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STOCKEXCHANGEEASY WAY TO EARN MONEY,

EASY WAY TO LOOSE MONEY

Presented BY


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Group MembersNAME ROLL NO.

Manish Ahuja 01

Krutik Badkar 02

Jitesh Chhapru 05

Palash Chelani 33

Tushar Gaikwad 56

Divesh Rohira 63


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WHAT IS STOCK EXCHANGE?Definition of Stock Exchange :

The securities regulation act of 1956 defined stock exchange as an

association , organization , or a individual which is established for

for the purpose of assisting , regulating , and controlling business in

buying ,selling and dealing in securities.Meaning :

This comes under treasury sector ,which provides service to stock

brokers & traders to trade stocks ,bonds and securities. Stock

exchanges helps the companies to raise their fund. Therefore thecompanies needs to list themselves in the Stock Exchange and the

shares will be issued which is known as equity or a ordinary share

and these shareholders are the real owners of the company the

Board Of Directors of the Company are elected out of these Equity

Shareholders only.


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HISTORY OF STOCK EXCHANGE

The stock exchange was established by East Indiacompany in 18th century . In India it was establishedin 1850 with 22 stock brokers opposite to town hallBombay .This stock exchange is known as oldest stockexchange of Asia.


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BROKER AND JOBBER

BROKER:

Intermediary on behalf of others.

A commission agent who transacts business in

securities on behalf of non members.JOBBER:

Is not allowed to deal with the public directly .

Deals with brokers who are engaged with the investors.

Thus, the securities is bought by the jobber frommembers and sells to members who are operating onthe stock exchange as broker.


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Scripless trade:- a procedure of trading in shares,

actual share certificates are not traded but shares are traded in electronic forms,

the share traded being adjusted by accounting by an organisation known as depository.

Rolling settlement:-

Securities that are sold in the secondary market ,settle three days after the initial trade date.

Within a portfolio, if some stocks are sold on Wednesday, they will settle the followingMonday.

When securities are sold and settled on successive business days, they are said to be

experiencing a rolling settlement


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Book building

Book building refers to the process of generating, capturing, and recordinginvestor demand for shares during an Initial Public Offering (IPO), orother securities during their issuance process, in order to support efficientprice discovery.

Market capitalization MCAP. Market capitalization represents the aggregate value ofa company or stock. It is obtained by multiplying the number of sharesoutstanding by their current price per share. For example, if XYZ company has15,000,000 shares outstanding and a share price of $20 per share then themarket capitalization is 15,000,000 x $20 = $300,000,000. Generally, the U.S.market recognizesthree market cap divisions: large cap (usually $5 billion and

above), mid cap (usually $1 billion to $5 billion), and smallcap (usually less than $1 billion), although the cutoffs between the categoriesare not precise or fixed. In our example above, XYZ would be considered asmall cap company. Also called market cap.


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Index:- A statistical measure of change in an economy or a securities

market.

an index is an imaginary portfolio of securities representing aparticular market or a portion of it.

Each index has its own calculation methodology

expressed in terms of a change from a base value. Thus, thepercentage change is more important than the actual numericvalue.

Stock and bond market indexes are used to construct index mutual

funds and exchange-traded funds (ETFs) Eg:The Standard & Poor's 500 is one of the world's best known

indexes, and is the most commonly used benchmark for the stockmarket.


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SPECULATION AND SPECULATOR

SPECULATION :

It is the transaction of members to buy or sell securities onstock exchange with a view to make profits to anticipatedraise or fall in price of securities.

SPECULATOR : The dealer in stock exchange who indulge in speculations.

They do not take delivery of securities purchased or sold,but only pay or rescue the difference between thepurchase price and sale price .

The different types of speculators areBULLBEAR

STAG

LAME DUCK


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BULL {TEJIWALA}

He is speculator who expects the future raise in price of

securities he buys the securities to sell them at future dateat the higher price.

He is called as bull because his activities resembles as a bull ,as the bull tends to throw its victims up in the air through itshorns. In simple the bull speculator tries to raise the price of

securities by placing a big purchase orders.


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BEAR {MANDIWALA}

He is speculator whoexpects future fall in prices, he does an agreement tosell securities at future

date at the present marketrate .

He is called as bear becausehis altitude resembles withbear , as the bear tends tostamp its victims down to

earth through its paws . Insimple the bear speculatorforces of prices ofsecurities to fall throughhis activities.


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STAG {DEER}

He operates in new issueof market . He is just like abull speculator . He applieslarge number of shares inthe issue market only by

paying , application money, allotment money. He isnot a genuine investorbecause , he sells thealloted securities at thepremium and makes profit.In simple he is cautious in

his dealings . He creates anartificial rise in prices ofnew shares and makesprofits.


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LAME DUCK

He is speculator when thebear operator finds itdifficult to deliver thesecurities to the consumer

on a particular day asagreed upon , he strugglesas a lame duck in fullfillinghis commitment . Thishappens when the prices

do not fall as expected bythe bear and the otherparty is not willing topostpone the settlement tothe next period.


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SECURITIES AND EXCHANGE

BOARD OF INDIA(SEBI)

The SEBI was constituted on 12th April,1988 under aresolution of the Government of India. On 31st

january,1992,it was made a statutory body by the

Securities and Exchange board of India Act,1992.

The Companies (Amendment) Act,2000 has given

certain powers to SEBI as regards the issues and

transfer of securities and non-payment of dividend

Delisting:- The removal of a listed security from the exchange on which it

trades. Stock is removed from an exchange because the companyfor which the stock is issued, whether voluntarily or involuntarily,

is not in compliance with the listing requirements of theexchange.

