STOCK EXCHANGES IN INDIA

By
KARTHIKEYAN.K
 Bombay Stock Exchange

BOMBAY STOCK
EXCHANGE

Type Stock Exchange

Location Mumbai, India

18°55′47″N
Coordinates 72°50′01″E18.929681°N
72.833589°E

Founded 1875

Bombay Stock Exchange

Owner
Limited

Key people Madhu Kannan (CEO & MD)

Currency Indian rupee

No. of listings 4,996

MarketCap US$1.39 trillion (August 2010)[1]

Volume US$980 billion (2006)

Indexes BSE Sensex

Website www.bseindia.com
Bombay Stock Exchange
The Bombay Stock Exchange (BSE) (Hindi : बबई शेअर बाजार Bombay Śhare Bāzaār)
(formerly, The Stock Exchange, Bombay) is the oldest stock exchange in Asia and largest number
of listed companies in the world, with 4990 listed as of August 2010.[2][3] It is located at Dalal
Street, Mumbai, India. On Aug, 2010, the equity market capitalization of the companies listed on
the BSE was US$1.39 trillion, making it the 4th largest stock exchange in Asia and the 11th
largest in the world.[4]

With over 4,990 Indian companies listed & over 7700 scrips on the stock exchange,[5] it has a
significant trading volume. The BSE SENSEX (SENSitive indEX), also called the "BSE 30", is
a widely used market index in India and Asia. Though many other exchanges exist, BSE and the
National Stock Exchange of India account for most of the trading in shares in India.

Contents
[hide]

• 1 Hours of operation
• 2 History
• 3 Timeline
• 4 BSE indices
• 5 Sensex correlation with emerging market indices
• 6 Awards
• 7 See also
• 8 References

• 9 External links

[edit] Hours of operation

Session Timing
Beginning of the Day Session 8:00 - 9:00
Trading Session 9:00 - 15:30
Position Transfer Session 15:30 - 15:50
Closing Session 15:50 - 16:05
Option Exercise Session 16:05 - 16:35
Margin Session 16:35 - 16:50
Query Session 16:50 - 17:35
End of Day Session 17:30
The hours of operation for the BSE quoted above are stated in terms of the local time (i.e. GMT
+5:30) in Mumbai (Bombay), India. BSE's normal trading sessions are on all days of the week
except Saturdays, Sundays and holidays declared by the Exchange in advance.[6]

[edit] History

The Phiroze Jeejeebhoy Towers house the Bombay Stock Exchange since 1980.

The Bombay Stock Exchange is the oldest exchange in Asia. It traces its history to the 1850s,
when 4 Gujarati and 1 Parsi stockbroker would gather under banyan trees in front of Mumbai's
Town Hall. The location of these meetings changed many times, as the number of brokers
constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an
official organization known as 'The Native Share & Stock Brokers Association'. In 1956, the
BSE became the first stock exchange to be recognized by the Indian Government under the
Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE Sensex in
1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE
used this index to open its derivatives market, trading Sensex futures contracts. The development
of Sensex options along with equity derivatives followed in 2001 and 2002, expanding the BSE's
trading platform. Historically an open outcry floor trading exchange, the Bombay Stock
Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days
to make this transition. This automated, screen-based trading platform called BSE On-line
trading (BOLT) currently has a capacity of 80 lakh orders per day. The BSE has also introduced
the world's first centralized exchange-based internet trading system, BSEWEBx.co.in to enable
investors anywhere in the world to trade on the BSE platform.[7]. The BSE is currently housed in
Phiroze Jeejeebhoy Towers at Dalal Street, Fort area.

[edit] Timeline
Following is the timeline on the rise and rise of the Sensex through Indian stock market history.

1830's Business on corporate stocks and shares in Bank and Cotton presses started in Bombay.
1860-1865 Cotton price bubble as a result of the American Civil War

1870 - 90's Sharp increase in share prices of jute industries followed by a boom in tea stocks and
coal

1978-79 Base year of Sensex, defined to be 100.

1986 Sensex first compiled[8] using a market Capitalization-Weighted methodology for 30

component stocks representing well-established companies across key sectors.

30 October 2006 The Sensex on October 30, 2006 crossed the magical figure of 13,000 and
closed at 13,024.26 points, up 117.45 points or 0.9%. It took 135 days for the Sensex to move
from 12,000 to 13,000 and 123 days to move from 12,500 to 13,000.

5 December 2006 The Sensex on December 5, 2006 crossed the 14,000-mark to touch 14,028
points. It took 36 days for the Sensex to move from 13,000 to the 14,000 mark.

6 July 2007 The Sensex on July 6, 2007 crossed the magical figure of 15,000 to touch 15,005
points in afternoon trade. It took seven months for the Sensex to move from 14,000 to 15,000
points.

19 September 2007 The Sensex scaled yet another milestone during early morning trade on
September 19, 2007. Within minutes after trading began, the Sensex crossed 16,000, rising by
450 points from the previous close. The 30-share Bombay Stock Exchange's sensitive index took
53 days to reach 16,000 from 15,000. Nifty also touched a new high at 4659, up 113 points.

