Indian stock Market

• India stock market offers a great opportunity to

the investors as right now it is experiencing a
boom in many of its shares. The speedy
ascension of the Indian stocks has made the
Indian Market of Securities very lucrative for
those interested in making profits by investing in
the Indian Stock Exchange . The healthy
banking and monetary services have secured
the investment possibilities in the Indian Stock
Market to a large extent.
• The Bombay Stock Exchange BSE, the oldest
organization in Asia, gives information about the
prices of the shares of the Stock Market in India.
The other organizations highlighting on the share
trading in the Indian Stock Market are:
• The National stock exchange of India (NSE)
• Securities and Exchange Board of India (SEBI)
• NSDL
• CDSL
1991 Liberalization process initiated

14-Dec-95 NSE asked SEBI for permission to trade index

futures.

18-Nov-96 SEBI setup L.C.Gupta Committee to draft a

policy framework for index futures.

11-May-98 L.C.Gupta Committee submitted report.

07-Jul-99 RBI gave permission for OTC forward rate
agreements (FRAs) and interest rate swaps.

24-May-00 SIMEX chose Nifty for trading futures and

options on an Indian index.

25-May-00 SEBI gave permission to NSE and BSE to do

index futures trading.

09-Jun-00 Trading of BSE Sensex futures commenced at

BSE.

12-Jun-00 Trading of Nifty futures commenced at NSE.

25-Sep-00 Nifty futures trading commenced at SGX.

02-Jun-01 Individual Stock Options & Derivatives

 Bse sentive index or Sensex
• It’s a value weighted index composed of
30 stocks with a base April 1979=100.
• These 30 stocks are most traded and
covering 13 sectors.
• List of stocks selected by index committee
(Academician, Mutual fund manager,
Finance journalist and Independent
governing body members .
 The Nifty
• Officially called S & P CNX nifty.
• Name Credited to 50 stocks(Covering 24
sectors) which it comprises.
• These 50 stocks contributes nearly 60 %
of market capitalisation.
 Security Market
• Prmary mkts:

1. Follow on offer
2. Intial public offer
3. Right issue
 Two types of Issue
• Fixed price issue:Where company and lead
merchant banker fix price .The basis of issue
.The basis of issue price is disclosed in the offer
document where the issuer disclosed the details
about the qualitative and quantitave factors
justifying the issue price.The issuer can mention
a price band of 20 % in the draft offer docs filed
with SEBI and actual price can be determined at
a later date before filing the finaloffer docs with
SEBI/ROCs.
 Book Building Issue
• Used in IPOs for efficient price discovery.
• Bisd are collected from the investors at
various prices,which are above or equal to the
floor price.The offer price is determined after
the bid closing date.
• The demand can be known everyday as the
book is being built.
• It shd remain open for public at least 3 days.
 Price Band
• The prospectus can contain either a floor
price or a price band within which the
investors can bid.
• The spread between the floor and cap of
the price band shd not be more than 20 %.
• Price band can be revised .
• Issue at face value or at
discount/premium.
 Cut off price
• The actual discovered issue price can be
any price in the price band or any price
above the floor price.
• The issue price is called cut off price.
• This is decided by the issuer and the lead
manager after considering the book and
investors appetite for the stock.
• Only retail investors can apply for Cut-off-
price.
 Face value of shares/debentures

• The nominal or stated amount in Rs

assigned to securities by the issuer.
• For shares it’s the original price shown in
the certificate.
• For bonds ,it’s the amount paid to the
holder at maturity.
• Generally issued at denomination
5,10,100.
 Allotment of an IPO
• As per SEBi the allotment shd be completed
with 15 days from the closing date of the
issue.
• After allotment should credited to Dmat within
20 working days /refund to bank account.
Listing of shares
would take 3 week after the closure of the
book built issue.
 Follow on Public Offering
• FPO is when a already listed company makes either a
fresh issue of securities to the public or an offer for sale
to public through an offer document.

