56122527 Analysis of Share Market

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.CONTENTS

Acknowledgment i

Declaration... ii

Certificate.iii

Preface...iv-v

The Indian Capital Market4 - 14

An Overview

Other leading cities in stock market operation

Growth of Indian Stock Exchanges

Sensex and Nifty

History

Key Milestones

How Stock Market Works..15

Initial Public Offering16 -18

Introduction

How to apply Public issue

How to make Payment for IPOs

Role of SEBI in process of IPO

DEMAT account19-20

Introduction

How to open Demat account

Document required1


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SEBI (Securities and Exchange Board of India)21-25

Introduction

The Board Comprises

Functions and Responsibilities

BSE (Bombay Stock Exchange) Introduction26-28

NSE (National Stock Exchange)..29-31

Introduction

NSE group

SENSEX.32-36

Introduction

SENSEX calculation Methodology

Concept of Free Float

Definition of Free Float

Function and Purpose of Stock Market

FII(Foreign Institutional Investor)..37-56

Introduction

FII mean

Regulations

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Research Methodology..57-62

Suggestions.63

Conclusion..64-65

Bibliography..66

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THE INDIAN CAPITAL MARKET

AN OVERVIEW

The Indian capital market is more than a century old. Its history goes back to 1875, when 22

brokers formed the Bombay Stock Exchange (BSE). Over the period, the Indian securities

market has evolved continuously to become one of the most dynamic, modern, and efficient

securities markets in Asia. Today,

Indian market confirms to best international practices and standards both in terms of structure

and in terms of operating efficiency .Indian securities markets are mainly governed by a) The

Companys Act1956, b) the Securities Contracts (Regulation) Act 1956 (SCRA Act), and c)the Securities and Exchange Board of India (SEBI) Act, 1992. A brief background of these

above regulations are given below

a) The Companies Act 1956 deals with issue, allotment and transfer of securities and various

aspects relating to company management. It provides norms for disclosures in the public

issues, regulations for underwriting, and the issues pertaining to use of premium and discount

on various issues.

b) SCRA provides regulations for direct and indirect control of stock exchanges with an aim

to prevent undesirable transactions in securities. It provides regulatory jurisdiction to Central

Government over stock exchanges, contracts in securities and listing of securities on stock

exchanges.

c) The SEBI Act empowers SEBI to protect the interest of investors in the securities market,

to promote the development of securities market and to regulate the security market.

There are two major types of issuers who issue securities. The corporate entities issue mainly

debt and equity instruments (shares, debentures, etc.), while the governments (central and

state governments) issue debt securities (dated securities, treasury bills). The secondary

market enables participants who hold securities to adjust their holdings in response to

changes in their assessment of risk and return. A variant of secondary market is the forward

market, where securities are traded for future delivery and payment in the form of futures and

options. The futures and options can be on individual stocks or basket of stocks like index.Two exchanges, namely National Stock Exchange (NSE) and the Stock Exchange, Mumbai

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(BSE) provide trading of derivatives in single stock futures, index futures, single stock

options and index options. Derivatives trading commenced in India in June 2000

Indian Stock Exchanges - An Umbrella Growth

The Second World War broke out in 1939. It gave a sharp boom which was followed by a

slump. But, in 1943, the situation changed radically, when India was fully mobilized as a

supply base.

On account of the restrictive controls on cotton, bullion, seeds and other commodities, those

dealing in them found in the stock market as the only outlet for their activities. They wereanxious to join the trade and their number was swelled by numerous others. Many new

associations were constituted for the purpose and Stock Exchanges in all parts of the country

were floated.

The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited (1940)

and Hyderabad Stock Exchange Limited (1944) were incorporated.

In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited and the

Delhi Stocks and Shares Exchange Limited - were floated and later in June 1947,

amalgamated into the Delhi Stock Exchange Association Limited.

There are two major indicators of Indian capital market- SENSEX & NIFTY:

Sensex & the Nifty

The 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 major companies of the BSE. The Nifty is an indicator of all

the major companies of the NSE. If the Sensex goes up, it means that the prices of the stocks

of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells

you that the stock price of most of the major stocks on the BSE have gone down. Just like the

Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE.

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Just in case you are confused, the BSE, is the Bombay Stock Exchange and the NSE is the

National Stock Exchange. The BSE is situated at Bombay and the NSE is situated at Delhi.

These are the major stock exchanges in the country. There are other stock exchanges like the

Calcutta Stock Exchange etc. but they are not as popular as the BSE and the NSE. Most of

the stock trading in the country is done though the BSE & the NSE. Besides Sensex and the

Nifty there are many other indexes. There is an index that gives you an idea about whether

the mid-cap stocks go up and down. This is called the BSE Mid-cap Index. There are many

other types of index. Unless stock markets provide professionalized service, small investors

and foreign investors will not be interested in capital market operations. And capital market

being one of the major sources of long-term finance for industrial projects, India cannot

afford to damage the capital market path. In this regard NSE gains vital importance in the

Indian capital market but if we see the sensex & nifty graph there is a great variation.

HISTORICAL PERSPECTIVE

The history of Indian stock market is about 200 years old. Prior to this the bills of exchange

were in use, especially in the medieval period, which can be considered as a form of virtual

stock trading but it was certainly not an organized stock trading. The recorded stock trading

can be traced only after the arrival of East India Company. The first organized stock market

that was governed by the rules and regulations came into the existence in the form of The

Native Share and Stock Brokers' Association in 1875. After gone through numerous changes

this association is today better as Bombay Stock Exchange, which remains the premier stock

exchange since its inception. During this period several other exchanges were launched and

some of which were closed also. Presently, there are 19 recognized stock exchanges out of

which four are national level exchanges and the remaining are regional exchanges. National

Stock Exchange, established in 1992, was the last exchange. Although the regional level

exchanges are in existence the volume of trading in these exchanges is negligible. National

Stock Exchange and Bombay Stock Exchange are the leaders of Indian Securities Market in

terms of listing, trading and volumes. The last 15 years of the Indian securities market can be

considered as the most important part of the history where the market gone through the post

liberalization era of Indian economy and witnessed the formation of Securities and Exchange

Board of India (SEBI) which brought substantial transparency in share market practices andthus managed to bring in trust of not only domestic investors but also the international ones.

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The Big Picture of share market

As investors, most of us tend to forget about all of the good years and only focus on the bad.

The broad markets have been heading up for about four years, so the thoughts of what

happened in 1999-2002 are well behind us. But now that the markets are volatile, there is a

lot of talk about the subprime mortgage industry, a weak dollar, and everyone begins to

completely forget about how well the past four years have been and only focus on the last

few months or weeks complaining how bad it is. Things can certainly continue to get worse,

but you have to look at things in context.

Remember, what goes up, must come down. Not only does the stock market cycle, but there

is a business cycle as well. We will always have various times that are great, and those that

arent as great, but you cant lose sight of the big picture.

Take a look at the following 12 years in a colorized format. Green identifies periods of strong

growth. Yellow indicates a period of volatility or no real direction, and red shows a period of

a downward trend. Based on this, is it any surprise that markets are becoming volatile and

possibly trending downward?

For even more similarities, scroll back up and look at the first chart from 1996-1999. Now,

scroll down and look at the 2005-Present image. Notice how similar they are? The markets

went up for completely different reasons, yet are behaving almost the same. All you have to

do is look at the following few years to see what might be in store for us over the coming

year or two. Will history repeat itself? There is no way to tell, and anything could happen to7


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make all of this information worthless, but you do have to at least consider the past trends and

understand that there is a chance the market will behave similarly and well enter a period of

significant decline.