The Sensex finally ended with a gain of 654 points at 16,323. The NSE Nifty gained 186 points
to close at 4,732.

26 September 2007 The Sensex scaled yet another height during early morning trade on
September 26, 2007. Within minutes after trading began, the Sensex crossed the 17,000-mark .
Some profit taking towards the end, saw the index slip into red to 16,887 - down 187 points from
the day's high. The Sensex ended with a gain of 22 points at 16,921.

9 October 2007 The BSE Sensex crossed the 18,000-mark on October 9, 2007. It took just 8
days to cross 18,000 points from the 17,000 mark. The index zoomed to a new all-time intra-day
high of 18,327. It finally gained 789 points to close at an all-time high of 18,280. The market set
several new records including the biggest single day gain of 789 points at close, as well as the
largest intra-day gains of 993 points in absolute term backed by frenzied buying after the news of
the UPA and Left meeting on October 22 put an end to the worries of an impending election.

15 October 2007 The Sensex crossed the 19,000-mark backed by revival of funds-based buying
in blue chip stocks in metal, capital goods and refinery sectors. The index gained the last 1,000
points in just four trading days. The index touched a fresh all-time intra-day high of 19,096, and
finally ended with a smart gain of 640 points at 19,059.The Nifty gained 242 points to close at
5,670.
29 October 2007 The Sensex crossed the 20,000 mark on the back of aggressive buying by
funds ahead of the US Federal Reserve meeting. The index took only 10 trading days to gain
1,000 points after the index crossed the 19,000-mark on October 15. The major drivers of today's
rally were index heavyweights Larsen and Toubro, Reliance Industries, ICICI Bank, HDFC
Bank and SBI among others. The 30-share index spurted in the last five minutes of trade to fly-
past the crucial level and scaled a new intra-day peak at 20,024.87 points before ending at its
fresh closing high of 19,977.67, a gain of 734.50 points. The NSE Nifty rose to a record high
5,922.50 points before ending at 5,905.90, showing a hefty gain of 203.60 points.

8 January 2008 The sensex peaks. It crossed the 21,000 mark in intra-day trading after 49
trading sessions. This was backed by high market confidence of increased FII investment and
strong corporate results for the third quarter. However, it later fell back due to profit booking.

13 June 2008 The sensex closed below 15,200 mark, Indian market suffer with major downfall
from January 21, 2008

25 June 2008 The sensex touched an intra day low of 13,731 during the early trades, then pulled
back and ended up at 14,220 amidst a negative sentiment generated on the Reserve Bank of India
hiking CRR by 50 bps. FII outflow continued in this week.

2 July 2008 The sensex hit an intra day low of 12,822.70 on July 2, 2008. This is the lowest that
it has ever been in the past year. Six months ago, on January 10, 2008, the market had hit an all
time high of 21206.70. This is a bad time for the Indian markets, although Reliance and Infosys
continue to lead the way with mostly positive results. Bloomberg lists them as the top two
gainers for the Sensex, closely followed by ICICI Bank and ITC Ltd.

6 October 2008 The sensex closed at 11801.70 hitting the lowest in the past 2 years.

10 October 2008 The Sensex today closed at 10527,800.51 points down from the previous day
having seen an intraday fall of as large as 1063 points. Thus, this week turned out to be the week
with largest percentage fall in the SenseX

18 May 2009 After the result of 15th Indian general election Sensex gained 21000.79 points
from the previous close of 12173.42, a record one-day gain. In the opening trade itself the
Sensex evinced a 15% gain over the previous close which led to a two-hour suspension in
trading. After trading resumed, the Sensex surged again, leading to a full day suspension of
trading.

[edit] BSE indices

Bombay Stock Exchange

For the premier stock exchange that pioneered the securities transaction business in India, over a
century of experience is a proud achievement. A lot has changed since 1875 when 318 persons
by paying a then princely amount of Re. 1, became members of what today is called Bombay
Stock Exchange Limited (BSE).

Over the decades, the stock market in the country has passed through good and bad periods. The
journey in the 20th century has not been an easy one. Till the decade of eighties, there was no
measure or scale that could precisely measure the various ups and downs in the Indian stock
market. BSE, in 1986, came out with a Stock Index-SENSEX- that subsequently became the
barometer of the Indian stock market.

The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of BSE
National Index (Base: 1983-84 = 100). It comprised 100 stocks listed at five major stock
exchanges in India - Mumbai, Calcutta, Delhi, Ahmedabad and Madras. The BSE National Index
was renamed BSE-100 Index from October 14, 1996 and since then, it is being calculated taking
into consideration only the prices of stocks listed at BSE. BSE launched the dollar-linked version
of BSE-100 index on May 22, 2006.

With a view to provide a better representation of the increasing number of listed companies,
larger market capitalization and the new industry sectors, BSE launched on 27th May, 1994 two
new index series viz., the 'BSE-200' and the 'DOLLEX-200'. Since then, BSE has come a long
way in attuning itself to the varied needs of investors and market participants. In order to fulfill
the need for still broader, segment-specific and sector-specific indices, BSE has continuously
been increasing the range of its indices. BSE-500 Index and 5 sectoral indices were launched in
1999. In 2001, BSE launched BSE-PSU Index, DOLLEX-30 and the country's first free-float
based index - the BSE TECk Index. Over the years, BSE shifted all its indices to the free-float
methodology (except BSE-PSU index).
BSE disseminates information on the Price-Earnings Ratio, the Price to Book Value Ratio and
the Dividend Yield Percentage on day-to-day basis of all its major indices.

