Indian Stock Exchange NSE

BY: Manu Singhal Nitesh Sabharwal Singh Gill Maneet Tanu Singhal Naman Paramveer singh

Paramdeep

Paramjodh

What is a Stock Exchange?

Definition of Stock Exchange

A stock exchange is an entity that provides "trading" facilities for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends. Securities traded on a stock exchange include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds.

NSE: National Stock Exchange

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

History
The National Stock Exchange (NSE) is India's leading stock exchange covering various cities and towns across the country. NSE was set up by leading institutions to provide a modern, fully automated screen-based trading system with national reach.

The Exchange has brought about unparalleled transparency, speed & efficiency, safety and market integrity. It has set up facilities that serve as a model for the securities industry in terms of systems, practices and procedures.
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Vision and Values

Purpose Committed to improve the financial well-being of people. Vision To continue to be a leader, establish global presence, facilitate the financial well being of people. Values NSE is committed to the following core values : Integrity Customer focussed culture Trust, respect and care for the individual Passion for excellence Teamwork

Partnership
The S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between the NSE and CRISIL. IISL is Indias first specialized company focused on an index as a core product. IISL has a licensing and marketing agreement with Standard & Poors, who is a world leader in index services.

MD & CEO of NSE

Chitra Ramkrishna on 26 November 2012 was appointed as the Managing Director and CEO of the National Stock Exchange (NSE). Her appointment to the position would come to effect from 1 April 2013, for a period of five years from the date of joining. Chitra Ramkrishna would be replacing the Managing Director and CEO of NSE Ravi Narain.

TRADING HOURS
NSE's normal trading sessions are conducted from 9:00 am India Time to 3:30 pm India

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S&P CNX Nifty companies of India

ACC Ambuja Cements Asian Paints Axis Bank Bajaj Auto Bank of Baroda BHEL BPCL Bharti Airtel Cairn India Cipla Coal India DLF Dr. Reddy's Laboratories GAIL Grasim Industries HCL Technologies HDFC HDFC Bank Hero MotoCorp Hindalco Industries HUL Infosys ICICI Bank IDFC ITC Limited Jaiprakash Associates Jindal Steel and Power Kotak Mahindra Bank L&T Lupin Mahindra & Mahindra Maruti Udyog NTPC ONGC Power Grid Corporation PNB Ranbaxy Laboratories Reliance Infrastructure Reliance Industries Sesa Goa Siemens SBI Sun Pharmaceutical TCS Tata Motors Tata Power Tata Steel Ultratech Cement Wipro

Why do companies issue shares to the public?

Most companies are usually started privately by their promoter(s). However, the promoters' capital and the borrowings from banks and financial institutions may not be sufficient for setting up or running the business over a long term. So companies invite the public to contribute towards the equity and issue shares to individual investors. The way to invite share capital from the public is through a 'Public Issue'. Simply stated, a public issue is an offer to the public to subscribe to the share capital of a company. Once this is done, the company allots shares to the applicants as per the prescribed rules and regulations laid down by SEBI.

Products

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

Equity
NSE started trading in the equities segment (Capital Market segment) on November 3, 1994 and within a short span of 1 year became the largest exchange in India in terms of volumes transacted. Trading volumes in the equity segment have grown rapidly with average daily turnover increasing from Rs.17 crores during 1994-95 to Rs.15,687 crores during FY 2009-10. Under equity we will be discussing the following points: LISTING TRADING CLEARING AND SETTLEMENT

LISTING
Listing on NSE provides qualifying companies with the broadest access to investors, the greatest market depth and liquidity, cost-effective access to capital, the highest visibility, the fairest pricing, and investor benefits. Securities listed on the Exchange are required to fulfill the eligibility criteria for listing.

Eligibility Criteria for Listing

IPOs by Companies 1. 2. The paid up equity capital of the applicant shall not be less than Rs. 10 crores and the capitalisation of the applicants equity shall not be less than Rs. 25 crores The Issuer shall have adhered to conditions precedent to listing as emerging from inter-alia from Securities Contracts (Regulations) Act 1956, Companies Act 1956, Securities and Exchange Board of India Act 1992. Atleast three years track record.