KEY MILESTONES

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

1900s

1978-79 Base year of Sensex, defined to be 100.

1986 Sensex first compiled. Using a market Capitalization Weighted methodology for 30

component stocks representing well-established companies across key sectors.

Since 1990

1000, July 25, 1990 On July 25, 1990, the Sensex touched the magical four-digit figure for

the first time and closed at 1,001 in the wake of a good monsoon season and excellent

corporate results.

July 1991 Rupee devalued by 18-19 %

2000, January 15, 1992 On January 15, 1992, the Sensex crossed the 2,000-mark and closed

at 2,020 followed by the liberal economic policy initiatives undertaken by the then prime

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3000, February 29, 1992 On February 29, 1992, the Sensex surged past the 3000 mark in the

wake of the market-friendly Budget announced by the then Finance Minister, Dr Manmohan

Singh.

4000, March 30, 1992 On March 30, 1992, the Sensex crossed the 4,000-mark and closed at

4,091 on the expectations of a liberal export-import policy. It was then that the Harshad

Mehta scam hit the markets and Sensex witnessed unabated selling.

5000, October 8, 1999 On October 8, 1999, the Sensex crossed the 5,000-mark as the BJP-

led coalition won the majority in the 13th Lok Sabha election.

6000, February 11, 2000 On February 11, 2000, the infotech boom helped the Sensex to

cross the 6,000-mark and hit and all time high of 6,006.

6151, Feb 14, 2000 Tops. Index declines until Sept 2001 and loses half the value. Coincides

with dot-com bubble burst.

2595, Sept 21, 2001 Bottoms.

7000, June 20, 2005 On June 20, 2005, the news of the settlement between the Ambani

brothers boosted investor sentiments and the scrips of RIL, Reliance Energy, Reliance

Capital, and IPCL made huge gains. This helped the Sensex crossed 7,000 points for the first

time.

8000, September 8, 2005 On September 8, 2005, the Bombay Stock Exchange's benchmark

30-share index -- the Sensex -- crossed the 8000 level following brisk buying by foreign and

domestic funds in early trading.

9000, November 28, 2005 The Sensex on November 28, 2005 crossed the magical figure of

9000 to touch 9000.32 points during mid-session at the Bombay Stock Exchange on the back

of frantic buying spree by foreign institutional investors and well supported by local

operators as well as retail investors.

10,000, February 6, 2006 The Sensex on February 6, 2006 touched 10,003 points during

mid-session. The Sensex finally closed above the 10K-mark on February 7, 2006.

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11,000, March 21, 2006 The Sensex on March 21, 2006 crossed the magical figure of 11,000

and touched a life-time peak of 11,001 points during mid-session at the Bombay Stock

Exchange for the first time. However, it was on March 27, 2006 that the Sensex first closed at

over 11,000 points.

12,000, April 20, 2006 The Sensex on April 20, 2006 crossed the 12,000-mark and closed at

a peak of 12,040 points for the first time.

13,000, October 30, 2006 The Sensex on October 30, 2006 crossed the magical figure of

13,000 and closed at 13,024.26 points, up 117.45 points or 0.9%. It took 135 days for the

Sensex to move from 12,000 to 13,000 and 123 days to move from 12,500 to 13,000.

14,000, December 5, 2006 The Sensex on December 5, 2006 crossed the 14,000-mark to

touch 14,028 points. It took 36 days for the Sensex to move from 13,000 to the 14,000 mark.

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. Nifty also touched a new high at

4659, up 113 points.

The Sensex finally ended with a gain of 654 points at 16,323. The NSE Nifty gained 186

points to close at 4,732.

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. Some profit taking towards the end, saw the index slip into red to 16,887 -

down 187 points from the day's high. The Sensex ended with a gain of 22 points at 16,921.

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 index zoomed to a new all-

time intra-day high of 18,327. It finally gained 789 points to close at an all-time high of

18,280. The market set several new records including the biggest single day gain of 78910


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points at close, as well as the largest intra-day gains of 993 points in absolute term backed by

frenzied buying after the news of the UPA and Left meeting on October 22 put an end to the

worries of an impending election.

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. The index touched a fresh all-time intra-

day high of 19,096, and finally ended with a smart gain of 640 points at 19,059.The Nifty

gained 242 points to close at 5,670.

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 tradingdays to gain 1,000 points after the index crossed the 19,000-mark on October 15. The major

drivers of today's rally were index heavyweights Larsen and Toubro, Reliance Industries,

ICICI Bank, HDFC Bank and SBI among others. The 30-share index spurted in the last five

minutes of trade to fly-past the crucial level and scaled a new intra-day peak at 20,024.87

points before ending at its fresh closing high of 19,977.67, a gain of 734.50 points. The NSE

Nifty rose to a record high 5,922.50 points before ending at 5,905.90, showing a hefty gain of

203.60 points.

21,000, January 8, 2008 The sensex peaks. It crossed the 21,000 mark in intra-day trading

after 49 trading sessions. This was backed by high market confidence of increased FII

investment and strong corporate results for the third quarter. 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 generated on the

Reserve Bank of India hiking CRR by 50 bps. FII outflow continued in this week.

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.

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Bloomberg lists them as the top two gainers for the Sensex, closely followed by ICICI Bank

and ITC Ltd.

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 the

previous day having seen an intraday fall of as large as 1063 points. Thus,this week turned

out to be the week with largest percentage fall in the Sensex.

14284.21, May 18, 2009 After the result of 15th indian general election Sensex gained

2110.79 points form the previous close of 12173.42 these creates a new histroy 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. 14200

How stock market works

In order to understand what stocks are and how stock markets work, we need to dive into

history--specifically, the history of what has come to be known as the corporation, or

sometimes the limited liability company (LLC). Corporations in one form or another have

been around ever since one guy convinced a few others to pool their resources for mutual

benefit.

The first corporate charters were created in Britain as early as the sixteenth century, but these

were generally what we might think of today as a public corporation owned by the

government, like the postal service.

Privately owned corporations came into being gradually during the early 19th century in

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the United States , United Kingdom and western Europe as the governments of those

countries started allowing anyone to create corporations.

In order for a corporation to do business, it needs to get money from somewhere. Typically,

one or more people contribute an initial investment to get the company off the ground. These

entrepreneurs may commit some of their own money, but if they don't have enough, they will

need to persuade other people, such as venture capital investors or banks, to invest in their

business.

They can do this in two ways: by issuing bonds, which are basically a way of selling debt (or

taking out a loan, depending on your perspective), or by issuing stock, that is, shares in the

ownership of the company.

Long ago stock owners realized that it would be convenient if there were a central place they

could go to trade stock with one another, and the public stock exchange was born. Eventually,

today's stock markets grew out of these public places.

IPO Initial Public Offering

Public issues can be classified into Initial Public offerings and further public offerings. In a

public offering, the issuer makes an offer for new investors to enter its shareholding family.

The issuer company makes detailed disclosures as per the DIP guidelines in its offer

document and offers it for subscription. Initial Public Offering (IPO ) 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 issuers

securities.

IPO is New shares Offered to the public in the Primary Market .The first time the company is

traded on the stock exchange. A prospectus is issued to read about its risk before investing.

IPO is a company's first sale of stock to the public. Securities offered in an IPO are often,

but not always, those of young, small companies seeking outside equity capital and a public

market for their stock. Investors purchasing stock in IPOs generally must be prepared to

accept very large risks for the possibility of large gains. Sometimes, Just before the IPO is

launched, Existing share Holders get a very liberal bonus issues as a reward for their faith inrisking money when the project was new

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How to apply to a public issue ?