The values of all BSE indices are updated on real time basis during market hours and displayed
through the BOLT system, BSE website and news wire agencies.

All BSE Indices are reviewed periodically by the BSE Index Committee. This Committee which
comprises eminent independent finance professionals frames the broad policy guidelines for the
development and maintenance of all BSE indices. The BSE Index Cell carries out the day-to-day
maintenance of all indices and conducts research on development of new indices.[9]

[edit] Sensex correlation with emerging market indices

Sensex is significantly correlated with the stock indices of other emerging markets[10][11]

[edit] Awards
• The World Council of Corporate Governance has awarded the Golden Peacock Global
CSR Award for BSE's initiatives in Corporate Social Responsibility (CSR).
• The Annual Reports and Accounts of BSE for the year ended March 31, 2006 and March
31 2007 have been awarded the ICAI awards for excellence in financial reporting.
 NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE) (Hindi: राषटीय शेअर बाजार) is a stock exchange located at
Mumbai, India. It is the largest stock exchange in India in terms of daily turnover and number of
trades, for both equities and derivative trading.[2] NSE has a market capitalization of around
6,393,418 crore (US$1,412.95 billion) (August 2010) and was expected to become the biggest
stock exchange in India in terms of market capitalization by 2009 end[3], although this has not yet
occurred. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are
the two most significant stock exchanges in India, and between them are responsible for the vast
majority of share transactions. The NSE's key index is the S&P CNX Nifty, known as the NSE
NIFTY (National Stock Exchange Fifty), an index of fifty major stocks weighted by market
capitalisation.

NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies

and other financial intermediaries in India but its ownership and management operate as separate
entities.[4] There are at least 2 foreign investors NYSE Euronext and Goldman Sachs who have
taken a stake in the NSE.[5] As of 2006, the NSE VSAT terminals, 2799 in total, cover more than
1500 cities across India.[6] In October 2007, the equity market capitalization of the companies
listed on the NSE was US$ 1.46 trillion, making it the second largest stock exchange in South
Asia. NSE is the third largest Stock Exchange in the world in terms of the number of trades in
equities.[7] It is the second fastest growing stock exchange in the world with a recorded growth of
16.6%.[8]

Contents
[hide]

• 1 Origins
• 2 Innovations
• 3 Markets
• 4 Hours
• 5 Milestones
• 6 Indices
• 7 Exchange Traded Funds on NSE
• 8 Certifications
• 9 NSE - Corporate Offices in India
• 10 See also
• 11 References

• 12 External links

[edit] Origins

NSE building at BKC, Mumbai

The National Stock Exchange of India was promoted by leading Financial institutions at the
behest of the Government of India, and was incorporated in November 1992 as a tax-paying
company. In April 1993, it was recognized as a stock exchange under the Securities Contracts
(Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital market (Equities) segment of the NSE commenced operations
in November 1994, while operations in the Derivatives segment commenced in June 2000.
[edit] Innovations
NSE has remained in the forefront of modernization of India's capital and financial markets, and
its pioneering efforts include:

• Being the first national, anonymous, electronic limit order book (LOB) exchange to trade
securities in India. Since the success of the NSE, existent market and new market
structures have followed the "NSE" model.
• Setting up the first clearing corporation "National Securities Clearing Corporation Ltd."
in India. NSCCL was a landmark in providing innovation on all spot equity market (and
later, derivatives market) trades in India.
• Co-promoting and setting up of National Securities Depository Limited, first depository
in India [9]
• Setting up of S&P CNX Nifty.
• NSE pioneered commencement of Internet Trading in February 2000, which led to the
wide popularization of the NSE in the broker community.
• Being the first exchange that, in 1996, proposed exchange traded derivatives, particularly
on an equity index, in India. After four years of policy and regulatory debate and
formulation, the NSE was permitted to start trading equity derivatives
• Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in
India.
• NSE has also launched the NSE-CNBC-TV18 media centre in association with CNBC-
TV18.
• NSE.IT Limited, setup in 1999 , is a 100% subsidiary of the National Stock Exchange of
India. A Vertical Specialist Enterprise, NSE.IT offers end-to-end Information
Technology (IT) products, solutions and services.

