Bombay Stock Exchange

BOMBAY STOCK EXCHANGE

Presented By: Harisankar N K Ebin Joy Ashiq Isham

BOMBAY STOCK EXCHANGE

 Bombay Stock Exchange is the oldest stock exchange

in Asia  Spanning three centuries in its 133 years of existence  BSE was established as "The Native Share & Stock Brokers' Association" in 1875.  BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act 1956.  BSE is the world's number 1 exchange in terms of the number of listed companies and the world's 5th in transaction numbers

Contd..  The market capitalization as on December 31, 2007

stood at USD 1.79 trillion  It is an index of 30 stocks representing 12 major sectors.  The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature , and is tracked worldwide  BSE has two of world's best exchanges, Deutsche Börse and Singapore Exchange, as its strategic partners.  It has a nation-wide reach with a presence in more than 359 cities and towns of India. BSE has always been at par with the international standards

Contd..  BSE provides an efficient and transparent market for

trading in equity, debt instruments and derivatives.  BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certification.  It is also the first exchange in the country and second in the world to receive Information Security Management System Standard BS 7799-2-2002 certification for its BSE On-line Trading System (BOLT)  More than 4900 companies listed in BSE

Contd..  In 2006, BSE launched the Directors Database and

ICERS (Indian Corporate Electronic Reporting System) to facilitate information flow and increase transparency in the Indian capital market.  BSE also has a wide range of services to empower investors and facilitate smooth transactions: 1)Investor Services 2)BSE On-line Trading (BOLT) 3)BSEWEBX.Com 4)Surveillance 5)BSE Training Institute

BENEFITS OF STOCK EXCHANGE FROM THE POINT OF VIEW OF COMMUNITY: 3) It assist the economic development by providing a body of interested investors. 4) it uploads the position of superior enterprises and assist them in raising further funds. 5) It encourages capital formation 6) Government can undertake projects of national importance and social value raising funds through the sale of its securities on the stock exchange. 7) It is the stock exchanges that central bank of a country can control credit by undertaking open market operations (purchase and sale of securities)

FROM THE COMPANY POINT OF VIEW : 1. A company whose shares quoted on stock exchange they enjoy better reputation and credit. 2. The market for the shares of such a company is naturally widened. 3. The market price of securities is likely to be higher in relation to its earnings, dividends and property values. This raises the bargaining power of the company in the event of a takeover, merger or amalgamation.

FROM THE INVESTORS POINT OF VIEW: 1. Liquidity of the investment is increased 2.The securities dealt on a stock exchange are good collateral security for loans. 3. The stock exchange safeguards interests of investors through strict enforcement of rules and regulations. 4. The present net worth of investments can be easily known by the daily quotations. 5. His risk is considerably less when he holds or purchases listed securities.

OBJECTIVES OF BSE 1)To safeguard the interest of investing public having dealings on the exchange. 2)To establish and promote honorable and just practices in securities transactions. 3)To promote, develop and maintain wellregulated market in securities. 4)To promote industrial development in the country through efficient resource mobilization by the way of investment in corporate securities.  

INDICES OF BSE  Broad Market Indices:

1)Sensex 2)Bse 100 3)Bse 200 5)Bse Mid Cap 6) Bse Small Cap  Sectoral Indices 1)Bse Auto 2)Bankex 3)Capital Goods 4)Consumerable Goods 5)Fmcg 6)IT, Power  Dollar Linked Indices 1)Dollex30 2)Dollex100 3)Dollex 200

4)Bse500

USAGE OF BSE INDICES BSE Indices are being used for the following

purposes: 1)Dissemination on the BSE trading terminals and BSE website. 2)Underlying for derivative products 3)Sale through BSE datafeed service (Realtime, Historic & EOD) 4)Licensing for Index Funds and Exchange Traded Funds 5)Benchmark for Mutual Funds 6)Licensing for Index Linked Structured

WHO SELECTS THE SCRIP They are selected by the Index Committee. This committee consists of all sorts of

individuals including academicians, mutual fund managers, finance journalists, independent governing board members and other participants in the financial markets. 

SCRIP SELECTION CRITERIA

Market capitalization: The company should have a market capitalization in the Top 100 market capitalization’s of the BSE. Also the market capitalization of each company should be more than 0.5% of the total market capitalization of the Index. Trading frequency: The company to be included should have been traded on each and every trading day for the last one year. Exceptions can be made for extreme reasons like share suspension etc. Number of trades: The scrip should be among the top 150 companies listed by average number of trades per day for the last one year.

contd.. Industry representation: The companies should be leaders in their industry group. Listed history: The companies should have a listing history of at least one year on BSE. Track record: In the opinion of the index committee, the company should have an acceptable track record.

FREE-FLOAT CAPITALIZATION METHOD § world wide accepted method §

best methods for calculating a stock market index

§

Free-float is a variation of the market cap method

§ determined by the percentage of floated shares to outstanding

FREE-FLOAT BANDS

SAMPATH KUMAR KUMARASWAMY

09/06/09

FREE FLOAT SHARES vHoldings by founders/directors/ acquirers which has control element, vHoldings by persons/ bodies with "controlling interest", Government holding as promoter/acquirer, vHoldings through the FDI Route, Strategic stakes by private corporate bodies/ individuals, vEquity held by associate/group companies (crossholdings), Equity held by employee welfare trusts, vLocked-in shares and shares which would not be sold in the open market in normal course.