Right Issue

• Issue fresh securities to the existing share holder as on a

record date.
• Offered in a particular ratio to the number of securities
held prior to the issue.
• Best suited to companies who would like to raise capital
without diluting stake of the existing share holder.
 Secondary Market
• Markets where securities are traded after
initially offered to public in the primary
market.
• Majority of trading done in secondary
market.
• Comprises of equity and debt market.
 Role of Secondary Market
• For General Investors : Provides efficient
platform for trading investors
• For company :Serves as a monitoring and
control conduit. Facilitate value enhancing
control activities, enabling implementation
of incentive-based management contracts
and aggregating information (Via price
discovery) that guide management
decisions.
 Settlements
• Rolling T+2 settlements or cash:
• Square up within a settlement or intraday-
netting of all transaction done on T day
(transaction )
• Auctions – In case of pay- in default.
• Pay-in and pay-out of funds and
securities.
 Clearing Corporation
• Organization which works with the
exchanges to handle conformation,
delivery & settlement of transactions.
Clearing corporation in India are:
• NSCCL:NATIONAL SECURITIES
CLEARING CORPORATION LTD.
• BOI share holding ltd: Bank of India share
holding ltd.
 Depositary
• A facility for holding securities, which enables
securities transaction to be processed by book
entry.
• To achieve this depositary holds share in
immobilized forms or dematerialized form.
• Holds beneficiary owner's shares in electronics
form through a registered DP.
• DP is an agent to depositary which is authorized
to offer depositary services to investors.
 There are two depositary in India
• NSDL :Through depositary act of in august
1996.first and largest depository in India.
• CDSL : received certificate of commencement
from SEBI from Feb 1999.Promoted by BSE and
other banks like SBI,BOI,BOB,HDFC Bank,Stan
Chat,UBI etc.
 Definition of Securities
• Securities refers to an instrument
representing ownership (Stocks),
• Debt agreement(Bonds),
• Or the right to ownership (Derivatives).
A security is essentially a contract that
can be assigned a value and traded.
 Meaning of Shares Or Stocks
• Total equity capital of a company which is
devided into equal units of small
denominations ,each called a share.
• Ex- Total equity capital of a company
-2,00,00000 is divided into 20,00000 units of
Rs 10 each.Each such units of Rs 10 is
called shares.Thus the company is said to
have 20,00000 equity shars of Rs 10 each.
 Types of Shares
• Equity shares: Represent the form of fractional ownership. Not
entitled to any interest payment, Voting rights, Share the profit
in form of Dividend and bonus.
• Rights shares :The issue of new secuirties to the existing
share holder at a ratio to those already held ,at a price.
• Bonus shares: issued to the share holder free of cost based on
the shares already held.
 Functions of Securities Market
• A place where buyer and seller of
securities can enter into transaction to
purchase and sell shares ,bonds
,Debentures etc.
• Enable corporate ,entrepreneur to raise
resources for their companies and
business ventures through Public issues
(IPO)
• Transfer resources from those having Idle
resources (Investors) to those who have
need for them (Corporate).
• Provides channels for reallocation of
savings to investment and
entrepreneurship.
• Savings are linked to investments by
varieties of intermediaries through
securities.
Participants in Securities Market
• Issuer of securities
• Investors in securities
• Intermediaries like Merchant Banker,
Broker etc.
 FDI…
• The economy of India has proven to be
highly conducive in terms of domestic
and foreign investments, in recent
years. India Investments have been
predicted as the propelling force towards
the country's attainment of self-sustained
growth by rapid industrialization.
• Foreign Direct Investment (FDI) in India is one
of the most talked about issues today. Rated
among the top emerging nations, India's
liberalization policies are paying rich dividends to
the economy as a whole.
Foreign Direct Investment (FDI) is defined as
"investment made to acquire lasting interest in
enterprises operating outside of the economy of
the investor." The FDI relationship consists of a
parent enterprise and a foreign affiliate, which
together form a Trans-national Corporation
(TNC).
 Definition of Derivatives