[edit] Markets
Currently, NSE has the following major segments of the capital market:

• Equity
• Futures and Options
• Retail Debt Market
• Wholesale Debt Market
• Currency futures
• MUTUAL FUND
• STOCKS LENDING & BORROWING

August 2008 Currency derivatives were introduced in India with the launch of Currency Futures
in USD INR by NSE. Currently it has also launched currency futures in EURO, POUND &
YEN. Interest Rate Futures was introduced for the first time in India by NSE on 31 August 2009,
exactly after
SHARE MARKET TERMINOLOGY
1. Absolute Return
The return that an asset achieves over a period of time. This measure
simply looks at the appreciation or depreciation (expressed as a
percentage) that an asset - usually a stock or a mutual fund - faces
over a period of time. Absolute return differs from relative return
because it is concerned with the return of the asset being looked at
and does not compare it to any other measure.
2. Actual Return
the actual gain or loss of an investor.
3. Acquisition
When one company purchases a majority interest in the acquired.
4. Allotment
The number of shares allotted to a partcipant in IPO against the actual
number of securities he had applied for.
5. American Depository Receipt (ADR)
A negotiable certificate issued by a U.S. bank representing a specified
number of shares (or one share) in a foreign stock that is traded on a
U.S. exchange. ADRs are denominated in U.S. dollars, with the
underlying security held by a U.S. financial institution overseas.
6. American Depository Share (ADS)
A share issued under deposit agreement that represents an underlying
security in the issuer's home country. The terms American depositary
receipt (ADR) and American depositary share (ADS) are often thought
to mean the same thing. However, an ADS is the actual share trading,
while an ADR represents a bundle of ADSs.
7. Analyst
A financial professional who has expertise in evaluating investments
and puts together buy, sell and hold recommendations on securities.
Also known as a "financial analyst" or a "security analyst".
8. Annual General Meeting (AGM)
A mandatory yearly meeting of shareholders that allows stakeholders
to stay informed and involved with company decisions and workings.
9. Annual Report
A company's annual statement of financial operations. Annual reports
include a balance sheet, income statement, auditor's report, and a
description of the company's operations.
10. Annuity
A financial product sold by financial institutions that is designed to
accept and grow funds from an individual and then, upon
annuitization, pay out a stream of payments to the individual at a later
point in time. Annuities are primarily used as a means of securing a
steady cash flow for an individual during their retirement years.
11. Arbitrage
The difference between price of a security in two different exchanges.
The difference can be used to make profits by persons holding a
security to sell the same at an exchange where its price is high and
buy it at an exchange where it is available at a lower price.
12. Ask
The price a seller is willing to accept for a share, also known as the
offer price.
13. Ask Size
The number of shares a seller is selling at a quoted ask price.
14. Asset Allocation
The process of dividing a portfolio among major asset categories such
as bonds, stocks or cash. The purpose of asset allocation is to reduce
risk by diversifying the portfolio.
15. Asset Allocation Fund
A mutual fund that splits its investment assets among stocks, bonds
and other investment vehicles in an attempt to provide a consistent
return for the investor.
16. Average Annual Growth Rate
The average increase in the value of a portfolio over the period of a
year.
17. Average Annual Return
The historical return of a mutual fund.
18. Average Return
The simple average of a series of returns generated over a period of
time.
19. Back door listing
A strategy of going public used by a company that fails to meet the
criteria for listing on a stock exchange. To get onto the exchange, the
company desiring to go public acquires an already listed company.
20. Bad Debt
A debt that is not collectible and therefore worthless to the creditor.
This debt, once considered to be bad, will be written off by the
company as an expense.
21. Balance Sheet
A financial statement that summarizes a company's assets, liabilities
and shareholders' equity at a specific point in time. These three
balance sheet segments give investors an idea as to what the
company owns and owes, as well as the amount invested by the
shareholders.
22. Balanced Fund
A mutual fund that invests its assets into the money market, bonds,
preferred stock, and common stock with the intention to provide both
growth and income.
23. Bankruptcy
The state of a person or firm unable to repay debts.
24. Bar Chart
A style of chart used by some technical analysts, the top of the vertical
line indicates the highest price a security traded at during the day, and
the bottom represents the lowest price. The closing price is displayed
on the right side of the bar, and the opening price is shown on the left
side of the bar. A single bar like the one below represents one day of
trading.

