Indian Stock Market

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-offprice.

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 intradaynetting 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. Longerdated 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 Close

High

Full Market Capitalisation Low

(Rs. crore)

% to Total Mkt Cap

Turnover (Rs. crore)

% to Total 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

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

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

BSE Sectoral Indices

METAL

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 1908-2008 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

556

493

1.13

Apr-2007

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 contracts

Turnover (Rs. cr.) *

Put Call Ratio

Index Futures

606790

12451.46

-

Stock Futures

674119

12207.31

-

Index Options

794883

17817.09

0.80

49045

950.82

0.29

0

0

-

2124837

43426.67

0.76

Stock Options

* Notional Turnover in case of options

Interest Futures F&O Total

FII DERIVATIVES STATISTICS FOR 19-Aug-2008 BUY

SELL

No. of Amt in contracts Crores

EXCERCISED

No. of Amt in contracts Crores

No. of Amt in contracts Crores

ASSIGNED

OPEN INTEREST AT THE END OF THE DAY

No. of Amt in No. of contracts Crores contracts

Amt in Crores

INDEX FUTURE S

40021

865.94

95880

2054.23

0

0.00

0

0.00

692305

15095.67

INDEX OPTIONS

51803

1110.31

27823

605.65

0

0.00

0

0.00

966840

21116.99

STOCK FUTURE S

41316

701.48

62017

1030.11

0

0.00

0

0.00

990641

17858.61

STOCK OPTIONS

1298

38.68

51

1.25

0

0.00

1

0.02

47720

815.66

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 Quantity

Traded Value (Rs.lakhs)

LTP

Prev Close

% Change

Last Ex Date

Last Corporate Action

RELIANCE

2077098

46034.10

2219.60

2224.80

-0.23

08-MAY-08

DIVIDENDRS.13 PER SHARE

RELCAPITAL

2856270

36140.10

1273.25

1286.60

-1.04

18-JUN-08

DIVIDENDRS5.50 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

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/DIVRS.25 PER SHARE

2613356

20687.06

791.90

809.10

-2.13

24-JUL-08

ANNUAL GENERAL MEETING

RELINFRA

BHARTIARTL

-