Indian Stock Market Review

8/6/2019 Indian Stock Market Review

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What is a stock market/ exchange ?

Stock Exchanges are structured marketplace where affiliates of the union gather to sell firm's shares

and other securities. India Stock Exchanges can either be a conglomerate/ firm or mutual group. The

affiliates act as intermediaries to their patrons or as key players for their own accounts.

Stock Exchanges in India also assist the issue and release of securities and other monetary tools

incorporating the fortification of revenues and dividends. The book keeping of the trade is

centralized but the buying and selling is associated to a particular place as advanced marketplaces

are mechanized. The buying and selling on an exchange is only open to its affiliates and brokers.

Different Stock Exchanges in India :

a) National Stock Exchange (NSE) of India

b) Bombay Stock Exchange (BSE) of India

c) Regional Stock Exchanges (RSE) of India

y Ahmeda bad Stock Exchange

y Bangalor e Stock Exchange

y Bhu baneshwar Stock Exchange

y Calcutta Stock Exchange

y Cochin Stock Exchange

y Coim bator e Stock Exchange

y Delhi Stock Exchange

y Guwahati Stock Exchange y Hyder a bad Stock Exchange

y Jaipur Stock Exchange y Ludhiana Stock Exchange

y Madhya Pr adesh Stock Exchange y Madr as Stock Exchange

y Magadh Stock Exchange y Mangalor e Stock Exchange

y Meer ut Stock Exchange

y OTC Exchange Of India

y Pune Stock Exchange

y Saur ashtr a K utch Stock Exchange

y Uttar Pr adesh Stock Exchange

y Vadodar a Stock Exchange

National Stock Exchange (NSE) of India

Integr ated in Novem ber 1992, the National Stock Exchange of India (NSE) was initially a tar iff f or f eiting association. In 1993, the exchange was certif ied under Secur ities Contr acts

(R egulation) Act, 1956 and in June 1994 it started its business f unctioning in the Wholesale

De bt Mark et (WDM). The Equities division of NSE began its o per ations in 1994 while in

2000 the cor por ation incor por ated its Der ivatives division.



Some NSE Figur es and Facts

y The equities division of NSE cover s around 300 Indian cities, while its der ivates

section cover s 305 cities.

y The num ber of secur ities accessi ble f or buying and selling in NSE exchange in its

equities and der ivates section ar e 1,383 and 3,143 r espectively.

y The total amount of Settlement warr anty f und in NSE equities division and der ivates section ar e R s 2,085.25 cror es and R s 6,018.30 cror es r espectively.

y The daily tur nover of NSE equities division is R s 10,336.52 cror es, f or der ivates

segment is R s 32,809.96 cror es and f or Whole sale de bt division is R s 13,911.57

cror es.

y NSE uses satellite communication ex pertise to str engthen contr i bution f rom around

400 Indian cities.

y The exchange administer s around r s 1 million of buying and selling on daily basis.

y It is one of the biggest VSAT incor por ated stock exchange across the wor ld.

y Curr ently mor e than 8,500 customer s ar e doing online exchange business on NSE

a pplication.

NSE Cor por ate Off ice

National Stock Exchange of India Ltd. Exchange Plaza

Plot no. C/1, G Block Bandr a-K ur la Complex

Bandr a (E) Mum bai - 400 051

India

E-mail: cc_ [email protected]

Bombay Stock Exchange (BSE) of India

The oldest stock mark et in Asia, BSE stands f or Bom bay Stock Exchange and was initially

k nown as "The Native Shar e & Stock Brok er s Association." Incor por ated in the 1875, BSE

became the f ir st exchange in India to be certif ied by the administr ation. It attained a

per manent author ization f rom the Indian gover nment in 1956 under Secur ities Contr acts

(R egulation) Act, 1956.

Over the year, the exchange company has played an essential part in the ex pansion of Indian

investment mark et. At pr esent the association is f unctioning as cor por atised body integr ated

under the stipulations of the Companies Act, 1956.

Some BSE Figur es and Facts

y BSE exchange was the f ir st in India to launch Equity Der ivatives, Fr ee Float Index,

USD ada ptation of BSE Sensex and Exchange f acilitated Inter net buying and selling

policy y BSE exchange was the f ir st in India to acquir e the ISO author ization f or supervision,

clear ance & Settlement



y BSE exchange was the f ir st in India to have launched pr ivate service f or economictr aining

y Its On-Line Tr ading System has been f elicitated by the inter nationally r enowned standar d of Inf or mation Secur ity Management System.

BSE Cor por ate Off ice

Bom bay Stock Exchange Limited

Phirozejeejee bhoy tower s

Dalal Str eet,

Mum bai- 400001,

India

We bsite: www. bseindia.com

Regional Stock Exchanges (RSE) of India

The Regional Stock Exchanges in India started spreading its business operation from 1894. The firstRSE to start its functioning in India was Ahmedabad Stock Exchange (ASE) followed by Calcutta Stock

Exchange (CSE) in 1908.