25. Basis Point

A unit that is equal to 1/100th of 1%, and is used to denote the change
in a financial instrument. The basis point is commonly used
for calculating changes in interest rates, equity indexes and the yield
of a fixed-income security.
26. Bear Market
A market condition in which the prices of shares are falling or are
expected to fall.
27. Best Ask
The lowest quoted ask price for a particular share among those offered
from competing market makers.
28. Best Bid
The highest quoted bid for a particular share among all those offered
by competing market makers.
29. Blue Chip
A nationally recognized, well-established and financially sound
company.
30. Bond
A debt investment with which the investor loans money to an entity
(company or government) that borrows the funds for a defined period
of time at a specified interest rate
31. Book Building
The process by which an underwriter attempts to determine at what
price to offer an IPO based on demand from institutional investors.
32. Book Closure
A company's announcement of a dividend or bonus to investors.
33. Book Value
The net asset value of a company, calculated by total assets minus
intangible assets (patents, goodwill) and liabilities.
34. Boom
A period of time during which sales or business activity increases
rapidly.
35. Bottom
The lowest point or price reached by a financial security,
commodity, index or economic cycle in a given time period, which
is followed by a steady increase.
36. Bottom Fisher
An investor who looks for bargains among stocks whose prices have
recently dropped dramatically. The investor believes that the recent
price drop is temporary and a recovery is soon to follow.
37. Bottom Line
Refers to a company's net earnings.
38. Breakout
A price movement through an identified level of support or resistance,
which is usually followed by heavy volume and increased
volatility. Traders will buy the underlying asset when the price breaks
above a level of resistance and sell when it breaks below support.
39. Broker
An individual or firm that charges a fee or commission for executing
buy and sell orders submitted by an investor.
40. Brokerage Account
An arrangement between an investor and a licensed brokerage firm
that allows the investor to deposit funds with the firm and place
 investment orders through the brokerage, which then carries out the
transactions on the investor's behalf.
41. Bubble
A surge in equity prices, often more than warranted by the
fundamentals and usually in a particular sector, followed by a drastic
drop in prices as a massive selloff occurs.
42. Bull Market
A financial market of a certain group of shares in which prices are
rising or are expected to rise.
43. Bullion
Gold and silver that is officially recognized as high quality (at least
99.5% pure), and is in the form of bars rather than coins.
44. Buy
A recommendation to purchase a specific security.
45. Buy and Hold
A passive investment strategy in which an investor buys stocks and
holds them for a long period of time, regardless of fluctuations in the
market.
46. Buy Back
The buying back of outstanding shares (repurchase) by a company in
order to reduce the number of shares on the market. Companies will
buyback shares either to increase the value of shares still available
(reducing supply), or to eliminate any threats by shareholders who
may be looking for a controlling stake.
47. CAGR
The year-over-year growth rate of an investment over a specified
period of time. It's an imaginary number that describes the rate at
which an investment would have grown if it grew at a steady rate
48. Capital Gain
An increase in the value of a capital asset (investment or real estate)
that gives it a higher worth than the purchase price. The gain is not
realized until the asset is sold.
49. Capital Gains Tax
A type of tax levied on capital gains incurred by individuals and
corporations. Capital gains are the profits that an investor realizes
when he or she sells the capital asset for a price that is higher than the
purchase price.

