of the stock market is being increasingly perceived
as an attractive investment segment with high growth potential. The primary objective
of this index is to capture the movement of the midcap segment of the market. It can
also be used for index based derivatives trading.
CNX 100
CNX 100 index would comprise of the securities, which are constituents of S&P CNX
Nifty, and CNX Nifty Junior. In other words this index is a combination of the S&P CNX
Nifty and CNX Nifty Junior. Any changes i.e. inclusion and exclusion of securities in S&P
CNX Nifty and CNX Nifty Junior would be automatically mirrored in this new index.
NASDAQ
1.
NASDAQis anacronymofNationalAssociation
ofSecuritiesDealersAutomatedQuotations. NASDAQ was founded in 1971 by
theNational Association of Securities Dealers(NASD), whichdivesteditself of NASDAQ
in a series of sales in 2000 and 2001. NASDAQ is owned and operated byNasdaq, Inc.,
the stocks of which were listed on its own stock exchange.
2.
When the NASDAQ began trading on February 8, 1971, it was the world's first electronic
stock market. At first, it was merely aquotation systemand did not provide a way to
perform electronic trades.
3.
The NASDAQ helped lower the spread (the difference between the bid price and the ask
price of the stock) but was unpopular among brokerages which made much of their
money on the spread.
4.
5.
Over the years, NASDAQ became more of a stock market by adding trade and
volume reporting and automated trading systems. NASDAQ was also the first stock
market in the United States to start trading online, highlighting NASDAQ-traded
companies (usually in technology) and closing with the declaration that NASDAQ is
"the stock market for the next hundred years." Its main index is theNASDAQ
Composite, which has been published since its inception.
6.
In 1992, NASDAQ joined with theLondon Stock Exchangeto form the first
intercontinental linkage ofsecurities markets. The National Association of Securities
Dealers spun off NASDAQ in 2000 to form apublic company, the NASDAQ Stock
Market, Inc.
7.
In 2006, the status of NASDAQ was changed from a stock market to a licensed
national securities exchange.
8.
To qualify for listing on the exchange, a company must be registered with theUnited
States Securities and Exchange Commission(SEC), must have at least threemarket
makers(financial firms that act as brokers or dealers for specific securities) and must
meet minimum requirements for assets, capital, public shares, and shareholders.
The
The
index includes all Nasdaq-listed stocks that are not derivatives, preferred shares,
funds,exchange-traded funds(ETFs) ordebenturesecurities.
Theindexfirst
TheNasdaq
exchange.
Depositories
A
Just
Investors
Dematerialization
Functions of Depository
One
It
helps in reducing the paper work involved in trade, expedites the transfer
and reduces the risk associated with physical shares such as damaged, theft,
interceptions and subsequent misuse of the certificates or fake securities.
With
all the details concerning your personal details, scrips as well the number
of units of each scrip held by the individual, several corporate actions or
transactions such as the issue of bonus shares or annual dividend are executed
via depositories acting as an important intermediary in the entire process.
Depositories
Facilitates
Nomination
Any
Facilitates
Rematerialisation,
certificates.
Facilitate
Electronic
Receipt
the first and largest depository in India, established in August 1996 and
promoted by institutions of national stature responsible for economic development of
the country has since established a national infrastructure of international standards
that handles most of the securities held and settled in dematerialized form in the
Indian capital market.
Using
NSDL
NSDL
Each
Axis
Bank, Citibank, Deutsche Bank, HSBC, State Bank of India (SBI), HDFC
Bank, Union Bank of India, Standard Chartered Bank, Dena Bank, Canara
Bank, Oriental Bank of Commerce.
Why NSDL?
Bad Deliveries, No More
Quick Turnarounds and Faster Settlements
NSDL
The
The
NSDL CAS statement applies, provided you are the primary/sole holder
of the concerned single/jointly owned investment account. NSDL CAS is a
popular tool as it allows the investor an easy, reliable and fast option to
keep track of his/her investment portfolio and make informed financial
decisions in the future.
It
It
Central
Depository Services India Limited was founded in 1999 and is based in Mumbai, India.
It operates as a subsidiary of BSE Ltd.
The
balances in the investors account recorded and maintained with CDSL can be obtained
through the DP. The DP is required to provide the investor, at regular intervals, a statement of
account which gives the details of the securities holdings and transactions. The depository
system has effectively eliminated paper-based certificates which were prone to be fake,
forged, counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous
transfer of securities.
CDSL
was promoted by BSE Ltd. jointly with leading banks such as State Bank of India, Bank
of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank and Union Bank of India.
Online trading
Investing
This
type of trading and investing has become the norm for individual
investors andtraderssince late 1990s with many brokers offering services
via a wide variety ofonline trading platforms.
Prior
2.
You will have more control and flexibility over the types of transaction you choose to conduct
3.
The commission costs for trading are significantly less money than using the services of a
professional broker
4.
5.
Online brokerage firms tend to offer their clients a slew of tools included real-time Level 2 stock
quotes, news, financial tools and graphs to help you do research
6.
Someonline brokerages will provide their clients to free access to high quality research reports
created by Standard and Poor and other predominate financial players
7.
Online account investors have access to their accounts 24/7 although market hours (trading
hours) are from 9:30am to 4pm
8.
As long as you have access to a computer and the internet, you can take steps to manage your
finances wherever you may be
Disadvantages:
First
time investors may get intimidates by all the technology and may
temporarily forget that they are actually using real money
There
Novices
not familiar with the ins and outs of the brokerage software can
make costly mistakes.
This
Small
cap companies have smaller revenue and client bases, and usually
include the start-ups or companies in the early stage of development.
Many
Hence
Mostfinancial
advisorssuggest that the key to minimizing risk is a welldiversified portfolio; investors should have a mix of low-, mid- and large-cap
stocks. However, some investors see mid-cap stocks as a way to diversify
risk as well.
Small-cap
stocks offer the most growth potential, but that growth comes
with the most risk. Large-cap stocks offer the most stability, but they offer
lower growth prospects. Mid-cap stocks represent a hybrid of the two,
providing a balance of growth and stability.
One
Large
companies such as Infosys, TCS, and Wipro are classified as large cap
stocks. These companies have been around in the industry long enough and
have firmly established themselves as leading players.
Their
Penny stocks
A
penny stock typically trades at a relatively low price and has a small
market capitalization, usually outside of the major market exchanges.
These
Penny
stocks are more suitable for investors with high tolerance for risk.
Examples: