PRESENTATION ON ONLINE TRADING AND STUDY OF

INDIAN STOCK MARKET WHAT IS A STOCK MARKET?

 Place where business of buying and selling stock takes place

 The stock market is not a specific place, though some people use the term "Dalaal Street”

WHAT IS A STOCK?

 Stock is a share in the ownership of a company.

It represents a claim on the company's assets and earnings

 Whether you say shares, equity or stock, it all means the same thing.

WHY COMPANIES ISSUE STOCK?

When a company would like to grow, it issues stocks to raise funds and pay for ongoing business activities

 It is popular because:

 The company does not have to repay the money

 Paying dividends is optional

 Dividends are distributions of earnings paid to stockholders HOW COMPANIES RAISE THE CAPITAL

 By following mean’s

 Debentures

 Equity

 Loan’s

MARKET SEGMENTS

 Primary market

-Channel for creation of new securities

 Secondary market

-The new securities issued in the primary

market are traded the secondary market

STOCK EXCHANGE WORLD WIDE

 New York Stock Exchange - United States

 NASDAQ (National Association of Security Dealers Automated Quotations) - United States

 Shanghai Stock Exchange - China

 London Stock Exchange - UK

STOCK EXCHANGE IN

BSE NSE ( ) (NATIONAL STOCK EXCHANGE)

BOMBAY STOCK EXCHANGE (BSE)

. 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.

NATIONAL STOCK EXCHANGE (NIFTY)

 November 1992 as a tax-paying company

 In April 1993, it was recognized as a stock exchange. INDEX

 SENSEX

 Sensex is an index, an index is basically an indicator.

 It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down. The sensex is an indicator of all the prices of the major companies of the BSE(Bombay stock exchange)

 It includes 30 companies

NIFTY(NIFTY FIFTY)

 Nifty is an indicator of all the major companies of NSE.

 The Nifty index is a composite of the top 50 stocks listed on the National stock exchange. It is a simplified tool which helps investors & ordinary people alike, understand what happens in the stock market & by extension, the economy.

MARKET TIMINGS

Trading on the equities segment takes place on all days of the week (except Saturdays and Sundays and holidays declared by the exchange in advance)

The market timings of the equities segment are:

Normal market open : 09:15 hours Normal market close : 15:30 hours

The closing session is held between 15.50 hours and 16.00 hours in NSE and 15.40 hours and 16.00 hours in BSE

NEAT- CASH

NEAT-F&O CIRCUIT BREAKERS

 An index based market-wide circuit breaker system applies at three stages of the index movement either way at 10%, 15% and 20%.

 The breakers are triggered by movement of either S&P CNX Nifty or Sensex, whichever is breached earlier

As an additional measure of safety, individual scrip-wise price bands has been fixed as below:

 Daily price bands of 2% (either way) on a set of specified securities

 Daily price bands of 5% (either way) on a set of specified securities

 Daily price bands of 10% (either way) on another set of specified securities

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

 SEBI is the Regulator for the Securities Market in India.

 Originally set up by the in 1988, it acquired statutory form in 1992.

FUNCTIONS AND RESPONSIBILITIES (SEBI)

 SEBI has to be responsive to the needs of three groups, which constitute the market:

 the issuers of securities

 the investors

 the market intermediaries.

HOW TO START?

 Open Demat A/c.

 Open Trading A/c. HOW THE MARKET WORK

NSE

Broker Broker

Public Public BLUE CHIP INDIAN COMPANIES

1. 6. 2. 7. 3. 8. 4. 9. 5. 10. 30 STOCK OF SENSEX

1. ACC 11.BHEL 21. SBI

2. GRASIM 12.GUJ AMBUJA 22.INFOSYS

3. HINDALCO 13.ICICI BANK 23.DR.REDYS

4. HLL 14.RANBAXY 24.SATYAM

5. ITC 15.REL 25.CIPLA

6. L&T 16.R.COM 26.AIRTEL

7. RIL 17.HDFC BANK 27.ONGC

8. TATA MOTORS 18.HDFC 28.WIPRO

9. TATA STEEL 19.MURTUI 29.NTPC

10. BAJAJ AUTO 20.TCS 30.HERO HONDA 50 STOCK OF NIFTY

1.ACC 11.GUJ AMBUJA 21.JET AIRWAYS 2.BAJAJ AUTO 12.HCL 22.ITC 3.BHEL 13.HDFC 23.L&T 4.BPL 14.HDFC BANK 24.MTNL 5.BHARTI AIRTEL 15.HERO HONDA 25.M&M 6.CIPLA 16.HINDALCO 26.MARUTI 7.DABUR 17.HLL 27.ONGC 8.DR.REDDYS 18.HPL 28.OBC 9.GAIL 19.ICICIBANK 29.PNB 10.GRASIM 20.INFOSYS 30.SBI