50. Cash Flow Statement

This document provides aggregate data regarding all cash inflows a
 company receives from both its ongoing operations and external
investment sources, as well as all cash outflows that pay for business
activities and investments during a given quarter.
51. Choppy Market
A stock market condition whereby prices swing up and down
considerably but with no resulting overall price movement in either
direction.
52. Closely Held Shares
The shares held by individuals closely related to a company.
53. Closing Price
The final price at which a security is traded on a given trading day.
54. Commodity
A basic good used in commerce that is interchangeable with other
commodities of the same type. Commodities are most often used as
inputs in the production of other goods or services.
55. Commodity Index
An index that tracks a basket of commodities to measure their
performance.
56. Common Shareholder
An individual, business or institution that holds common shares in a
company, giving the holder an ownership stake in the company. This
will also give the holder the right to vote on corporate issues such as
board elections and corporate policy, along with the right to
any common dividend payments.
57. Consensus Estimate
A figure based on the combined estimates of the analysts covering a
public company. Generally, analysts give a consensus for a company's
earnings per share and revenue; these figures are most often made for
the quarter, fiscal year and next fiscal year.
58. Correction
Corrections are generally temporary price declines, interrupting an
uptrend in the market or asset.
59. Crash
A major decline in a financial market.
60. Demat - Dematerialization
The move from physical certificates to electronic book keeping.
61. Dalal Street
A term that refers to the Bombay Stock Exchange, the major stock
exchange in India. The street is home not only the Bombay Stock
Exchange but also a large number of other financial institutions.
62. Day Trader
A stock trader who holds positions for a very short time (from minutes
to hours) and makes numerous trades each day. Most trades are
entered and closed out within the same day.
63. De-merger
A corporate strategy to sell off subsidiaries or divisions of a company.
64. Debenture
A type of debt instrument that is not secured by physical asset or
collateral. Debentures are backed only by the
general creditworthiness and reputation of the issuer. Both
corporations and governments frequently issue this type of bond in
order to secure capital.
65. Debt
An amount of money borrowed and owed by one party to another.
66. Debt Fund
An investment pool, such as a mutual fund or ETF, in which core
holdings are fixed income investments.The fee ratios on debt funds are
lower, on average, than equity funds because the overall management
costs are lower.
67. Deflation
A general decline in prices, often caused by a reduction in the supply
of money or credit. It is the opposite of inflation.
68. Delisting
The removal of a listed security from the exchange on which it trades.
69. Derivative
A security whose price is dependent upon or derived from one or more
underlying assets. The derivative is a contract between two or more
parties. Its value is determined by fluctuations in the underlying asset
like commodities, bonds, stocks, etc
70. Disinvestment
The action of an organization or government selling or liquidating an
asset or subsidiary.
71. Diversification
A risk-management technique that mixes a wide variety of investments
within a portfolio. The rationale behind this technique contends that a
portfolio of different kinds of investments will, on average, yield higher
returns and pose a lower risk than any individual investment found
within the portfolio.
72. Dividend
Distribution of a portion of a company's earnings, decided by the board
of directors, to a class of its shareholders.
73. Downgrade
A negative change in the rating of a security.
74. Due Diligence - DD
An investigation or audit of a potential investment.
75. EBITDA - Earnings Before Interest, Taxes, Depreciation and
Amortization
EBITDA is a good metric to evaluate profitability
76. EPS - Earnings Per Share
EPS is the earning on each share of a company
77. ESOP - Employee Stock Ownership Plan
A qualified, defined contribution, employee benefit plan designed to
invest primarily in the stock of the sponsoring employer.
78. Earnings Estimate
An analyst's estimate for a company's future quarterly or annual
earnings.
79. Earnings Surprise
When the earnings reported in a company's quarterly or annual report
are above or below analysts' earnings estimates.
80. Equity Fund
A mutual fund that invests in a broad, well-diversified group of stocks.
81. Ex-Dividend
The trading of shares when a declared dividend belongs to the seller
rather than the buyer.
82. Exponential Moving Average - EMA
A type of moving average that is similar to a simple moving average,
except that more weight is given to the latest data.
83. FCCB - Foreign Currency Convertible Bond
A type of convertible bond issued in a currency different than the
issuer's domestic currency.
84. FDI - Foreign Direct Investment
An investment abroad, usually where the company being invested in is
controlled by the foreign corporation.
85. FII - Foreign Institutional Investor
An investor or investment fund that is from or registered in a country
outside of the one in which it is currently investing.
86. Face Value
The nominal value of a security stated by the issuer. For shares, it is
the original cost of the share shown on the certificate.
87. Financial Porn
A slang term used to describe sensationalist reports of financial news
and products causing irrational buying that can be detrimental to
investors' financial health.
88. Fiscal Year
Any 12-month period that a company uses for accounting purposes.
89. Fully Paid Shares
Shares issued in which no more money is required to be paid to the
company by shareholders on the value of the shares.
90. Fund Of Funds
A mutual fund that invests in other mutual funds.
91. Fundamental Analysis
Fundamental analysis is to produce a value that an investor can
compare with the security's current price in hopes of figuring out what
sort of position to take on that stock.
92. Futures
A financial contract obligating the buyer to purchase an asset (or a
seller to sell an asset) at a predetermined date and price.
93. GAAP - Generally Accepted Accounting Principles
The common set of accounting principles, standards and procedures
that companies use to compile their financial statements.
94. GDP
The forfeited output of a country's economy.
95. GDR - Global Depositary Receipt
A bank certificate issued in more than one country for shares in a
foreign company. The shares are held by a foreign branch of an
international bank.
96. Gilt Fund
A mutual fund that invests in several different types of medium and
long-term government securities in addition to top quality corporate
debt.
97. Going Public
The process of selling shares that were formerly privately held to new
investors for the first time. Also known as Initial public offering (IPO).
98. Green Field Investment
A form of foreign direct investment where a parent company starts a
new venture in a foreign country by constructing new operational
facilities from the ground up.
99. Greenshoe Option
A provision contained in an underwriting agreement that gives the
underwriter the right to sell investors more shares than originally
planned by the issuer.
100. Growth Fund
A diversified portfolio of stocks that has capital appreciation as its