• Derivative expresses the underlying value

of any capital market instruments. In other
words, it means a Derivative does not
signify any standardized value of any
capital market but is a derived value of
underlying assets like commodities,
securities, bullion, currency, live stock etc.
• Further, it can also be a forward, future
option or any other hybrid contract having
pre-determined fixed duration value, which
is to be executed as per the agreements.
The Indian Derivative market is regulated
as per the "Securities Laws (Second
Amendment) Act, 1999".
 Derivative Markets in India

• Trading takes place either on a separate and

independent Derivative Exchange or on a
separate segment of an existing Stock Exchange.
• Derivative Exchange or segment operates as a
self regulatory body.
• Securities and Exchange Board of India (SEBI)
acts as the guardian.
• Clearing & settlement of all derivative trades
made on an Derivative Exchange or Segment are
done through a Clearing Corporation - an
independent body set to act as a regulatory.
• The following factors have been driving the
growth of financial derivatives:

1.Increased volatility in asset prices in financial

markets,
2.Increased integration of national financial
markets with the international markets,
• 3.Marked improvement in communication facilities and
sharp decline in their costs,
4.Development of more sophisticated risk management
tools, providing economic agents a wider choice of risk
management strategies, and
5.Innovations in the derivatives markets, which optimally
combine the risks and returns over a large number of
financial assets, leading to higher returns, reduced risk
as well as trans-actions costs as compared to individual
financial assets.
• Derivative is a product whose value is derived from the
value of one or more basic variables, called bases
(underlying asset, index, or reference rate), in a
contractual manner. The underlying asset can be equity,
forex, commodity or any other asset. For example, wheat
farmers may wish to sell their harvest at a future date to
eliminate the risk of a change in prices by that date.
Such a transaction is an example of a derivative. The
price of this derivative is driven by the spot price of
wheat which is the "underlying".
 In the Indian context the Securities Contracts
(Regulation) Act, 1956 (SC(R) A) defines "equity
derivative" to include -

1.A security derived from a debt instrument, share,

loan whether secured or unsecured, risk
instrument or contract for differences or any other
form of security.
2.A contract, which derives its value from the
prices, or index of prices, of underlying securities.

The derivatives are securities under the SC(R) A

and thus the regulatory framework under the
SC(R) A governs the trading of derivatives.
 commonly used derivatives
contracts
• Forwards: A forward contract is a customized contract
between two entities, where settlement takes place on a
specific date in the future at today's pre-agreed price.

Futures: A futures contract is an agreement between

two parties to buy or sell an asset at a certain time in the
future at a certain price. Futures contracts are special
types of forward contracts in the sense that the former
are standardized exchange-traded contracts.
• Options: Options are of two types - calls and puts. Calls
give the buyer the right but not the obligation to buy a
given quantity of the underlying asset, at a given price on
or before a given future date. Puts give the buyer the
right, but not the obligation to sell a given quantity of the
underlying asset at a given price on or before a given
date.

Swaps: Swaps are private agreements between two

parties to exchange cash flows in the future according to
a prearranged formula. They can be regarded as
portfolios of forward contracts. The two commonly used
swaps are:
• Interest rate swaps: These entail swapping only
the interest related cash flows between the
parties in the same currency.
• Currency swaps: These entail swapping both
principal and interest between the parties, with
the cash flows in one direction being in a different
currency than those in the opposite direction.
• Warrants: Options generally have lives of upto one year,
the majority of options traded on options exchanges
having a maximum maturity of nine months. Longer-
dated options are called warrants and are generally
traded over-the-counter.

LEAPS: The acronym LEAPS means Long-Term Equity

Anticipation Securities. These are options having a
maturity of upto three years.
• Baskets: Basket options are options on portfolios of
underlying assets. The underlying asset is usually a
moving average or a basket of assets. Equity index
options are a form of basket options.