When a company floats a public issue or IPO, it prints forms for application to be filled by

the investors. Public issues are open for a few days only. As perlaw, any public issue should

be kept open for a minimum of 3days and a maximum of 21 days. For issues, which are

underwritten by financial institutions, the offer should be kept open for a minimum of 3 days

and a maximum of 21 days. For issues, which are underwritten by all India financial

institutions, the offer should be kept open for a maximum of 10 days. Generally, issues are

kept open for only 3 to 4 days. The duly complete application from, accompanied by cash,

cheque, DD or stock invest should be deposited before the closing date as per the instruction

on the from. IPO's by investment companies (closed end funds) usually contain

underwriting fees which represent a load to buyers.

Before applying for any IPO , analyse the following factors:

1. Who are the Promoters ? What is their credibility and track record ?

2. What is the company manufacturing or providing services - Product, its potential

3. Does the Company have any Technology tie-up ? if yes , What is the reputation of the

collaborators

4. What has been the past performance of the Company offering the IPO?

5. What is the Project cost, What are the means of financing and profitability projections?

6. What are the Risk factors involved ?

7. Who has appraised the Project ? In India Projects apprised by IDBI and ICICI have more

credibility than small Merchant Bankers

How to make payments for IPOs:

The payment terms of any IPO or Public issue is fixed by the company keeping in view its

fund requirements and the statutory regulations. In general, companies stipulate that either theentire money should be paid along with the application or 50 percent of the entire amount be

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paid along with the application and rest on allotment. However, if the funds requirements is

staggered, the company may ask for the money in calls, that is, the company demands for the

money after allotment as and when the cash flow demands. As per the statutory requirements,

for public issue large than Rs. 250 crore, the money is to be collected as under:

25 per cent on application

25 per cent on allotment

50 per cent in two or more calls

The role of SEBI in the process of IPO

SEBI regulates the IPO process and issued detailed Guidelines under section 11 of the SEBI

Act, 1992 in the name of SEBI (Disclosure and Investors Protection) Guidelines, 2002

generally known as DIP Guidelines. It is also noted that under the provisions sections 55 of

the Companies Act, 1956. the matters pertaining to issue and transfer of securities and non

payment of dividend in case of listed companies, the companies intend to get listed are being

administered by SEBI.

DEMAT ACCOUNT

Demat refers to a dematerialised account. Though the company is under obligation to offer

the securities in both physical and demat mode, you have the choice to receive the securities

in either mode.

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If you wish to have securities in demat mode, you need to indicate the depository and also of

the depository participant with whom you have depository account in your application.

It is, howeverdesirable that you hold securities in demat form as physical securities carry

the risk of being fake, forged or stolen.

Just as you have to open an account with a bank if you want to save your money, make

cheque payments etc, Nowadays, you need to open a demat account if you want to buy or

sell stocks.

So it is just like a bank account where actual money is replaced by shares. You have to

approach the DPs (remember, they are like bank branches), to open your demat account.

Let's say your portfolio of shares looks like this: 150 of Infosys, 50 of Wipro, 200 of HLL

and 100 of ACC. All these will show in yourdemat account. So you don't have to possess

any physical certificates showing that you own these shares. They are all held electronically

in your account. As you buy and sell the shares, they are adjusted in your account. Just like

a bank passbook or statement, the DP will provide you with periodic statements of holdings

and transactions.

The most important thing required to trade in share market is Demat account. Demat orDematerialized account is to store stocks in electronics form. It is just like opening a bank

account to store your money. Now nobody is interested to keep shares in physical forms and

going for electronic based filing of shares. This has changed the style of operation in main

Indian stock markets like BSE Sensex ( Bombay Stock Exchange Sensitive Index) and Nifty

(National Stock Exchange of India) and its brokers.

How to Open a Demat Account

It is like opening a bank account. You have to approach a depository participants to open an

online trading or demat account. Most of the banks are DPs too.

Documents Required

You will have to submit few documents with the application form to open a demat account.

As per latest Govt of India rule PAN (Personal Account Number) card is must for opening a

demat account. These are the documents required to open a demat account

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1. Photo Copy of PAN Card (Mandatory)

2. Two Passport size photos

3. Address Proof Ration Card/Passport/Driving License/Voters ID Card/BSNLTelephone/LIC Policy

4. Latest Bank Statement and photocopy of Bank

SEBI Introduction

In 1988 the Securities and Exchange Board of India (SEBI) was established by the

Government of India through an executive resolution, and was subsequently upgraded as a

fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities

and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place of Government

Control, a statutory and autonomous regulatory board with defined responsibilities, to cover

both development & regulation of the market, and independent powers have been set up.

Paradoxically this is a positive outcome of the Securities Scam of 1990-91.

The basic objectives of the Board were identified as:

to protect the interests of investors in securities;

to promote the development of Securities Market;

to regulate the securities market and

for matters connected therewith or incidental thereto.

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Since its inception SEBI has been working targetting the securities and is attending to the

fulfillment of its objectives with commendable zeal and dexterity. The improvements in the

securities markets like capitalization requirements, margining, establishment of clearing

corporations etc. reduced the risk of credit and also reduced the market.

SEBI has introduced the comprehensive regulatory measures, prescribed registration norms,

the eligibility criteria, the code of obligations and the code of conduct for different

intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars,

portfolio managers, credit rating agencies, underwriters and others. It has framed bye-laws,

risk identification and risk management systems for Clearing houses of stock exchanges,

surveillance system etc. which has made dealing in securities both safe and transparent to the

end investor.

Another significant event is the approval of trading in stock indices (like S&P CNX Nifty &

Sensex) in 2000. A market Index is a convenient and effective product because of the

following reasons:

It acts as a barometer for market behavior;

It is used to benchmark portfolio performance;

It is used in derivative instruments like index futures and index options;

It can be used for passive fund management as in case of Index Funds.

Two broad approaches of SEBI is to integrate the securities market at the national level, and

also to diversify the trading products, so that there is an increase in number of tradersincluding banks, financial institutions,insurance companies, mutual funds, primary dealers

etc. to transact through the Exchanges. In this context the introduction of derivatives trading

through Indian Stock Exchanges permitted by SEBI in 2000 AD is a real landmark.

SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatory

framework for derivatives trading and suggest bye-laws for Regulation and Control of

Trading and Settlement of Derivatives Contracts. The Board of SEBI in its meeting held on

May 11, 1998 accepted the recommendations of the committee and approved the phased

introduction of derivatives trading in India beginning with Stock Index Futures. The Board

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also approved the "Suggestive Bye-laws" as recommended by the Dr LC Gupta Committee

for Regulation and Control of Trading and Settlement of Derivatives Contracts.

SEBI then appointed the J. R. Verma Committee to recommend Risk Containment

Measures (RCM) in the Indian Stock Index Futures Market. The report was submitted in

November 1998.

However the Securities Contracts (Regulation) Act, 1956 (SCRA) required amendment to

include "derivatives" in the definition of securities to enable SEBI to introduce trading in

derivatives. The necessary amendment was then carried out by the Government in 1999. The

Securities Laws (Amendment) Bill, 1999 was introduced. In December 1999 the new

framework was approved.

Derivatives have been accorded the status of `Securities'. The ban imposed on trading in

derivatives in 1969 under a notification issued by the Central Government was revoked.