MARKET CAPITALIZATION ü It is the worth of the company in terms of shares ü

Based on this market capitalization values only companies are classified into "large-cap", "mid-cap" and "small cap"

ü

Market Capitalization = No. of outstanding shares x Current market price of one share

IN CASE OF BONUS SHARES sensex will be based on some adjustment in the

total market capitalization

Total market capitalization (new) = Total market

capitalization(old) x [ New market capitalization of stock / old market capitalization of stock]

KINDS OF SHARES

ØSmall Caps (small market Capitalization less lie in between $300 million - $2billion), ØLarge Caps (large Capitalization in between $10billion - $200billion), ØMid Caps (lie in between Small & Large)

VALUATION OF SENSEX Find out the “free-float market cap” of all the 30 companies that make up the Sensex



Add all the “free-float market cap’s” of all the 30 companies





Make all this relative to the Sensex

SENSEX AS ON 11-08-2009  OPENING

- 15,160.24

 HIGH

- 15,218.65

 LOW

- 14,864.23

 CLOSING

- 15,074.59

Market Capitalization for sensex as on 11august 2009

BSE SENSEX CONSTITUTION

BSE Sensex constitutes of the following companies:  ACC (Cement - Major)  Bharti Airtel (Telecommunications - Service)  BHEL (Engineering - Heavy)  DLF (Construction & Contracting - Real Estate)  Grasim (Diversified)  HDFC Bank (Banks - Private Sector)  HDFC (Finance - Housing)  Hindalco (Aluminium)  HUL (Personal Care)  ICICI Bank (Banks - Private Sector)

Contd.. Infosys (Computers - Software) ITC (Cigarettes) Jaiprakash Associates (Construction &

Contracting - Civil) Larsen & Toubro (Diversified) Mahindra and Mahindra (Auto - Cars & Jeeps) Maruti Suzuki (Auto - Cars & Jeeps) NTPC (Power - Generation/Distribution) ONGC (Oil Drilling And Exploration) Ranbaxy Labs (Pharmaceuticals) Reliance Communications (Telecommunications - Service)

Contd.. Reliance Industries Limited (Diversified) Reliance Infrastructure (Power -

Generation/Distribution) State Bank of India (Banks - Public Sector) Sterlite Industries (Metals - Non Ferrous) Sun Pharma (Pharmaceuticals) Tata Motors (Auto - LCVs/HCVs) Tata Power (Power - Generation/Distribution) Tata Steel (Steel - Large) TCS (Computers - Software) Wipro (Computers - Software)

15,000, July 6, 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. 16,000, September 19, 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 The Sensex finally ended with a gain of 654

Contd.. 17,000, September 26, 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 . 18,000, October 09, 2007 The BSE Sensex crossed the 18,000-mark on October 09, 2007. It took just 8 days to cross 18,000 points from the 17,000 mark. 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

Contd.. 19,000, October 15, 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. 20,000, October 29, 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 were index

Contd.. 21,000, January 8, 2008 The sensex

peaks. It crossed the 21,000 mark in intraday trading after 49 trading sessions. However, it later fell back due to profit booking. 15,200, June 13, 2008 The sensex closed below 15,200 mark, Indian market suffer with major downfall from January 21,2008 14,220, June 25, 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

Contd.. 12,822, July 2, 2008 The sensex hit an

intra day low of 12,822.70 on July 2nd, 2008. This is the lowest that it has ever been in the past year. Six months ago, on January 10th, 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. 11801.70, Oct 6, 2008 The sensex closed at 11801.70 hitting the lowest in the past 2 years. 10527, Oct 10, 2008 The Sensex today closed at 10527,800.51 points down from

Contd.. 14284.21, May 18, 2009 After the result of

15th Indian general election Sensex gained 2110.79 points from the previous close of 12173.42 these creates a new history in Indian Market. In the Opening Trade itself sensex gain 15% from the previous day close this leads to the suspension of 2 hours trade.After 2 hours sensex again surged this leads to the suspension of full day trading.

Sensex falls Some major single-day falls of the Sensex have occurred on the following dates  January 21, 2008 --- 1,408.35 points  Oct 24, 2008---1070.63 points  March 17, 2008 --- 951.03 points  July 6, 2009 --- 870 points  January 22, 2008 --- 857 points  February 11, 2008 --- 833.98 points  May 18, 2006 --- 826 points  October 10,2008 --- 800.10 points

 

Listing of Securities The securities are included in the official list of the stock exchange for the purpose of trading.. Listing ensures that the company is solvent and its existence is legal. Listing is the official enrollment of the name of the company in the stock market

Purpose of Listing • Detailed information is available • Transfer of securities is increased if more info is available • Continuous dealing increases the value of security • Liquidity to shares is ensured • Safety to deal • Ensures credit worthiness • Collateral security for loans • Market is widened

Objectives of Listing The objectives of listing are mainly to provide liquidity to securities; mobilize savings for economic development; protect interest of investors by ensuring full disclosures

Rules for listing of securities Documents to be attached • Copies of Memorandum and Articles of association, prospectus, Directors reports, Balance Sheet, and agreement with underwriters… • Specimen copies of share and debenture certificates, letters of allotment… • Particulars regarding its capital structure. • A statement showing distribution of shares • Particulars of cash bonus during the last ten years • A brief history of company's activities since its incorporation.

Member’s Information Transactions in any stock Exchange are

executed by member brokers who deal with investor A member of a stock exchange is an individual or a corporate body who holds the right to trade in the stocks listed on the exchange An investor can buy or sell securities only through one of the members of the exchange Trading members of Bombay Stock Exchange Ltd are individuals and corporate who holds the right to trade in the stocks

Contd.. The Exchange has 951 trading

members to whom the clearing number is allotted by the Exchange.

THANK YOU

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