Swaptions: Swaptions are options to buy or sell a swap

that will become operative at the expiry of the options.
Thus a swaption is an option on a forward swap. Rather
than have calls and puts, the swaptions market has
receiver swaptions and payer swaptions. A receiver
swaption is an option to receive fixed and pay floating. A
payer swaption is an option to pay fixed and receive
floating.
Participants and Functions
In Derivative Market
 Three broad categories of participants - hedgers,
speculators, and arbitrageurs - trade in the derivatives
market. Hedgers face risk associated with the price of an
asset. They use futures or options markets to reduce or
eliminate this risk. Speculators wish to bet on future
movements in the price of an asset. Futures and options
contracts can give them an extra leverage; that is, they can
increase both the potential gains and potential losses in a
speculative venture. Arbitrageurs are in business to take
advantage of a discrepancy between prices in two different
markets. If, for example, they see the futures price of an
asset getting out of line with the cash price, they will take
offsetting positions in the two markets to lock in a profit.
 (Rs. crore)

FII DII

FII & DII Turnover (BSE + NSE)

Trade Date Buy Sales Net Buy Sales Net

19/8/08 1,146.65 1,863.00 -716.35 500.74 486.18 14.56

18/8/08 1,682.95 2,158.45 -475.50 633.35 504.44 128.91

14/8/08 1,752.94 2,326.92 -573.98 812.05 788.73 23.32

Aug, 08 29,581.09 32,711.49 -3,130.40 11,325.10 10,561.75 763.35

Since 1/1/08 * 501,174.32 568,070.73 -66,896.41 198,539.39 152,571.37 45,968.02

* Data for DII turnover is since 16/4/07

 Indices Highlights

This data was last updated on Tuesday, August 19, 2008

INDICES 52 Week Full Market Capitalisation Turnover

Close High Low (Rs. crore) % to Total Mkt (Rs. crore) % to Total
Cap Turnover

SENSEX 14,543.73 21,206.77 12,514.02 2,115,905.37 44.12 1,178.20 29.66

MIDCAP 5,766.32 10,245.81 4,970.47 689,159.35 14.37 664.98 16.74
SMLCAP 7,012.74 14,239.24 6,170.00 215,673.96 4.50 407.01 10.25
BSE-100 7,602.61 11,655.91 6,536.94 3,523,501.17 73.47 2,350.24 59.16
BSE-200 1,779.29 2,776.96 1,532.03 4,021,826.33 83.86 2,824.24 71.10
BSE-500 5,627.21 8,991.42 4,862.30 4,465,336.23 93.10 3,241.98 81.61
BSE Sectoral Indices
AUTO 3,849.33 5,865.35 3,332.43 112,450.72 2.34 27.21 0.68
BANKEX 6,892.18 12,678.98 5,354.38 344,049.30 7.17 337.46 8.49
CD 3,783.26 7,119.69 3,213.67 18,690.55 0.39 5.65 0.14
CG 12,062.41 21,020.97 9,481.97 302,916.30 6.32 229.91 5.79
FMCG 2,162.85 2,569.72 1,795.65 191,657.51 4.00 21.37 0.54
HC 4,266.79 4,602.15 3,256.94 160,131.67 3.34 64.37 1.62
IT 3,892.26 5,075.13 3,189.14 328,298.09 6.85 84.72 2.13
METAL 12,272.80 20,494.62 9,776.77 419,709.46 8.75 219.33 5.52
OIL&GAS 9,987.91 14,268.89 7,315.50 822,054.85 17.14 515.10 12.97
POWER 2,615.11 4,929.34 2,076.60 491,872.95 10.26 302.60 7.62
PSU 6,892.73 11,205.38 5,354.95 1,233,130.83 25.71 323.27 8.14
REALTY 5,117.50 13,848.09 4,068.30 152,394.66 3.18 186.35 4.69
TECk 3,010.24 4,187.63 2,759.49 653,742.42 13.63 327.26 8.24
 Historical Data for S&P CNX NIFTY