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4. The applicant desirous of listing its securities should satisfy the exchange on the following: a) No disciplinary action by other stock exchanges and regulatory authorities in past three years b) Redressal Mechanism of Investor grievance c) Distribution of shareholding d) Details of Litigation e) Track Record of Director(s) of the Company

Listing Procedure
An Issuer has to take various steps prior to making an application for listing its securities on the NSE. These steps are essential to ensure the compliance of certain requirements by the Issuer before listing its securities on the NSE. The various steps to be taken include: Approval of Memorandum and Articles of Association Approval of draft prospectus Submission of Application Listing conditions and requirements

Listing Fees

TRADING
The NSE trading system called 'National Exchange for Automated Trading' (NEAT)

Circuit Breakers
The Exchange has implemented index-based market-wide circuit breakers in compulsory rolling settlement with effect from July 02, 2001. The market-wide circuit breakers are triggered by movement of either the BSE Sensex or the NSE S&P CNX Nifty, whichever is breached earlier. In case of a 10% movement of either of these indices, there would be a one-hour market halt if the movement takes place before 1:00 p.m. In case the movement takes place at or after 1:00 p.m. but before 2:30 p.m. there would be trading halt for hour. In case movement takes place at or after 2:30 p.m. there will be no trading halt at the 10% level and market shall continue trading. In case of a 15% movement of either index, there shall be a two-hour halt if the movement takes place before 1 p.m. If the 15% trigger is reached on or after 1:00p.m. but before 2:00 p.m., there shall be a one-hour halt. If the 15% trigger is reached on or after 2:00 p.m. the trading shall halt for remainder of the day. In case of a 20% movement of the index, trading shall be halted for the remainder of the day. Apart from circuit breakers, price bands are also used.

Locations
NSE trading terminals are present in various cities and towns all over India. NSE uses sophisticated telecommunication technology through which members can trade remotely from their offices located in any part of the country.

Computer to Computer Link (CTCL) facility

NSE offers Computer-to-Computer Link (CTCL) facility to its trading members by which members can use their own trading front-end software in order to trade on the NSE trading system.

Trading Hours
NSE's normal trading sessions are conducted from 9:15 am India Time to 3:30 pm India Time on all days of the week except Saturdays, Sundays and Official Holidays declared by the Exchange (or by the Government of India) in advance.

CLEARING & SETTLEMENT (EQUITIES)

Clearing is the process of determination of obligations, after which the obligations are discharged by settlement. NSCCL has two categories of clearing members: 1. Trading Clearing Members: Trading members can trade on a proprietary basis or trade for their clients. All proprietary trades become the members obligation for settlement. 2. Custodians: Custodians are clearing members but not trading members. They settle trades on behalf of their clients that are executed through other trading members. Some of the custodians empanelled with NSCCL are Axis Bank Ltd., Citibank N.A., Deutsche Bank A.G., ICICI Bank Ltd.

Settlement Cycle
NSCCL follows a T+2 rolling settlement cycle. For all trades executed on the T day, NSCCL determines the cumulative obligations of each member on the T+1 day and electronically transfers the data to Clearing Members (CMs). All trades concluded during a particular trading date are settled on a designated settlement day i.e. T+2 day.

BONDS
To make a large purchase, a firm can borrow the funds from a bank, but it can also issue a bond. A bond is a document that formally promises to pay back a loan under specified terms and a given period of time.

Equity vs. Debt

To start a new business, a company can raise money in two ways - by selling shares of equity or by incurring debt. If the owner invested all their own savings to buy the materials necessary to start the business, they made an equity investment in the company. Equity is simply ownership of a corporation. Typically, ownership units in a corporation are referred to as stock.

 However, if our owner did not have necessary funds to start their own business they could finance their operation in one of two ways: 1. Issue stock (or certificates of partial ownership in his company) to people who may be interested in helping their venture out in return for a proportional share of the profits that the company might generate. 2. Borrow money that will need to be paid back with interest.

Initial Public Offerings (IPOs)

The very first sale of stocks to the public is called an initial public offering (IPO), It is the selling of securities to the public in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuer's securities. The sale of securities can be either through book building or through normal public issue.

Derivatives The Derivatives section provides you with an insight into the derivatives segment of NSE with Current Market Reports, Historical Data and Product Information. Real-time quotes and information regarding derivative products, trading systems & processes, clearing and settlement, risk management, statistics etc. are available here. Equity Derivatives Currency Derivatives Interest Rate Futures Global Indices Debt The Debt section provides you with an insight into the debt segment of NSE with Current Market Reports, Historical Data and Product Information. Large investors and a high average trade value characterize this segment. Till recently, the market was purely an informal market with most of the trades directly negotiated and struck between various participants. The commencement of this segment by NSE has brought about transparency and efficiency to the debt market. Retail Debt Market Wholesale Debt Market Corporate Bonds

NSE has launched several stock indices, including

S&P CNX Nifty (Standard & Poor's CRISIL NSE Index) CNX Nifty Junior CNX 100 (= S&P CNX Nifty + CNX Nifty Junior) S&P CNX 500 (= CNX 100 + 400 major players across 72 industries) CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)

S&P CNX Nifty

S&P CNX Nifty is a well diversified 50 stock index accounting for 23 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds. S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL has a Marketing and licensing agreement with Standard & Poor's (S&P), who are world leaders in index services. FACTS: The total traded value for the last six months of all Nifty stocks is approximately 48% of the traded value of all stocks on the NSE. Nifty stocks represent about 56% of the Free Float Market Capitalization as on Sep 30, 2010. Impact cost of the S&P CNX Nifty for a portfolio size of Rs.50 lakhs is 0.06%.