The reasons for delisting include violating regulations and/orfailing to meet financial specifications set out by the stockexchange. Companies that are delisted are not necessarilybankrupt, and may continue trading over the counter.


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How stock exchanges get

moneyThey get their money by listing fees

paid by the corporation to have theircompany traded


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Clearing corporation: An agency or corporation on an exchange that settles

transactions for a fee. Most exchanges have one or moreclearing corporations that are charged with matching orderstogether, ensuring that delivery is made to the correct party,and collecting margin money. Because so many trades takeplace on an exchange in a given day, clearing corporations

exist to process what each party owes or is owed in a centrallocation so that the fewest securities and the least amount ofmoney actually change hands. For example, suppose that abroker-dealer buys 1,000 shares of a security and then, in acompletely separate transaction, sells 700 of the sameshares. At the end of the trading day, the clearing housewould determine that the broker-dealer must only buy 300shares as the other 700 belong to another party. Clearingcorporations receive a clearing fee in exchange for theseservices.


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Contract note:A confirming note, containing details of a stock

exchange deal, which is sent by a broker to a

client. The contract note shows: the date andtime of deal, the title of the security, the numberbought/sold, the price paid/received, the totalvalue of the deal, the stamp duty (if a purchase of

shares), and the amount of commission chargedby the broker. Traditionally, contract notes wereposted, but are now often emailed.


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ADR:- American Depository Receipt

are issued by depository banks in the U.S. under

agreement with the issuing foreign company; the entire issuance is called an American Depositary

Receipt (ADR) and the individual shares are referred to as

ADSs.

GDR:- Global Depository Receipt

A bank certificate issued in more than one country for

shares in a foreign company.

The shares are held by a foreign branch of an

international bank.


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IDR:- Indian Depository Receipt

IDR is an instrument in the form of a Depository

Receipt created by the Indian depository in India

against the underlying equity shares of the issuing

company. IDRs would be denominated in Indian rupees,

irrespective of the denomination of underlying

shares.

Standard Chartered PLC became the first global

company to file for an issue of Indian depository

receipts in India.


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LONDON STOCK EXCHANGE

It was the first stock exchange established by east

India company in 18th century in London. The top

gainer of LONDON STOCK EXCHANGE is Blue chip

shares. FTSE: A company that specializes in index calculation.

Although not part of a stock exchange, co-owners

include the London Stock Exchange and the

Financial Times.

The FTSE is similar to Standard & Poor's in theUnited States. They are best known for the FTSE

100, an index of blue-chip stocks on the London

Stock Exchange.


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BOMBAY STOCK EXCHANGE

It is oldest and first stockexchange of Indiaestablished in the year1875. First it was startedunder baniyan treeopposite to town hall ofBombay over 22 stock

brokers. The top gainer inBSE is 100 companies inthat GMR infra is first


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NATIONAL STOCKEXCHANGE OF INDIA(NSEOR NSEI)The NSE of India is the leading stock

exchange of India, covering 370 cities and

towns in the

country. It was established in1994 as a TAX

company. It was established by 21 leading

financial institutions and banks like theIDBI,ICICI,IFCI,LIC,SBI,etc.

Features of NSEINation wide coverage i.e., investors from all over country

Ringless i.e., it has no ring or trading floor

Screen-based trading i.e., trading in this stock exchange is done electronically.

Transparency,i.e.,the use of computer screen for trading makes the dealings insecurities transparent.

Professionalization in trading, i.e., it brings professionalism in its functions


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NASDAQ:-

The largest electronic exchange in the world and thesecond largest exchange in the United States. It wasestablished in 1971 and was originally organized as asuccessor to over-the-counter "curb trading" that waspreviously popular in New York. As a result it wasconsidered in some circles an over-the-counter tradingsystem as late as the mid-1980s. NASDAQ has thehighest trading volume of any exchange in the world,and is a popular exchange for technology companies. It

was originally owned by the NASD (now FINRA) and wasspun off in 2000 and 2001.

NYSE:

A stock exchange based in New York City, which isconsidered the largest equities-based exchange in theworld based on total market capitalization of its listed

securities. Formerly run as a private organization, theNYSE became a public entity in 2005 following theacquisition of electronic trading exchange Archipelago.The parent company of the New York Stock Exchange isnow called NYSE Euronext, following a merger with theEuropean exchange in 2007.


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CAC: The CAC 40 is used as a benchmark index for funds investing in

the French stock market

The CAC 40 is similar to the Dow Jones Industrial Average inthat it is the most commonly used index that represents theoverall level and direction of the market in France.

At the time of writing (Aug 2005), the CAC 40 included suchcompanies as Renault, Michelin, L'Oreal and Vivendi Universal.

DAX: In a different twist from most indexes, the DAX is updated with

futures prices for the next day, even after the main stockexchange has closed. Changes are made on regular review

dates, but index members can be removed if they no longerrank in the top 45 largest companies, or added if they breakthe top 25.

The vast majority of all shares on the Frankfurt Exchange nowtrade on the all-electronic Xetra system, with a near-95%

adoption rate for the stocks of the 30 DAX members


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Nikkei: Short for Japan's Nikkei 225 Stock Average, the leading and

most-respected index of Japanese stocks. It is a price-weighted index comprised of Japan's top 225 blue-chip

companies on the Tokyo Stock Exchange. The Nikkei isequivalent to the Dow Jones Industrial Average Index in theU.S. In fact, it was called the Nikkei Dow Jones StockAverage from 1975 to 1985.

The index has been calculated since Sept 1950

(retroactively since to May 1949). A few years after thecountry's leading business newspaper theNihonKeizaiShimbun (Nikkei or Japan Economic Daily)began to commission the calculations, it was renamed.


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HAPPY INVESTMENT WITH

LOTS OF PROFITSEND

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