Thereafter SEBI formulated the necessary regulations/bye-laws and intimated the Stock

Exchanges in the year 2000. The derivative trading started in India at NSE in 2000 and BSE

started trading in the year 2001.

SEBI is the Regulator for the Securities Market in India. Originally set up by

the Government of India in 1988, it acquired statutory form in 1992 with SEBI Act

1992 being passed by the Indian Parliament.Chaired by C B Bhave, SEBI is headquartered in

the popular business district of Bandra-Kurla complex in Mumbai, and has Northern, Eastern,

Southern and Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad.

Organisation Structure

Chandrasekhar Bhaskar Bhave is the sixth chairman of the Securities Market Regulator. Prior

to taking charge as Chairman SEBI, he had been the chairman of NSDL (National Securities

Depository Limited) ushering in paperless securities. Prior to his stint at NSDL, he had

served SEBI as a Senior Executive Director. He is a former Indian Administrative Service

officer of the 1975 batch.

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The Board comprises

Name Designation As per

Mr CB Bhave Chairman SEBICHAIRMAN (S.4(1)(a) of theSEBI Act, 1992)

Mr KP KrishnanJoint Secretary, Ministry ofFinance

Member (S.4(1)(b) of theSEBI Act, 1992)

Mr Anurag GoelSecretary, Ministry ofCorporate Affairs

Member (S.4(1)(b) of theSEBI Act, 1992)

Dr G Mohan GopalDirector, National JudicialAcademy, Bhopal

Member (S.4(1)(d) of theSEBI Act, 1992)

Mr MS SahooWhole Time Member,SEBI


Dr KM AbrahamWhole Time Member,SEBI


Mr Mohandas Pai Director, InfosysMember (S.4(1)(d) of theSEBI Act, 1992)

Functions and Responsibilities

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

the issuers of securities

the investors

the market intermediaries.

SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and

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enforcement action in its executive function and it passes rulings and orders in its judicial

capacity. Though this makes it very powerful, there is an appeals process to create

accountability. There is a Securities Appellate Tribunal which is a three member tribunal and

is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A

second appeal lies directly to the Supreme Court.

SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and

successively (e.g. the quick movement towards making the markets electronic and paperless

rolling settlement on T+2 basis). SEBI has been active in setting up the regulations as

required under law. It is regulating body.

INTRODUCTION BSE

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now

spanning three centuries in its 133 years of existence. What is now popularly known as 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's pivotal and pre-eminent role in the development of the Indian capital market is widely

recognized. It migrated from the open outcry system to an online screen-based order driven

trading system in 1995. Earlier an Association Of Persons (AOP), BSE is now a corporatised

and demutualised entity incorporated under the provisions of the Companies Act, 1956,

pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the

Securities and Exchange Board of India (SEBI). With demutualisation, BSE has two of

world's best exchanges, Deutsche Brse and Singapore Exchange, as its strategic partners.

Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by

providing it with an efficient access to resources. There is perhaps no major corporate in

India which has not sourced BSE's services in raising resources from the capital market.

Today, BSE is the world's number 1 exchange in terms of the number of listed companies and

the world's 5th in transaction numbers. The market capitalization as on December 31, 200721


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stood at USD 1.79 trillion . An investor can choose from more than 4,700 listed companies,

which for easy reference, are classified into A, B, S, T and Z groups.

The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature ,

and is tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The

SENSEX is constructed on a 'free-float' methodology, and is sensitive to market sentiments

and market realities. Apart from the SENSEX, BSE offers 21 indices, including 12 sectoral

indices. BSE has entered into an index cooperation agreement with Deutsche Brse. This

agreement has made SENSEX and other BSE indices available to investors in Europe and

America. Moreover, Barclays Global Investors (BGI), the global leader in ETFs through its

iShares brand, has created the 'iShares BSE SENSEX India Tracker' which tracks the

SENSEX. The ETF enables investors in Hong Kong to take an exposure to the Indian equitymarket.

The first Exchange Traded Fund (ETF) on SENSEX, called "SPIcE" is listed on BSE. It

brings to the investors a trading tool that can be easily used for the purposes of investment,

trading, hedging and arbitrage. SPIcE allows small investors to take a long-term view of the

market.

BSE provides an efficient and transparent market for trading in equity, debt instruments and

derivatives. 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. The systems and

processes are designed to safeguard market integrity and enhance transparency in operations.

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).

BSE continues to innovate. In recent times, it has become the first national level stock

exchange to launch its website in Gujarati and Hindi to reach out to a larger number of

investors. It has successfully launched a reporting platform for corporate bonds in India

christened the ICDM or Indian Corporate Debt Market and a unique ticker-cum-screen aptly

named 'BSE Broadcast' which enables information dissemination to the common man on the

street.

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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. While the Directors Database provides a single-point access to information on

the boards of directors of listed companies, the ICERS facilitates the corporate in sharing

with BSE their corporate announcement

INTRODUCTION NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE), located in Bombay, is India's first debt market. It was

set up in 1993 to encouragestock 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 traded are,

treasury bills, government security and bonds issued by public

The Organisation

The National Stock Exchange of India Limited has genesis in the report of the High Powered

Study Group on Establishment of New Stock Exchanges, which recommended promotion of

a National Stock Exchange by financial institutions (FIs) to provide access to investors from

all across the country on an equal footing. Based on the recommendations, NSE was

promoted by leading Financial Institutions at the behest of the Government of India and was

incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the

country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956

in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment

in June 1994. The Capital Market (Equities) segment commenced operations in November

1994 and operations in Derivatives segment commenced in June 2000.

Our Group

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NSCCL

NCCL NSETECH

IISL

NSE NSE.IT

DotExIntl. Ltd.

NSDL

Listing

NSE plays an important role in helping an Indian companies access equity capital, by

providing a liquid and well-regulated market. NSE has about 1319 companies listed

representing the length, breadth and diversity of the Indian economy which includes from hi-

tech to heavy industry, software, refinery, public sector units, infrastructure, and financial

services. Listing on NSE raises a companys profile among investors in India and abroad.

Trade data is distributed worldwide through various news-vending agencies. More

importantly, each and every NSE listed company is required to satisfy stringent financial,

public distribution and management requirements. High listing standards foster investor

confidence and also bring credibility into the markets.

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http://www.nseindia.com/content/us/us_nsdl.htmhttp://www.nseindia.com/content/us/us_dotex.htmhttp://www.nseindia.com/content/us/us_nseit.htmhttp://www.nseindia.com/content/us/us_organisation.htmhttp://www.nseindia.com/content/us/us_iisl.htmhttp://www.nseindia.com/content/us/us_nsetech.htmhttp://www.nseindia.com/content/us/us_nccl.htmhttp://www.nseindia.com/content/us/us_nsccl.htm


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NSE lists securities in its Capital Market (Equities) segment and its Wholesale Debt Market

segment.

Introduction of SENSEX

SENSEX, first compiled in 1986, was calculated on a "Market Capitalization-Weighted"

methodology of 30 component stocks representing large, well-established and financially

sound companies across key sectors. The base year of SENSEX was taken as 1978-79.

SENSEX today is widely reported in both domestic and international markets through print

as well as electronic media. It is scientifically designed and is based on globally accepted

construction and review methodology. Since September 1, 2003, SENSEX is being calculated

on a free-float market capitalization methodology. The "free-float market capitalization-

weighted" methodology is a widely followed index construction methodology on which

majority of global equity indices are based; all major index providers like MSCI, FTSE,

STOXX, S&P and Dow Jones use the free-float methodology.