primary goal, and thereby invests in companies that reinvest their
earnings into expansion, acquisitions, and/or research and
development.
101. Guidance
Information that a company provides as an indication or estimate of
their future earnings.
102. Haircut
The difference between prices at which a market maker can buy and
sell a security.
103. Hammering
The rapid and concentrated sale of a stock thought to be overvalued
by the market.
104. Hedge
Making an investment to reduce the risk of adverse price movements
in an asset. Normally, a hedge consists of taking an offsetting position
in a related security, such as a futures contract.
105. Hedge Fund
An aggressively managed portfolio of investments that uses advanced
investment strategies such as leverage, long, short and
derivative positions in both domestic and international markets with
the goal of generating high returns.
106. Holding Period
In a long position, holding period refers to the time between an asset's
purchase and its sale. In a short sale, the length of time for which the
short position is held.
107. Initial Public Offering - IPO
The first sale of stock by a private company to the public.
108. Iceberg Order
A large single order that has been divided into smaller lots, usually by
the use of an automated program, for the purpose of hiding the actual
order quantity.
109. In And Out
The purchase and sale of a security within a short period of time,
usually on the same day.
110. Income Fund
A mutual fund that seeks to provide stable current income by investing
in securities that pay interest or dividends.
111. Index
A statistical measure of change in an economy or a securities market.
In the case of financial markets, an index is essentially an imaginary
portfolio of securities representing a particular market or a portion of
it.
112. Index Fund
A portfolio of investments that is weighted the same as a stock-
exchange index in order to mirror its performance.
113. Inflation
The rate at which the general level of prices for goods and services is
rising, and, subsequently, purchasing power is falling.
114. Inorganic Growth
A growth in the operations of a business that arises from mergers or
takeovers, rather than an increase in the companies own business
activity.
115. Insider Information
Material information about a company's activities that has not been
disclosed to the public.
116. Insider Trading
The buying or selling of a security by someone who has access
to material, nonpublic information about the security. Insider trading
can be illegal or legal depending on when the insider makes the trade.
It is illegal when the material information is still nonpublic.
117. Institutional Investor
A non-bank person or organization that trades securities in large
 enough share quantities or dollar amounts that they qualify for
preferential treatment and lower commissions.
118. Interim Dividend
A dividend payment made before a company's AGM and final financial
statements.
119. IPO Lock-Up
A contractual caveat referring to a period of time after a company has
initially gone public, usually between 90 to 180 days. During these
initial days of trading, company insiders or those holding majority
stakes in the company are forbidden to sell any of their shares.
120. Joint Venture
Two companies joining together to start a new entity, keeping the
current entities untouched to start a business.
121. Key Performance Indicators - KPI
A set of quantifiable measures that a company or industry uses to
gauge or compare performance in terms of meeting their strategic and
operational goals.
122. Limit Order
An order placed with a brokerage to buy or sell a set number of shares
at a specified price or better.
123. Liquidity
The degree to which an asset or security can be bought or sold in the
market without affecting the asset's price.
124. Long Term
Holding an asset for an extended period of time. Depending on the
type of security, a long-term asset can be held for as little as one
year or for as long as 15 years or more.
125. Losing Your Shirt
In the investment world, this expression is used to describe a very bad
investment that causes an investor to lose everything he or she has
invested.
126. M&A - Mergers And Acquisitions
A merger is a combination of two companies to form a new company,
while an acquisition is the purchase of one company by another with
no new company being formed.
127. Margin
Borrowed money that is used to purchase securities.
128. Margin Call
A broker's demand on an investor using margin to deposit additional
money or securities so that the margin account is brought up to the
minimum maintenance margin.
129. Market Order
An order to buy or sell a stock immediately at the best available
current price.
130. Market Perform
Market perform is a neutral assessment of a stock and is neither
strongly positive or negative.
131. Market Timing
The act of attempting to predict the future direction of the market,
typically through the use of technical indicators or economic data.
132. Market Value
The current quoted price at which investors buy or sell a share of
common stock or a bond at a given time. Also known as "market
price".
133. Maturity Date
The date on which the principal amount of a note, draft, acceptance
bond or other debt instrument becomes due and is repaid to the
investor and interest payments stop.
134. Medium Term
An intermediate period of time to hold an asset.
135. Mid Cap
Companies having a market capitalization between Rs 500 crore and
Rs 1,000 crore
136. Monetary Policy
The actions of a reserve bank of india, that determine the size and rate
of growth of the money supply, which in turn affects interest rates.
137. Money Market
The securities market dealing in short-term debt and monetary
instruments.
138. Mutual Fund
A security that gives small investors access to a well-diversified
portfolio of equities, bonds and other securities. Each shareholder
participates in the gain or loss of the fund. Units are issued and can be
redeemed as needed.
139. NAV - Net Asset Value
The total value of the fund's portfolio less liabilities.
140. Offering Price
The price at which publicly issued securities are made available for
purchase.
141. One Night Stand Investment
Buying a security with the intention of holding it for the long term, but
subsequently panicking and selling it the following day.
142. Online Trading
The act of placing buy/sell orders for financial securities and/or
currencies with the use of a brokerage's internet-based proprietary
trading platforms.
143. Open End Fund
A type of mutual fund where there are no restrictions on the amount of
shares the fund will issue. If demand is high enough, the fund will
 continue to issue shares no matter how many investors there are.
Open-end funds also buy back shares when investors wish to sell.
144. Open Offer
A secondary market offering that is similar to a rights issue in which a
shareholder is given the opportunity to purchase stock at a price that
is lower than the current market price.
145. Organic Growth
The growth rate that a company can achieve by increasing output and
enhancing sales. This excludes any profits or growth acquired from
takeovers, acquisitions or mergers.
146. Oversubscribed
A situation in which the demand for an initial public offering of
securities exceeds the number of shares issued.
147. P/E Ratio - Price-Earnings Ratio
PE ratio or PE multiples is the ratio arrived by dividing Current market
Price by Earnings per share of that stock.
148. Par Value
The face value of a bond.
149. Pension Fund
A fund established by an employer to facilitate and organize the