CNX Nifty Junior

The next rung of liquid securities after S&P CNX Nifty is the CNX Nifty Junior. We can say that the S&P CNX Nifty and the CNX Nifty Junior as making up the 100 most liquid stocks in India. As with the S&P CNX Nifty, stocks in the CNX Nifty Junior are filtered for liquidity, so they are the most liquid of the stocks excluded from the S&P CNX Nifty. S&P CNX Nifty and the CNX Nifty Junior are synchronized so that the two indices will always be disjoint sets; i.e. a stock will never appear in both indices at the same time. FACTS : CNX Nifty Junior represents about 11 % of the Free Float Market Capitalization as on Sep 30, 2010. The traded value for the last six months of all Junior Nifty stocks is approximately 14% of the traded value of all stocks on the NSE Impact cost for CNX Nifty Junior for a portfolio size of Rs.25 lakhs is 0.09%.

CNX 100
CNX 100 is a diversified 100 stock index accounting for 35 sectors of the economy. CNX 100 = S&P CNX Nifty + CNX Nifty Junior CNX 100 is owned and managed by India Index Services & Products Ltd. (IISL). Which is a joint venture between CRISIL & NSE. IISL is Indias first specialized company focused upon the index as a core products. FACTS: CNX 100 represents about 67% of the Free Float market capitalization as on Sep 30, 2010. The average traded value for the last six months of all CNX100 stocks is approximately 61 % of the traded value of all stocks on the NSE. Impact cost for CNX 100 for a portfolio size of Rs. 50 Lakhs is 0.07%.

S&P CNX 500

The S&P CNX 500 is Indias first broad based benchmark of the Indian capital market. S&P CNX 500 = CNX 100 + 400 major players across 72 industries Industry weightages in the index reflect the industry weightages in the market. For e.g. if the banking sector has a 5% weightage in the universe of stocks traded on NSE, banking stocks in the index would also have an approx. representation of 5% in the index. FACTS: The S&P CNX 500 represents about 90% of the Free Float Market Capitalization and about 87% of the total turnover on the NSE as on Sept 30, 2010.

CNX Midcap
The primary objective of the CNX Midcap Index is to capture the movement and be a benchmark of the midcap segment of the market. The CNX Midcap Index has a base date of Jan 1, 2003 and a base value of 1000. All constituents of the CNX Midcap Index must have a minimum listing record of 6 months. All companies in the CNX Midcap Index have a minimum track record of three years of operations with a positive net worth.

CERTIFICATIONS
NSE also conducts online examination and awards certification, under its programmes of NSE's Certification in Financial Markets (NCFM). Currently, certifications are available in 19 modules, covering different sectors of financial and capital markets. Branches of the NSE are located throughout India.

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ADVANTAGES OF TRADING AT NSE

Integrated network for trading in stock market of India Fully automated screen based system that provides higher degree of transparency Investors can transact from any part of the country at uniform prices Greater functional efficiency supported by totally computerized network
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Bull & Bear Markets

Bull Markets bull markets are movements in the stock market in which prices are rising and the consensus is that prices will continue moving upward. During this time, economic production is high, jobs are plentiful and inflation is low.

Bear Markets
Bear markets are the opposite--stock prices are falling, and the view is that they will continue falling. The economy will slow down, coupled with a rise in unemployment and inflation. In either scenario, people invest as though the trend will continue. Investors who think and act as though the market will continue to rise are bullish, while those who think it will keep falling are bearish.

QUICK FACTS ABOUT NSE

Ranks 04th in the world, in terms of number of transactions executed on a stock exchange, after NASDAQ, NYSE and Shanghai SE. Ranks 2nd in the world, in terms of the number of contracts traded in Single Stock Futures. Ranks 03rd in the world, in terms of no. of contracts traded, in Stock index Futures Ranks 2nd in Asia, in terms of no. of contracts traded, in equity derivatives instrument.

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REQUIREMENT
DEMAT ACCOUNT & Trading Account
Companies

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How are the NIFTY 50 Stocks are selected?

Listing History Trading Frequency Rank based on the Market Cap Market Capitalization weight Industry / sector they belong Historical Record

Seven ways to survive a Stock Market Correction 1. Stop Listening To Analysts 2. Stop Staring At Your Portfolio Every Thirty Minutes. 3. Be Patient 4. Speak To Actual Investors With Experience 5. Stop Following Crazy Tips 6. Understand Market Cycles 7. Follow The Guru

Bibliography:
NSE web site Wikipedia Yahoo answer