The growth of the equity market in India has been phenomenal in the present decade. Right

from early nineties, the stock market witnessed heightened activity in terms of various bull

and bear runs. In the late nineties, the Indian market witnessed a huge frenzy in the 'TMT'

sectors. More recently, real estate caught the fancy of the investors. SENSEX has captured all

these happenings in the most judicious manner. One can identify the booms and busts of the

Indian equity market through SENSEX. As the oldest index in the country, it provides the

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time series data over a fairly long period of time (from 1979 onwards). Small wonder, the

SENSEX has become one of the most prominent brands in the country.

SENSEX Calculation Methodology

SENSEX is calculated using the "Free-float Market Capitalization" methodology, wherein,

the level of index at any point of time reflects the free-float market value of 30 component

stocks relative to a base period. The market capitalization of a company is determined by

multiplying the price of its stock by the number of shares issued by the company. This market

capitalization is further multiplied by the free-float factor to determine the free-float market

capitalization.

The base period of SENSEX is 1978-79 and the base value is 100 index points. This is often

indicated by the notation 1978-79=100. The calculation of SENSEX involves dividing the

free-float market capitalization of 30 companies in the Index by a number called the Index

Divisor. The Divisor is the only link to the original base period value of the SENSEX. It

keeps the Index comparable over time and is the adjustment point for all Index adjustments

arising out of corporate actions, replacement of scrips etc. During market hours, prices of the

index scrips, at which latest trades are executed, are used by the trading system to calculate

SENSEX every 15 seconds. The value of SENSEX is disseminated in real time.

Concept of FREE FLOAT

Free-float methodology refers to an index construction methodology that takes into

consideration only the free-float market capitalization of a company for the purpose of index

calculation and assigning weight to stocks in the index. Free-float market capitalization takes

into consideration only those shares issued by the company that are readily available for

trading in the market. It generally excludes promoters' holding, government holding, strategic

holding and other locked-in shares that will not come to the market for trading in the normal

course. In other words, the market capitalization of each company in a free-float index is

reduced to the extent of its readily available shares in the market.

Definition of Free-float

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Shareholding of investors that would not, in the normal course come into the open market for

trading are treated as 'Controlling/ Strategic Holdings' and hence not included in free-float.

Specifically, the following categories of holding are generally excluded from the definition of

Free-float:

Shares held by founders/directors/ acquirers which has control element

Shares held by persons/ bodies with "Controlling Interest"

Shares held by Government as promoter/acquirer

Holdings through the FDI Route

Strategic stakes by private corporate bodies/ individuals

Equity held by associate/group companies (cross-holdings)

Equity held by Employee Welfare Trusts

Locked-in shares and shares which would not be sold in the open market in normal

course.

Maintenance of SENSEX

One of the important aspects of maintaining continuity with the past is to update the base year

average. The base year value adjustment ensures that replacement of stocks in Index,

additional issue of capital and other corporate announcements like 'rights issue' etc. do not

destroy the historical value of the index. The beauty of maintenance lies in the fact that

adjustments for corporate actions in the Index should not per se affect the index values.

TheBSE Index Celldoes the day-to-day maintenance of the index within the broad index

policy framework set by the BSE Index Committee.The BSE Index Cellensures that

SENSEX and all the other BSE indices maintain their benchmark properties by striking a

delicate balance between frequent replacements in index and maintaining its historical

continuity. The BSE Index Committee comprises of capital market expert, fund managers,

market participants and members of the BSE Governing Board.

Function and purpose of stock market

The stock market is one of the most important sources for companies to raise money. This

allows businesses to be publicly traded, or raise additional capital for expansion by selling

shares of ownership of the company in a public market. The liquidity that an exchange

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provides affords investors the ability to quickly and easily sell securities. This is an attractive

feature of investing in stocks, compared to other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an important part of the

dynamics of economic activity, and can influence or be an indicator of social mood. An

economy where the stock market is on the rise is considered to be an up and coming

economy. In fact, the stock market is often considered the primary indicator of a country's

economic strength and development. Rising share prices, for instance, tend to be associated

with increased business investment and vice versa. Share prices also affect the wealth of

households and their consumption. Therefore, central banks tend to keep an eye on the

control and behavior of the stock market and, in general, on the smooth operation of financial

system functions. Financial stability is the raison d'tre of central banks.

Exchanges also act as the clearinghouse for each transaction, meaning that they collect and

deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk

to an individual buyer or seller that the counterparty could default on the transaction.

The smooth functioning of all these activities facilitates economic growth in that lower costs

and enterprise risks promote the production of goods and services as well as employment. In

this way the financial system contributes to increased prosperity.

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FII (Foreign Institutional Investors) in Indian Stock Market

Foreign Institutional Investor (FII) is used to denote an investor - mostly of the form of an

institution or entity, which invests money in the financial markets of a country different from

the one where in the institution or entity was originally incorporated.

FII investment is frequently referred to as hot money for the reason that it can leave the

country at the same speed at which it comes in.

In countries like India, statutory agencies like SEBI have prescribed norms to register FIIs

and also to regulate such investments flowing in through FIIs. In 2008, FIIs represented the

largest institution investment category, with an estimated US$ 751.14 billion.

Since 1990-91, the Government of India embarked on liberalisation and economic reforms

with a view of bringing about rapid and substantial economic growth and move towards

globalisation of the economy. As a part of the reforms process, the Government under its

New Industrial Policy, revamped its foreign investment policy recognising the growing

importance of foreign direct investment as an instrument of technology transfer,

augmentation of foreign exchange reserves and globalisation of the Indian economy.

Simultaneously, the Government, for the first time, permitted portfolio investments from

abroad by foreign institutional investors in the Indian capital market. The entry of FIIs seems

to be a follow up of the recommendation of the Narsimhan Committee Report on Financial

System. While

recommending their entry, the Committee, however did not elaborate on the objectives of the

suggested policy. The committee only suggested that the capital market should be gradually

opened up to foreign portfolio investments.

From September 14, 1992 with suitable restrictions, FIIs were permitted to invest in all the

securities traded on the primary and secondary markets, including shares, debentures and

warrants issued by companies which were listed or were to be listed on the Stock Exchanges

in India.

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While presenting the Budget for 1992-93, the then Finance Minister Dr. Manmohan Singh

had announced a proposal to allow reputed foreign investors, such as Pension Funds etc., to

invest in Indian capital market. To operationalise this policy announcement, it had become

necessary to evolve guidelines for such investments by Foreign Institutional Investors (FIIs).

The policy framework for permitting FII investment was provided under the Government of

India guidelines vide Press Note date September 14, 1992. The guidelines formulated in this

regard were as follows:

1. Foreign Institutional Investors (FIIs) including institutions such as Pension Funds,

Mutual Funds, Investment Trusts, Asset Management Companies, Nominee

Companies and Incorporated/Institutional Portfolio Managers or their power of

attorney holders (providing discretionary and non-discretionary portfoliomanagement services) would be welcome to make investments under these

guidelines.

2. FIIs would be welcome to invest in all the securities traded on the Primary and

Secondary markets, including the equity and other securities/instruments of

companies which are listed/to be listed on the Stock Exchanges in India including

the OTC Exchange of India. These would include shares, debentures, warrants, and

the schemes floated by domestic Mutual Funds. Government would even like to add

further categories of securities later from time to time.