investment of employees' retirement funds contributed by the
employer and employees.
150. Poop And Scoop
A highly illegal practice occurring mainly on the Internet. A small group
of informed people attempt to push down a stock by spreading false
information and rumors. If they are successful, they can purchase the
stock at bargain prices.
151. Portfolio
The group of assets - such as stocks, bonds and mutuals - held by an
investor.
152. Preferred Stock
A class of ownership in a corporation that has a higher claim on the
assets and earnings than common stock.
153. Premium
The difference between the higher price paid for a fixed-income
security and the security's face amount at issue.
154. Price Target
A projected price level as stated by an investment analyst or advisor.
155. Private Company
A company whose ownership is private.
156. Pro-Rata
Used to describe a proportionate allocation.
157. Profit Taking
The action of selling stock to cash in on a sharp rise. This action pushes
prices down temporarily.
158. Public Company
A company that has issued securities through an initial public offering
and which are traded on at least one stock exchange.
159. Public Offering
The sale of equity shares or other financial instruments by an
organization to the public in order to raise funds for business
expansion and investment.
160. Pump And Dump
A scheme attempting to boost the price of a stock
through recommendations based on false, misleading, or greatly
exaggerated statements.
161. QOQ - Quarter on Quarter
A measuring technique that calculates the change between one financial quarter and the
previous financial quarter. This is similar to the year over year measure, which compares
the quarter of one year (Q1 2007) to the same quarter of the previous year (Q1 2006).
162. Quarterly Earnings Report
A quarterly filing made by public companies to report their performance. Included in
earnings reports are items such as net income, earnings per share, earnings from
continuing operations and net sales.
163. Rally
A period of sustained increases in the prices of stocks or indexes.
164. Record Date
The date established by an issuer of a security for the purpose of
determining the holders who are entitled to receive a dividend, rights
or bonus.
165. Redemption
The return of an investor's principal in a security, such as a stock,
bond, or mutual fund.
166. Registrar
An institution or organization that is responsible for keeping records of
bondholders and shareholders.
167. Resistance
The price at which a stock or market can trade, but which it cannot
exceed, for a certain period of time.
168. Rights Offering (Issue)
Issuing rights to a company's existing shareholders to buy a
proportional number of additional securities at a given price (usually at
a discount) within a fixed period.
169. SEBI - Securities And Exchange Board Of India
The regulatory body for the investment market in India.
170. Saturday Night Special
A slang term used to refer to a surprise takeover attempt.
171. Sector Fund
An investment fund that makes investments solely in businesses that
operate in a particular industry or sector of the economy.
172. Sensex
An abbreviation of the Bombay Exchange Sensitive Index (Sensex) -
the benchmark index of the Bombay Stock Exchange (BSE). It is
composed of 30 of the largest and most actively-traded stocks on the
BSE.
173. Settlement Date
The date by which an executed security trade must be settled. That is,
the date by which a buyer must pay for the securities delivered by the
seller.
174. Share Capital
Funds raised by issuing shares in return for cash or other
considerations.
175. Shareholder
Any person, company, or other institution that owns at least 1 share in
a company.
176. Shares
A unit of ownership interest in a corporation or financial asset. The two
main types of shares are common shares and preferred shares.
177. Short Sale
A market transaction in which an investor sells borrowed securities in
anticipation of a price decline and is required to return an equal
amount of shares at some point in the future.
178. Short Term
Holding an asset for short period of time.
179. Simple Moving Average - SMA
A simple, or arithmetic, moving average that is calculated by adding
the closing price of the security for a number of time periods and then
dividing this total by the number of time periods.
180. Small Cap
Refers to stocks with a relatively small market capitalization. It is a
company with a market capitalization less than Rs 500 crore.
181. Spinoff
The creation of an independent company through the sale or
distribution of new shares of an existing business/division of a
parent company.
182. Stop-Limit Order
An order placed with a broker that combines the features of stop order
with those of a limit order. A stop-limit order will be executed at a
specified price (or better) after a given stop price has been reached.
183. Stop-Loss Order
An order placed with a broker to sell a security when it reaches
a certain price. It is designed to limit an investor's loss on a security
position.
184. Support
The price level which, historically, a stock has had difficulty falling
below.
185. Takeover
A corporate action where an acquiring company makes a bid for an
acquiree. If the target company is publicly traded, the acquiring
company will make an offer for the outstanding shares.
186. Technical Analysis
A method of evaluating securities by analyzing statistics generated by
market activity, such as past prices and volume. Technical analysts do
not attempt to measure a security's intrinsic value, but instead use
charts and other tools to identify patterns that can suggest future
activity.
187. Technical Rally
An upward movement in a security's price following a declining trend.
The movement is caused by technical as opposed to fundamental
factors affecting sentiment.
188. Tick
The minimum upward or downward movement in the price of a
security.
189. Top Line
A reference to the gross sales or revenues of a company.
190. Trailing EPS
The sum of a company's earnings per share for the previous four
quarters.
191. Underperform
An analyst recommendation that means a stock is expected to do
slightly worse than the market return.
192. Undersubscribed
A situation in which the demand for an initial public offering of
securities is less than the number of shares issued.
193. Upgrade
A positive change in the rating of a security.
194. Valuation
The process of determining the current worth of an asset or company.
195. Vested Interest
A financial or personal stake one entity has in an asset, security, or
transaction.
196. Volatility
Volatility refers to the amount of uncertainty or risk about the size of
changes in a security's value.
197. Warrant
A derivative security that gives the holder the right to purchase
securities (usually equity) from the issuer at a specific price within a
certain time frame.
198. Write-Off
A reduction in the value of an asset or earnings by the amount of
an expense or loss.
199. XD - Ex- Dividend
Buying the shares trading in XD will not entitle you for the dividend
which is already declared but not yet been issued.
200. YOY - Year Over Year
A method of evaluating two or more measured events that compares
the results of measurement at one time period with those from another
time period, on an annualized basis.
201. Yield
Yield is the annual rate of return for any investment and is expressed
as a percentage.
202. Zero Dividend Preferences
Zero dividend preference shares are Preference shares which receive
no dividends throughout their lives.