For the period 19-07-2008 to 19-08-2008

Date Open High Low Close

21-Jul-2008 4092.20 4168.15 4072.75 4159.50

22-Jul-2008 4158.45 4262.45 4137.95 4240.10
23-Jul-2008 4246.70 4491.55 4246.70 4476.80
24-Jul-2008 4476.20 4539.45 4385.85 4433.55
25-Jul-2008 4440.85 4440.85 4297.15 4311.85
28-Jul-2008 4282.25 4352.65 4282.25 4332.10
29-Jul-2008 4332.20 4332.20 4159.15 4189.85
30-Jul-2008 4191.20 4327.00 4191.20 4313.55
31-Jul-2008 4314.35 4342.00 4285.55 4332.95
01-Aug-2008 4331.60 4422.95 4235.70 4413.55
04-Aug-2008 4426.10 4436.15 4362.90 4395.35
05-Aug-2008 4395.80 4515.15 4376.00 4502.85
06-Aug-2008 4506.25 4615.90 4503.90 4517.55
07-Aug-2008 4515.25 4580.15 4493.70 4523.85
08-Aug-2008 4518.35 4546.35 4464.00 4529.50
11-Aug-2008 4529.35 4625.20 4529.35 4620.40
12-Aug-2008 4620.95 4649.85 4525.75 4552.25
13-Aug-2008 4548.05 4572.65 4497.25 4529.05
14-Aug-2008 4524.20 4529.80 4421.25 4430.70
18-Aug-2008 4430.70 4447.40 4379.85 4393.05
19-Aug-2008 4393.10 4393.70 4316.55 4368.25
 Historical Data for CNX MIDCAP

For the period 19-07-2008 to 19-

08-2008
Date Open High Low Close

21-Jul-2008 5193.20 5193.20 5116.30 5173.10

22-Jul-2008 5191.80 5300.25 5185.60 5277.50
23-Jul-2008 5468.25 5624.70 5464.50 5600.15
24-Jul-2008 5667.80 5705.95 5542.25 5585.40
25-Jul-2008 5531.05 5621.35 5495.75 5564.40
28-Jul-2008 5578.90 5640.50 5555.70 5605.80
29-Jul-2008 5544.85 5566.85 5425.55 5442.70
30-Jul-2008 5479.90 5576.20 5479.90 5564.70
31-Jul-2008 5569.75 5582.05 5522.25 5536.95
01-Aug-2008 5516.75 5644.15 5469.30 5637.55
04-Aug-2008 5641.35 5773.75 5641.35 5766.30
05-Aug-2008 5770.90 5870.55 5770.90 5861.25
06-Aug-2008 5913.60 5984.90 5851.40 5863.25
07-Aug-2008 5867.25 5917.95 5852.15 5873.50
08-Aug-2008 5878.10 5915.80 5833.90 5904.00
11-Aug-2008 5973.80 6013.05 5973.80 5991.70
12-Aug-2008 6008.90 6015.90 5912.35 5935.15
13-Aug-2008 5917.45 5977.10 5904.60 5916.35
14-Aug-2008 5906.20 5915.90 5798.05 5804.90
18-Aug-2008 5783.90 5817.25 5710.60 5727.75
19-Aug-2008 5720.55 5724.25 5632.45 5711.25
 Historical Data
Advances & Declines

Month Advances Declines Advance/Decline

Ratio
Jul-2008 607 605 1.00
Jun-2008 440 769 0.57
May-2008 495 708 0.70
Apr-2008 675 525 1.29
Mar-2008 467 737 0.63
Feb-2008 550 639 0.86
Jan-2008 433 756 0.57
Dec-2007 720 460 1.57
Nov-2007 576 576 1.00
Oct-2007 533 607 0.88
Sep-2007 585 549 1.07
Aug-2007 544 573 0.95
Jul-2007 508 592 0.86
Jun-2007 507 569 0.89
May-2007 507 557 0.91
Apr-2007 556 493 1.13
FII trading activity on NSE and BSE on Capital Market Segment

The following is combined FII trading data across NSE and BSE collated
on the basis of trades executed by FIIs on 19-Aug-2008.

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)

Category Date Buy Value Sell Value Net Value

FII 19-Aug-2008 1146.65 1863 -716.35

Domestic Institutional Investors trading activity on NSE and BSE on
Capital Market Segment

The following is combined Domestic Institutional Investors trading data across

NSE and BSE collated on the basis of trades executed by Banks, DFIs, Insurance
and MFs on 19-Aug-2008.