3. FIIs would be required to obtain an initial registration with Securities and Exchange

Board of India (SEBI), the nodal regulatory agency for securities markets, before any

investment is made by them in the Securities of companies listed on the Stock

Exchanges in India, in accordance with these guidelines. Nominee companies,

affiliates and subsidiary companies of a FII would be treated as separate FIIs for

registration, and may seek separate registration with SEBI.

4. Since there were foreign exchange controls in force, for various permissions under

exchange control, along with their application for initial registration, FIIs were also

supposed to file with SEBI another application addressed to RBI for seeking various permissions under FERA, in a format that would be specified by RBI for the

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purpose. RBI's general permission would be obtained by SEBI before granting initial

registration and RBI's FERA permission together by SEBI, under a single window

approach.

5. For granting registration to the FII, SEBI should take into account the track record of

the FII, its professional competence, financial soundness, experience and such other

criteria that may be considered by SEBI to be relevant. Besides, FII seeking initial

registration with SEBI were be required to hold a registration from the Securities

Commission, or the regulatory organisation for the stock market in the country of

domicile/incorporation of the FII.

6. SEBI's initial registration would be valid for five years. RBI's general permission

under FERA to the FII would also hold good for five years. Both would be

renewable for similar five year periods later on.

7. RBI's general permission under FERA would enable the registered FII to buy, sell

and realize capital gains on investments made through initial corpus remitted toIndia, subscribe/renounce rights offerings of shares, invest on all recognized stock

exchanges through a designated bank branch, and to appoint a domestic Custodian

for custody of investments held.

8. The General Permission from RBI would also enable the FII to:

Open foreign currency denominated accounts in a designated bank. (There

could even be more than one account in the same bank branch each designated

in different foreign currencies, if it is so required by FII for its operational

purposes);

Open a special non-resident rupee account to which could be credited all

receipts from the capital inflows, sale proceeds of shares, dividends and

interests;

Transfer sums from the foreign currency accounts to the rupee account and vice

versa, at the market rate of exchange;

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Make investments in the securities in India out of the balances in the rupee

account;

Transfer repatriable (after tax) proceeds from the rupee account to the foreign

currency account(s); f. Repatriate the capital, capital gains, dividends, incomes received by way of

interest, etc. and any compensation received towards sale/renouncement of

rights offerings of shares subject to the designated branch of a bank/the

custodian being authorized to deduct with holding tax on capital gains and

arranging to pay such tax and remitting the net proceeds at market rates of

exchange;

Register FII's holdings without any further clearance under FERA.

What Does Foreign Institutional Investor - FIIMean?

An investor or investment fund that is from or registered in a country outside of the one in

which it is currently investing. Institutional investors include hedge funds, insurance

companies, pension funds and mutual funds.

Regulation imposed by SEBI on FII

(a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(b) "certificate" means a certificate of registration granted by the Board under these

regulations;

(c) "designated bank" means any bank in India, which has been authorised by the Reserve

Bank of India to act as a banker to Foreign Institutional Investors;

(d) "domestic custodian" includes any person carrying on the activity of providing

custodial services in respect of securities;

(e) "Enquiry officer" means any officer of the Board, or any other person appointed by

the Board under Chapter V of these regulations;

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(f) "Foreign Institutional Investor" means an institution established or incorporated

outside India which proposes to make investment in India in securities;

(g) "Form" means a form specified in the First Schedule to these regulations;

(h) "Government of India Guidelines" means the guidelines dated September 14, 1992

issued by the Government of India for Foreign Institutional Investors, as amended from

time to time;

(i) "institution" includes every artificial juridical person;

(j) "schedule" means a schedule to these regulations;

(k) "sub-account" includes those institutions, established or incorporated outside Indiaand those funds, or portfolios, established outside India, whether incorporated or not, on

whose behalf investments are proposed to be made in India by a Foreign Institutional

Investor.

DEPARTMENTS

1. R & D department

2. Membership Inspection / Grievances / Complain / Audit

3. Listing

4. Market operation department (Margin)

5. Secretarial Department

6. Surveillance Department

7. EDP (Computer)

8. Accounts

9. Legal

10. UPSE securities (Subsidiary Company)

11. Clearing House (Trade and Operation)

1. R & D, Library and Investor service department

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Research and development wing of the Uttar Pradesh Stock ExchangeAssociation Limited has been functioning eve since 1992 under SEBI directionand providing valuable services to the investors. The wing presently namesinvestor service center has a well maintained, library comprising of books,

journals, periodicals, and newspapers on financial market, annual reports ofcompanies, prime directory etc.

They maintain the records of day to day quotations of major exchanges, theannual reports of companies, PRIME directory, complete set of volumes of theStock Exchange, Mumbai Directories. Along with this it also maintains the newsletters, daily bulletin, books on Capital Markets, Investor awareness, BudgetTaxation with other relevant books.

The UPSE has been organizing summer camps to give trainings to CompanySecurities and MBAs different institutes giving those complete data and helpingthe student to know the practical day-to-day working of the exchanges. Alongwith this it also organizes Investor Awareness Shows.

The changing technology has helped the exchange to install a corporatedatabase of over 7000 companies. The rates of UPSE, BSE, and NSE aredisplayed live for the benefit of investors.

There are three main function of this department

To render investor services

To maintain library To conduct research and development

All the above facilities are provided free of cost to one and all any query ismandatory attended by the help desk situated in the investor service center,

headed by a responsible official of the exchange.

Membership and Grievances

There are two types of membership

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1. Shareholder 2. Trading member

Eligibility for membership

To have the membership of the stock exchange one has to satisfy the followingcriteria

1. He has to be the citizen of India.2. Experience of 2 year in the securities department.3. Capital of 10 lakh (individual) and 20 lakh (company).4. He must submit 4 lakh as Base Minimum Capital (BMC). This becomesoperational in the stock market.

a) The BMC must comprise of at least of 50% of cash or cashequivalents (FDR, bank guarantee, etc)b) Other 50% can comprise of the following type of assets (shares-valued on the daily basis)

5. He must submit extra money as Margin, to trade in shares of the stockexchange.

a) The margin again has to be of 50% of cash or cash equivalents

(FDR, bank guarantee, etc.)

b) Other 50% can comprise of the following type of assets (shares-valued on the daily basis)

6. No association with defaulter member, i.e. the member has to provide anundertaking of not being involved with defaulting broker.

Procedure to get membership

Application screening committee (UPSE) Board approval (UPSE) SEBI approval

Grievances and problems

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There are of two types of problem between the investor and the following parties

1. Companies

2. Broker

Transfer of share committee

This committee takes care of the hassle free transfer of the share from one party toanother.

Investor services committee

This committee helps solve problem between the broker and stock holder. There is nocharge for the resolution of the problem of the investor regarding the above parties.

Arbitration committee (upper committee)

To appeal against the decision of the Investor Service Committee (ISC), one has tosubmit the decision of ICS along with Rs. 1000 in the arbitration committee.

The arbitration panel headed by presiding arbitrator appoints a sole arbitrator. Thesole arbitrator undertakes investigation and hearing of the case. Then arbitrationaward decision is given. The execution of the order of the arbitration has to be madewithin 15 days.

Default committee

The department collects and keeps track of the various dues to the stockexchange. It also takes action against the defaulting brokers and company.

It can invite investor claim by advertising in the newspapers.

The assets of the defaulting party are disbursed to the lenders and the surplusgoes to the investor protection fund (IPF).

If the asset of the defaulting party falls the lenders demand, 1 lakh (maximum)

can be released from the IPF, condition being it is per person case.

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Disciplinary committee

The department takes care of the imaginaries that occur that during the regularconduct of the business of the stock exchange.