The stock exchange in India witnessed a flourishing phase in 1980s with the incorporation of many

exchanges under it. In early 60s, it has only few certifies RSEs under it namely Hyderabad Stock

Exchange, Indore Stock Exchange, Madras Stock Exchange, Calcutta Stock Exchange and Delhi Stock

Exchange. The recent to join the list was Meerut Stock Exchange and Coimbatore Stock Exchange.

HISTORY

History of the Indian Stock Market - The Origin

One of the oldest stock mark ets in Asia, the Indian Stock Mark ets have a 200 year s old

histor y.

18th

Century

East India Company was the dominant institution and by end of the centur y,

busuness in its loan secur ities gained f ull momentum

1830's Business on cor por ate stock s and shar es in Bank and Cotton pr esses started in

Bom bay. Tr ading list by the end of 1839 got broader

1840's R ecognition f rom bank s and merchants to a bout half a dozen brok er s

1850's R a pid develo pment of commercial enter pr ise saw brok er age business attr acting

mor e peo ple into the business

1860's The num ber of brok er s incr eased to 60

1860-61 The Amer ican Civil War brok e out which caused a sto ppage of cotton supply

f rom United States of Amer ica; mark ing the beginning of the "Shar e Mania" in

India

1862-63 The num ber of brok er s incr eased to a bout 200 to 250

1865 A disastrous slump began at the end of the Amer ican Civil War (as an



example, Bank of Bom bay Shar e which had touched R s. 2850 could only be

sold at R s. 87)

Pre-Independance Scenario - Establishment of Different Stock Exchanges

1874 With the r a pidly develo ping shar e tr ading business, brok er s used to gather at a

str eet (now well k nown as "Dalal Str eet") f or the pur pose of tr ansacting

business.

1875 "The Native Shar e and Stock Brok er s' Association" (also k nown as "The

Bom bay Stock Exchange") was esta blished in Bom bay

1880's Develo pment of cotton mills industr y and set up of many other s

1894 Esta blishment of "The Ahmeda bad Shar e and Stock Brok er s' Association"

1880 - 90's Shar p incr ease in shar e pr ices of jute industr ies in 1870's was f ollowed by a

boom in tea stock s and coal

1908 "The Calcutta Stock Exchange Association" was f or med

1920 Madr as witnessed boom and business at "The Madr as Stock Exchange" was

tr ansacted with 100 brok er s.

1923 When r ecession f ollowed, num ber of brok er s came down to 3 and the

Exchange was closed down

1934 Esta blishment of the Lahor e Stock Exchange

1936 Mer ger of the Lahoe Stock Exchange with the Pun ja b Stock Exchange

1937 R e-or ganisation and set up of the Madr as Stock Exchange Limited (Pvt.)

Limited led by improvement in stock mark et activities in South India with esta blishment of new textile mills and plantation companies

1940 Uttar Pr adesh Stock Exchange Limited and Nag pur Stock Exchange Limited

was esta blished

1944 Esta blishment of "The Hyder a bad Stock Exchange Limited"

1947 "Delhi Stock and Shar e Brok er s' Association Limited" and "The Delhi Stock s

and Shar es Exchange Limited" wer e esta blished and later on mer ged into "The Delhi Stock Exchange Association Limited"

Post Independance Scenario The depr ession witnessed af ter the Independance led to closur e of a lot of exchanges in the countr y. Lahor e

stock Exchange was closed down af ter the partition of India, and later on mer ged with the Delhi Stock

Exchange. Bangalor e Stock Exchange Limited was r egister ed in 1957 and got r ecognition only by 1963. Most

of the other Exchanges wer e in a miser a ble state till 1957 when they a pplied f or r ecognition under Secur ities Contr acts (R egulations) Act, 1956. The Exchanges that wer e r ecognized under the Act wer e:

1. Bom bay

2. Calcutta

3. Madr as

4. Ahmeda bad 5. Delhi

6. Hyder a bad

7. Bangalor e 8. Indor e



Trading Pattern of the Indian Stock Market Indian Stock Exchanges allow tr ading of secur ities of only those pu blic limited companies

that ar e listed on the Exchange(s). They ar e divided into two categor ies:

Types of Transactions The f lowchart below descr i bes the ty pes of tr ansactions that can be carr ied out on the Indian

stock exchanges:

Indian stock exchange allows a mem ber brok er to per f or m f ollowing activities:



1. Act as an agent,2. Buy and sell secur ities f or his clients and char ge commission f or the same,

3. Act as a tr ader or dealer as a pr incipal,4. Buy and sell secur ities on his own account and r isk .

Over The Counter Exchange of India (OTCEI) Tr aditionally, tr ading in Stock Exchanges in India f ollowed a conventional style wher e

peo ple used to gather at the Exchange and bids and off er s wer e made by o pen outcr y.