50 STOCK OF NIFTY

31.NATIONAL ALUMINIUM 41.TATA MOTORS

32.RANBAXY 42.TATA POWER

33.R.COM 43.TATA STEEL

34.REL 44.WIPRO

35.RIL 45.ZEE

36.SATYAM 46.VSNL

37.SAIL 47.SIEMENS

38SUN PHARMA 48.INDIAN PETRO

39.SUSLON 49.ABB

40.TCS 50.GLAXO SECTOR INDICATORS

1. BANKING SECTOR

2. CAPITAL GOODS SECTOR

3. CEMENT SECTOR

4. REAL ESTATE SECTOR

5. INFRASTRUCTURE SECTOR

6. POWER SECTOR

7. TELECOM SECTOR

8. AUTOMOBILES SECTOR

9. METAL SECTOR

10. INFORMATION TECHNOLOGY SECTOR

BANKING SECTOR

CAPITAL GOODS SECTOR

CEMENT SECTOR

REAL ESTATE SECTOR

INFRASTRUCTURE SECTOR POWER SECTOR TELECOM SECTOR AUTOMOBILES SECTOR

METAL SECTOR

INFORMATION TECHNOLOGY SECTOR

FACTORS AFFECTING STOCK MARKET

1. INFLATION

2. MARKET TRENDS

3. GLOBAL MARKETS

4. GOVT. POLICIES

5. FINANCIAL STATEMENT OF COMPANIES

INFLATION

 INFLATION RATE CURRENT 12.14

 MAIN FACTOR CRUDE 147$ BARRAL

 NOW CRUDE IS More than 105$ BARRAL

FINANCIAL STATEMENT OF COMPANIES

 PROFITS

 LOSSES

 GROWTH FACTORS AFFECTING STOCK PRICE

 FINANCIAL STATEMENT OF COMPANIES

 GROWTH OF CONPANIES

 ORDER BOOK

 MANAGEMENT

 LAND BANK

 POLICIES

 PLANS

FIIS INVESTING IN INDIA

1. FOREIGN ECONOMY 2.INDIAN ECONOMY

 2% GROWTH RATE  8.5% GROWTH RATE

 DEVELOPED  DEVELOPING ECONOMY ECONOMY

 LESS EXPANSION  MORE Expansion

DEMAT ACCOUNT

1. ILLEGAL TRADING SYSTEM :

 Dabba System

 Private Karb System

 Patiya System

 Badla System DABBA TRADING :

$ The illegal practice of buy/sale of securities outside the exchange mechanism without any documentary evidence to relate such transactions.

$ Â "Dabba Trading" also known as "Bucketing" is the process used by brokers to route their client’s trades outside the Stock/Commodity exchange.

$ In such trading, the broker either does not execute any trade or matches and execute trades on its own terminal. CAUGHT DABBA TRADING :

Pradeep Kumar Bansal, who was the target of the Sebi-NSE operation, was a fairly big fish in the dabba trade. He operates from a non-descript address at Byculla in central Mumbai, but his office, packed with sophisticated equipment and gadgetry, acts as the hub for his nationwide operations. His firm, Bansal Sharevest Securities Pvt Ltd has multiple trading memberships on Indian stock exchanges including: the National Stock Exchange (derivatives segment), the Interconnected Stock Exchange of India and the Calcutta Stock Exchange. He is also a sub- broker to his own broking firm, earning commissions on its deals. (Sebi has now banned promoters/directors from acting as sub- brokers to their own brokerage firm after a separate investigation). SCAMS IN CAPITAL MARKET

He was known as the 'Big Bull'. However, his bull run did not last too long. He triggered a rise in the Bombay Stock Exchange in the year 1992 by trading in shares at a premium across many segments. Taking advantages of the loopholes in the banking system, Harshad and his associates triggered a securities scam diverting funds to the tune of Rs 4000 crore (Rs 40 billion) from the banks to stockbrokers between April 1991 to May 1992.

Harshad Mehta worked with the Company before he moved ahead to try his luck in the stock markets. Mehta soon mastered the tricks of the trade and set out on dangerous game plan. Mehta has siphoned off huge sums of money from several banks and millions of investors were conned in the process. His scam was exposed, the markets crashed and he was arrested and banned for life from trading in the stock markets.

He was later charged with 72 criminal offences. A Special Court also sentenced Sudhir Mehta, Harshad Mehta's brother, and six others, including four bank officials, to rigorous imprisonment (RI) ranging from 1 year to 10 years on the charge of duping State to the tune of Rs 600 crore (Rs 6 billion) in connection with the securities scam that rocked the financial markets in 1992. He died in 2002 with many litigations still pending against him. SCAMS IN CAPITAL MARKET

Ketan Parekh followed Harshad Mehta's footsteps to swindle corers of rupees from banks. A chartered accountant he used to run a family business, NH Securities.

Ketan however had bigger plans in mind. He targetted smaller exchanges like the Allahabad Stock Exchange and the Calcutta Stock Exchange, and bought shares in fictitious names.

His dealings revolved around shares of ten companies like Himachal Futuristic, Global Tele- Systems, SSI Ltd, DSQ Software, Zee Telefilms, Silverline, Pentamedia Graphics and Satyam Computer (K-10 scrips).

Ketan borrowed Rs 250 crore from Global Trust Bank to fuel his ambitions. Ketan alongwith his associates also managed to get Rs 1,000 crore from the Madhavpura Mercantile Co- operative Bank.

According to RBI regulations, a broker is allowed a loan of only Rs 15 crore (Rs 150 million). There was evidence of price rigging in the scrips of Global Trust Bank, Zee Telefilms, HFCL, Lupin Laboratories, Aftek Infosys and Padmini Polymer. ADVANTAGES OF ONLINE TRADING….

 Instant Access

 Convenience

 Monetary Savings

 Value Added Services.

DISADVANTAGES OF ONLINE TRADING:-

 Investing alone:

 Security

 Personalized services