It can penalize the party involved in the earlier mentioned acts with following

1. Financial fines2. Expulsion

Investor grievance with the broker or vise versa goes to the Investor ServiceCommittee (ISC).

Investor having complained against any company then the case goes to theArbitration committee.

Here the investor only has to deposit arbitration fees but no security. Whereasthe brokers has to deposit 100% of the award, given against him by the ISC.

The legal path for complaints of the investor is as follows:

ISC Arbitration committee District judge High court Supreme court

The various measures that court can take on the litigation of this type are asfollows:

1. Set aside2. Confirm3. Reprimand (send back the order to the lower court)

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LISTING

Recruitment with respect to the listing of securities on a recognized stock

exchange

A public company as defined under the act 1956, desirous of getting itssecurities listed on a recognized stock exchange, shall apply for the purpose to thestock exchange and forward alone with its application the following documentsand particulars:

a) Memorandum and article of association and in case of a debenture issue, a copyof the trust deed.

b) Copies of all prospectuses or statement in lieu of prospectuses issued by the

company at any time.

c) Copies of offer for the sale and circulars or advertisements offering any

securities for subscription or sale during the last five years.

d) Copies of balance sheet and audited accounts for the last five years, or in the caseof new companies, for such shorter period for which account have been made up.

e) A statement showing-i. Dividend and cash bonuses, if any, paid during the last ten years (or such

shorter period as the company has been in existence, whether as a privateor public company).

ii. Dividend or interest in arrear, if any.

f) Certified copy of agreement or other documents relating

to arrangements with orbetween: -

i. Vendors and /or promotersii. Underwriters and sub-underwriters.

iii. Broker and sub-broker.

g) Certified copies of agreement with

i. Managing agents and secretaries and treasures.

ii. Selling agentsiii. Managing directors and technical directorsiv. General manager, sales manager, manager or secretary.

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h) Certified copy of every letter, report, balance sheet, valuation,contract, court order or other document, or other document, part ofwhich is referred to in any prospectus, offer for sale, circular oradvertisement offering securities for subscription or sale, during the last

five years.

i) A statement containing particulars of the date of, and parties to allmaterial contracts, agreements (including agreement for technical adviceand collaboration) concessions and similar other documents (exceptthose entered into in the ordinary courses of business carried on orintended to be carried on by the company) together with a briefdescription of the terms, subject matter and general nature of thedocuments.

j) A brief history of the company since its incorporation givingdetails of its activities including any reorganization, reconstruction oramalgamation, changes in its capital structure (authorized, issued andsubscribed) and debenture borrowings if any.

k) Particulars of shares and debentures issuedi. For consideration other than cash, whether in whole or part,

ii. At a premium or discount or,iii. In pursuance of an opinion.

l) A statement containing particulars of any commission,brokerage, discount or other special terms including an opinion for theissue of any kind of the securities granted to any person.

m) Certified copies of

i. Acknowledgement card or the receipt of filling offer document withthe securities and exchange board of India.

ii. Agreement, if any, with the industrial finance corporation, industrialcredit and Investment Corporation and similar bodies.

) Particulars of shares forfeited.o) A list of highest ten holder of each class or kind of securities of the company as on the date of application along with the

particulars as to the number of shares or debentures held by and theaddress of each such holders.

p) Particulars of shares or debentures for which permissionto deal is applied for:

Provided that a recognized stock exchange may either generally by its buy

laws or in any particular case call for such further particulars ofdocuments, as it deems proper.

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An initial listing fee for a company to get listed with the Uttar Pradesh StockExchange is 10500.

The Annual listing fees structure is as follows:

Capital (in crore) Fees

Up to 1 6000

1.5 9000

5.10 1400010.20 28000

Each additional 1 crore over 20 crore onwards in the capital will attract Rs

4600 more in addition to 28000.

If other company from different state listed with BSE or NSE the companywill be charged 50% of the above fees.

One day free run for the stock is provided to estimate the value of the stock.That is, there is no circuit limits to the stock for the first day of the trading of astock.

Indian primary market ushered in an era of free pricing in 1992. Followingthis, the guidelines have provided that the issuer in consultation with MerchantBanker shall decide the price. There is no price formula stipulated by SEBI. SEBIdoes not play any role in price fixation. The company and merchant banker arehowever required to give full disclosures of the parameters, which they hadconsidered while deciding the issue price. There are two types of issues one wherecompany and LM fix a price (called fixed price) and other, where the companyand LM stipulate a floor price or a price band and leave it to market forces todetermine the final price (price discovery through book building process).

To have voluntary delisting, company must be listed in BSE and NSE.

For compulsory delisting, the stock exchange takes action against thecompany. If there is violation of the listing clauses, the company can be listed.

MARGIN DEPARTMENT

New scheme for margin is implemented from the date 30 June.In the new system of margin there is the concept of Upfront Margin.

The upfront margins consist of the following types of margins VAT (Value at Risk)and ELM (Extreme Loss Margin).

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The VAR and ELM is fixed for the different scripts.

The Z group of shares can attract VAR and ELM of 100%, where as for the B andA group share could attract lesser percentage.

Marked to Market is a special type of margin.

Further details please refer to the specialization portion of the report.

SECRETARIAL

Governing Board

According to the article of association of the exchange governing board comprisesof

1. Six director elected under the provision of the article of association of theexchange.

2. Person not exceeding two is nominated by SEBI as director3. Four people from public as public representatives nominated by the governing

board of the exchange subject to SEBI approval.4. One executive director appointed by the governing board subject to prior approval

of SEBI.However w.e.r. 12-07-2002 SEBI has suspended the governing board of the

exchange and appointed an administrator to perform the power and function of thegoverning board, under section 11 of SCRA, 1956.

According to the new regulation every stock exchange will now have a boardof director.

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Surveillance

This department was established in 1995 under the requirement of the SEBI. Themain objective of the surveillance function of the exchange is to manage risk bytaking necessary action timely. All instruments traded in the market come under the

surveillance umbrella of UPSE.

Purpose of the surveillance

Purpose of surveillance is to prevent risk which may arise dueto-

a. Carry forward tradeb. Trade away from market pricec. Price manipulationd. Insider tradinge. Circular tradingf. Creation of false market

In order to detect abnormal behavior/movement, it is necessary toknow the normal market behavior. The necessary actions are initiatedlike imposition of special margin, suspensions, deactivation ofterminals, etc. to control abnormal behavior, the department carries outinvestigation. If necessary, based on the preliminaryexamination/analysis and suitable action are taken against membersinvolved based on investigation. The detailed explanations of the

various surveillance activities are as follows:On-line surveillance

One of the most important tools of the surveillance is the on-line real time surveillance system with main objective of detecting

potential market abuses at a necessary stage to reduce the ability of themarket participants. To unduly influence the price and volume of thescripts traded at the exchange, improve the risk management systemand strengthen the self regulatory mechanism at the exchange thesystem has a facility to generate the alters on-line based on certain

preset parameters like price and volume variation in scripts; members

crossing intra day limit or gross exposure limit.

Off-line surveillance

The of-line surveillance system comprises of the variousreports based on different parameters and securities, thereof.

High-low difference in pricePercentage change in price over a week/fortnight/month.Top scripts by turnoverScripts hitting new high/low, etc.

The surveillance action or investigations are initiated in the scripts identifiedin the scripts identified from the above-stated reports.

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It takes finds the irregularities and ensures theproper working of the stock exchange. Surveillance ensures risks arising of thedaily trading are managed efficiently, by enabling proper collection of themargins.