This age-old tr ading mechanism in the Indian stock mark ets used to cr eate many f unctional

ineff iciencies. Lack of liquidity and tr anspar ency, long settlement per iods and benami

tr ansactions ar e a f ew examples that adver sely aff ected investor s. In or der to overcome these

ineff iciencies, OTCEI was incor por ated in 1990 under the Companies Act 1956. OTCEI is

the f ir st scr een based nationwide stock exchange in India cr eated by Unit Tr ust of India,

Industr ial Cr edit and Investment Cor por ation of India, Industr ial Develo pment Bank of India,

SBI Ca pital Mark ets, Industr ial Finance Cor por ation of India, Gener al Insur ance Cor por ation and its su bsidiar ies and CanBank Financial Services.

Advantages of OTCEI

1. Gr eater liquidity and lesser r isk of inter mediar y char ges due to widely spr ead tr ading

mechanism across India

2. The scr een- based scr ipless tr ading ensur es tr anspar ency and accur acy of pr ices

3. Faster settlement and tr ansf er process as compar ed to other exchanges 4. Shorter allotment procedur e (in case of a new issue) than other exchanges

National Stock Exchange In or der to lif t the Indian stock mark et tr ading system on par with the inter national standar ds.

On the basis of the r ecommendations of high power ed Pher wani Committee, the National Stock Exchange was incor por ated in 1992 by Industr ial Develo pment Bank of India,

Industr ial Cr edit and Investment Cor por ation of India, Industr ial Finance Cor por ation of

India, all Insur ance Cor por ations, selected commercial bank s and other s.



NSE provides ex posur e to investor s in two ty pes of mark ets, namely:

1. Wholesale de bt mark et

2. Ca pital mark et

Wholesale Debt Market - Similar to money mark et o per ations, de bt mark et o per ations involve institutional investor s and cor por ate bodies enter ing into tr ansactions of high value in

f inancial instr umets lik e tr easur y bills, gover nment secur ities, commercial pa per s etc.

Trading at NSE

1. Fully automated scr een- based tr ading mechanism

2. Str ictly f ollows the pr inciple of an or der -dr iven mark et3. Tr ading mem ber s ar e link ed through a communication network

4. This network allows them to execute tr ade f rom their off ices 5. The pr ices at which the buyer and seller ar e willing to tr ansact will a ppear on the

scr een

6. When the pr ices match the tr ansaction will be completed 7. A conf ir mation slip will be pr inted at the off ice of the tr ading mem ber

Advantages of trading at NSE

1. Integr ated network f or tr ading in stock mark et of India

2. Fully automated scr een based system that provides higher degr ee of tr anspar ency

3. Investor s can tr ansact f rom any part of the countr y at unif or m pr ices

4. Gr eater f unctional eff iciency supported by totally computer ized network



Below is the detail compar ison of ma jor Online Stock Mark et Tr ading we bsites in India. This compar ison is to hel p investor to tak e calculated decision while searching f or new tr ading

portal.



1. ICICIDirect

2. Sharekhan

3. Indiabulls

4. 5Paisa

5. MotilalOswal Securities

6. HDFC Securities

7. Reliance Money

8. IDBIPaisaBuilder

9. Religare

10. Geojit



11. Networth Stock Broking

12. Kotak Securities

13. Standard Chartered-STCI Capital Markets Ltd

14. Angel Trade

15. HSBC InvestDirect

8. IDBIPaisaBuilder

Demat Account Definition

Demat r ef er s to a dematerialised account.

Though the company is under obligation to off er the secur ities in both physical and demat mode, you have the choice to r eceive the secur ities in either mode.

If you wish to have secur ities in demat mode, you need to indicate the name of the depositor y and also of

the depository participant with whom you have depositor y account in your a pplication.

It is, however desirable that you hold secur ities in demat form as physical secur ities carr y the r isk of being

f ak e, f or ged or stolen.

Just as you have to o pen an account with a bank if you want to save your money, mak e cheque payments

etc, Nowadays, you need to open a demat account if you want to buy or sell stocks .

HOW TO OPEN A DEMAT ACCOUNT ?

Opening an individual Demat account is a two-step process: You a pproach a DP and f ill

up the Demat account-o pening book let. The We b sites of the NSDL and the CDSL list the

a pproved DPs. You will then r eceive an account num ber and a DP ID num ber f or the account. Quote both

the num ber s in all f utur e corr espondence with your DPs.



advance.

Custodian fee: This f ee is char ged monthly and depends on the num ber of secur ities (inter national

secur ities identif ication num ber s ± ISIN) held in the account. It gener ally r anges between R s. 0.5 to R s. 1 per ISIN per month.

DPs will not char ge custody f ee f or ISIN on which the companies have paid one-time custody char ges tothe depositor y.

Transaction fee: The tr ansaction f ee is char ged f or cr editing/de biting secur ities to and f rom the account on

a monthly basis. While some DPs, such as SBI, char ge a f lat f ee per tr ansaction, HDFC Bank and ICICIBank peg the f ee to he tr ansaction value, su b ject to a minimum amount.

The f ee also diff er s based on the k ind of tr ansaction (buying or selling). Some DPs char ge only f or de biting

the secur ities while other s char ge f or both. The DPs also char ge if your instr uction to buy/sell f ails or is r ejected.

In addition, service tax is also char ged by the DPs.

Indian Stock Market Review

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