DII trading activity on NSE and BSE in Capital Market Segment(In Rs.
Crores)
Category Date Buy Value Sell Value Net Value
DII 19-Aug-2008 500.74 486.18 14.56
 Trade Statistics for 19-Aug-2008

Product No. of Turnover Put Call

contracts (Rs. cr.) * Ratio

Index Futures 606790 12451.46 -

Stock Futures 674119 12207.31 -

Index Options 794883 17817.09 0.80

Stock Options 49045 950.82 0.29

* Notional Turnover in case of options

Interest Futures 0 0 -

F&O Total 2124837 43426.67 0.76

 FII DERIVATIVES STATISTICS FOR 19-Aug-2008
BUY SELL EXCERCISED ASSIGNED OPEN INTEREST AT
THE END OF THE DAY

No. of Amt in No. of Amt in No. of Amt in No. of Amt in No. of Amt in
contracts Crores contracts Crores contracts Crores contracts Crores contracts Crores

INDEX 40021 865.94 95880 2054.23 0 0.00 0 0.00 692305 15095.67

FUTURE
S

INDEX 51803 1110.31 27823 605.65 0 0.00 0 0.00 966840 21116.99

OPTIONS

STOCK 41316 701.48 62017 1030.11 0 0.00 0 0.00 990641 17858.61

FUTURE
S

STOCK 1298 38.68 51 1.25 0 0.00 1 0.02 47720 815.66

OPTIONS
Index Watch

As on 19-AUG-2008 16:00:25 hours IST

Index Prev Close Open High Low Last % Change

S&P CNX NIFTY 4393.05 4393.10 4393.70 4316.55 4368.25 -0.56

S&P CNX DEFTY 3518.30 3522.00 3522.45 3430.85 3474.35 -1.25

S&P CNX 500 3519.30 3495.75 3513.30 3458.85 3500.75 -0.53

NIFTY MIDCAP 50 2158.80 2152.25 2166.55 2122.00 2157.45 -0.06

CNX NIFTY JUNIOR 7080.60 7036.20 7072.10 6927.15 7028.95 -0.73

CNX MIDCAP 5727.75 5720.55 5724.25 5632.45 5711.25 -0.29

CNX IT 3919.45 3927.50 3931.75 3872.45 3898.05 -0.55

CNX 100 4185.10 4156.55 4177.30 4110.00 4160.50 -0.59

BANK NIFTY 6015.05 5928.95 6027.90 5874.10 5992.40 -0.38

 Ten Most Active Securities
Symbol Total Traded Traded Value LTP Prev Close % Change Last Last
Quantity (Rs.lakhs) Ex Date Corporate
Action

RELIANCE 2077098 46034.10 2219.60 2224.80 -0.23 08-MAY-08 DIVIDEND-

RS.13 PER
SHARE
RELCAPITAL 2856270 36140.10 1273.25 1286.60 -1.04 18-JUN-08 DIVIDEND-
RS5.50 PER
SHARE

ICICIBANK 5207501 34715.81 677.70 665.00 1.91 10-JUL-08 AGM/DIVIDEN

D - 110%

RCOM 7512123 30138.64 399.80 412.50 -3.08 19-SEP-08 AGM/DIVIDEN

D - 15%

VITLINFO 10248867 30114.25 305.05 261.65 16.59 - -

RNRL 26957320 25407.27 95.35 94.80 0.58 25-JUL-08 ANNUAL
GENERAL
MEETING
RELINFRA 2528816 24614.99 993.15 972.40 2.13 04-JUL-08 AGM/DIVIDEN
D - 63%
LT 913611 24417.72 2675.10 2695.05 -0.74 20-AUG-08 AGM/DIV -
RS.15 PER
SHARE
HDFC 967178 22038.60 2284.65 2363.70 -3.34 27-JUN-08 AGM/DIV-
RS.25 PER
SHARE
BHARTIARTL 2613356 20687.06 791.90 809.10 -2.13 24-JUL-08 ANNUAL
GENERAL
MEETING