Settlement guarantee fund is made for the payment

of the Clint of a defaulting broker.

Various Forms of errors and mal practices are as follows

1. Insider trading is utilization of the internal informationof a company to manipulate the price of the share of thecompany, before that information is made public.To avoidsuch irregularities, the surveillance department keep trackof the people insider to the companies and their trading

2.Price rigging it is way by which a company tries to manipulate the prices of the

shares in the stock market.

3. Punching errors that occur while operator types the order on the computerterminal.4. Humors are another threat to the proper working of the stock exchanges. These arefalse stories that are made up to manipulate the prices of the share.

Humor verifications another function of the stockexchange and specially the surveillance department.7.EDP (Computer Department)

Stock trading has evolved tremendously. Since the very first InitialPublic Offering (IPO) in the 13th century, owning shares of a company has been avery attractive incentive.

Even though the origins or stock trading go back to the 13th

century, the market as we know now today did not catch on strongly until the late1800s. Co-*operation between technology and society has led the push for effectiveand efficient way of trading. Technology has allowed the stock market to growtremendously, and all the while society has encourage the growth. Within seconds of

an order of a stock, the transaction can now take the place. Most of the recentadvancements with the trading have been due to Internet. The interest has allowedonline trading. In contrast to the past where only those who could afford theexpensive stock brokers could trade, but now anyone who wishes to be active in thestock market can do so at a very low cost per transaction. Trading can even be donethrough computer-mediated communication (CMC) using mobile devices such ashandheld computers and cellular phones. These advances in technology have madeday trading possible.

The stock market has now grown so that some arguethat it represents a countrys economy. This growth has been enjoyed largely to thecredibility and reputation that the stock market has earned.

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In the screen-based systems, the trading ring isreplaced by the computer screen and distant participants can trade the shares witheach other through the computer network. The screen-based trading system, enhance

the information efficiency of the marker as more participants trade at a faster speed. Alarge number of participants, geographically separated, can trade simultaneously athigh speed.

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RESEARCH METHODOLOGY

TITLE:

To analyse the changing trends of the share market, in last ten years share market faces so

many ups and down. And also anlayse that how the investor invest their money with what

perception.

OBJECTIVES

Analysis of Indian stock market in last ten years.

To determine reasons for so many ups and down.

To determine the procedures of investors to opting companies for share.

To determine the reasons of increasing the number of investors.

To determine the effect of all scams in the share market.

Analysis of changing trends in Indian stock market in last ten years.

The trend in last ten years in share market has been changed like the way selling and buying

initially, bidding form was there to sell or buy. Share price in that time could change

suddenly according to bidding. Investors had more risk in investing because everything was

hidden even share price also was hidden. So that investors have to do believe on brokers. The

availability of brokers was also less. Today everything we can watch on screen investors can

know their share price anytime and investors can buy easily share online through internet by

which investors belief have been increased. SEBI playing an important role in motivating the

investors to invest in share market. SEBI makes a regulation to protect the interests

of investors in securities, to promote the development of Securities Market, to regulate the

securities market through which interest of investors is increased .

To determine reasons for so many ups and down

There are so many reason which affect the share market for example elections, FIIs sale and

purchase, the world economy, future projects of different companies, scams are also affect

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the share market for e.g. the Harshad Mehta scam affect so much on the market as well as

investors behaviour. And the last downfalls reason was recession and FII that downfall broke

the belief of investors because the investors bear huge losses in a that single day. The day was

black Monday.

Black Monday saw bloodbath on Dalal Street as the Indian stock markets crashed by over

1430 points in afternoon trade (the market has since then recovered somewhat), reminding

investors.

Why Did the Markets Crash?? I am listing below some of the reason that I understand

1. Relent less selling by the FII's.

2. Lot of Investors turning into traders and taking long positions in the futures Market.

3. Overall Change in the Global Investment Climate

4. Fear of the US Economy headed towards a recession.

5. Commodities Market Being Very Volatile.

6. Increasing Presence of Hedge funds across all asset classes increases chances of volatility.

To determine the procedures of investors to opting Companies for share.

It is very difficult to determine the good share for investment but investors can use someways to play a safe game. Share market is like speculation but It is most important thing to

analyse the market before investing in it. It is generally very difficult for new investors

because they are unable to decide or select a good share which will profitable for them Many

investor new to share trading overcomplicate the whole process. Investors load their charts

with lots of fancy technical indicators and are constantly testing out new systems in order to

try and find that holy grail trading system thats going to make them rich. However it should

be pointed out that the most basic systems are often the most profitable.

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If you look at the price patterns of various different companies you will generally see that

when a stock is trending upwards it will never go up in a straight line. Even when there is a

very long-term upwards trend there will always be pull-backs along the way.

So therefore if you are looking to trade these long-term trends then a very simple but

effective trading strategy would be to wait for one of these pull-backs and then enter a long

position as soon as the price moves back up again.

So you can see that this very simple trading strategy can produce some excellent results and

its a lot more effective than most of the overcomplicated systems that a lot of traders use.

Successful share trading isnt really that difficult. You simply need to look for shares that are

trending either upwards or downwards and then find a way of profiting from this trend.

To determine the reasons of increasing the number of investors

The lowering of interest rates on all major saving schemes is forcing small investors to look

at the stock markets. This has resulted in a sharp jump in liquidity in the market. Investors are

growing more enthusiastic about shares every day highlighted by sharply higher fund inflows

in the market that propelled the benchmark market index.

There are many factors that have boosted the sentiment of not only domestic investors but

also foreign institutional investors who had lately adopted an indifferent approach towards

Indian market.

According to analysts, include sharp increase in foreign fund inflows in the market, a smart

pick up in industrial growth, and a downward trend in the overall interest rate regime.

To determine the effect of all scams in the share market.

All the scams affect the share market every scams make the drastic change in share market.

In Harshad Mehta scams share market raise 1000 points in just 16 days When his scam was

opened share market falls down suddenly through which investor belief was broken. And

they were avoiding the investment in share market. When the investors are interested to

invest the next scam was held Ketan Parekh scam. In this the share prices of Zee telefilmraised from Rs.476 to Rs.1555 and it falls down to Rs.121 in a year. And Satyam scam plays

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a major role in the downfall of Indian market. It is because of only one member our market

has decreased a lot. Lot of shareholders suffers because of him as the share price comes down

like a rocket. Will the market come up and when it would happen will be a big question.

To determine that how the Indian economy affected through the changing trends

in share market.

Indian market is presently down due to various reasons. The effect of recession has just now

crossed Indian banks. The main thing for recession is bank rupturing and it should be stopped

and it should not happen hereafter. But the effect is increasing day by day and this result in

unemployment. Before Recession the unemployment is somewhat controlled but after

recession it is a growing concern. The recession affect most in the Indian Economy.

The sensex climbed at a rapid rate, touching record heights in 2007 -2008. The average

Indian investor who traditionally has been a very conservative investor became more

confident and started investing heavily in the stock market. The stock market grew in leaps

and bounds and its growth in the last five years itself has been a phenomenal twenty five per

cent. All the economists and statisticians of the world started making predictions about India

becoming the next economic superpower of Asia or perhaps the world. All this sounded very

good to be true and the whole countrys attitude seemed to be a vibrant one. Against this

backdrop the unthinkable happened, the stock market Of the United states of America or

Wall street stock exchange crashed due to a crisis in the housing finance sector of its leading

banks, caused due to delinquency and non-repayment of housing loans. This resulted in a

panic in the w