P RESENTATION O N O NLINE

T RADING AND S TUDY O F

I NDIAN S TOCK MARKET

W HAT IS A STOCK MARKET ?

Place where business of buying and selling stock

takes place

The stock market is not a specific place, though

some people use the term "Dalaal Street

W HAT IS A S TOCK ?

Stock is a share in the ownership of a company.

It represents a claim on the company's assets
and earnings

Whether you say shares, equity or stock, it all

means the same thing.

W HY C OMPANIES I SSUE
S TOCK ?
When a company would like to grow, it issues stocks
to raise funds and pay for ongoing business
activities

It is popular because:

The company does not have to repay the money

Paying dividends is optional

Dividends are distributions of earnings paid to

stockholders

H OW C OMPANIES R AISE T HE
C APITAL

By following means

Debentures

Equity

Loans

M ARKET S EGMENTS

Primary market
-Channel for creation of new securities

Secondary market
-The new securities issued in the primary

market are traded the secondary market

S TOCK EXCHANGE WORLD

WIDE

New York Stock Exchange - United States

NASDAQ (National Association of Security Dealers

Automated Quotations) - United States

Shanghai Stock Exchange - China

London Stock Exchange

- UK

S TOCK

EXCHANGE IN I NDIA

BSE

NSE

(BOMBAY STOCK EXCHANGE )

(NATIONAL STOCK EXCHANGE)

B OMBAY S TOCK E XCHANGE (BSE)

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

1978-79 Base year of Sensex,

defined to be 100.

N ATIONAL S TOCK E XCHANGE (NIFTY)

November 1992 as a tax-paying

company

In April 1993, it was recognized

as a stock exchange.

INDEX

SENSEX

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 prices of the
major companies of the BSE(Bombay stock exchange)

It includes 30 companies

NIFTY(N IFTY F IFTY )

Nifty is an indicator of all the major companies of

NSE.

The Nifty index is a composite of the top 50

stocks listed on the National stock exchange. It is
a simplified tool which helps investors & ordinary
people alike, understand what happens in the
stock market & by extension, the economy.

M ARKET T IMINGS
Trading on the equities segment takes place on all
days of the week (except Saturdays and Sundays
and holidays declared by the exchange in
advance)
The market timings of the equities segment are:
Normal market open : 09:15 hours
Normal market close : 15:30 hours
The closing session is held between 15.50 hours
and 16.00 hours in NSE and 15.40 hours and
16.00 hours in BSE

NEAT- C ASH

NEAT-F&O

C IRCUIT B REAKERS

An index based market-wide circuit breaker system applies at three stages of

the index movement either way at 10%, 15% and 20%.

The breakers are triggered by movement of either S&P CNX Nifty or Sensex,
whichever is breached earlier

As an additional measure of safety, individual scrip-wise price bands has been fixed
as below:

Daily price bands of 2% (either way) on a set of specified securities

Daily price bands of 5% (either way) on a set of specified securities

Daily price bands of 10% (either way) on another set of specified securities

S ECURITIES AND E XCHANGE B OARD OF

I NDIA (SEBI)

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.

F UNCTIONS AND R ESPONSIBILITIES

(SEBI)

SEBI has to be responsive to the needs of three

groups, which constitute the market:

the issuers of securities

the investors

the market intermediaries.

H OW

Open Demat A/c.

Open Trading A/c.

TO

S TART ?

H OW

THE

M ARKET W ORK
NSE

Broker

Broker

Public

Public

BLUE CHIP INDIAN COMPANIES

1.

6.

2.

7.

3.

8.

4.

9.

5.

10.

30 STOCK OF SENSEX
1.

ACC

11.BHEL

21. SBI

2.

GRASIM

12.GUJ AMBUJA

22.INFOSYS

3.

HINDALCO

13.ICICI BANK

23.DR.REDYS

4.

HLL

14.RANBAXY

24.SATYAM

5.

ITC

15.REL

25.CIPLA

6.

L&T

16.R.COM

26.AIRTEL

7.

RIL

17.HDFC BANK

27.ONGC

8.

TATA MOTORS

18.HDFC

28.WIPRO

9.

TATA STEEL

19.MURTUI

29.NTPC

10.

BAJAJ AUTO

20.TCS

30.HERO HONDA

50 STOCK OF NIFTY
1.ACC

11.GUJ AMBUJA

21.JET AIRWAYS

2.BAJAJ AUTO

12.HCL

22.ITC

3.BHEL

13.HDFC

23.L&T

4.BPL

14.HDFC BANK

24.MTNL

5.BHARTI AIRTEL 15.HERO HONDA

25.M&M

6.CIPLA

16.HINDALCO

26.MARUTI

7.DABUR

17.HLL

27.ONGC

8.DR.REDDYS

18.HPL

28.OBC

9.GAIL

19.ICICIBANK

29.PNB

10.GRASIM

20.INFOSYS

30.SBI

50 STOCK OF NIFTY
31.NATIONAL ALUMINIUM

41.TATA MOTORS

32.RANBAXY

42.TATA POWER

33.R.COM

43.TATA STEEL

34.REL

44.WIPRO

35.RIL

45.ZEE

36.SATYAM

46.VSNL

37.SAIL

47.SIEMENS

38SUN PHARMA

48.INDIAN PETRO

39.SUSLON

49.ABB

40.TCS

50.GLAXO

SECTOR INDICATORS
1.

BANKING SECTOR

2.

CAPITAL GOODS SECTOR

3.

CEMENT SECTOR

4.

REAL ESTATE SECTOR

5.

INFRASTRUCTURE SECTOR

6.

POWER SECTOR

7.

TELECOM SECTOR

8.

AUTOMOBILES SECTOR

9.

METAL SECTOR

10.

INFORMATION TECHNOLOGY SECTOR

BANKING SECTOR

CAPITAL GOODS SECTOR

CEMENT SECTOR

REAL ESTATE SECTOR

INFRASTRUCTURE
SECTOR

POWER SECTOR

TELECOM SECTOR

AUTOMOBILES SECTOR

METAL SECTOR

INFORMATION TECHNOLOGY
SECTOR

FACTORS AFFECTING STOCK

MARKET

1.

INFLATION

2.

MARKET TRENDS

3.

GLOBAL MARKETS

4.

GOVT. POLICIES

5.

FINANCIAL STATEMENT OF COMPANIES

INFLATION

INFLATION RATE CURRENT 12.14

MAIN FACTOR CRUDE 147$ BARRAL

NOW CRUDE IS More than 105$ BARRAL

FINANCIAL STATEMENT OF
COMPANIES

PROFITS

LOSSES

GROWTH

FACTORS AFFECTING STOCK

PRICE

FINANCIAL STATEMENT OF COMPANIES

GROWTH OF CONPANIES

ORDER BOOK

MANAGEMENT

LAND BANK

POLICIES

PLANS

FIIS INVESTING IN INDIA

1.

FOREIGN ECONOMY

2.INDIAN ECONOMY

2% GROWTH RATE

8.5% GROWTH RATE

DEVELOPED
ECONOMY

DEVELOPING
ECONOMY

LESS EXPANSION

MORE Expansion

DEMAT ACCOUNT

1.

I LLEGAL T RADING S YSTEM :

Dabba System

Private Karb System

Patiya System

Badla System

DABBA TRADING :
$ The illegal practice of buy/sale of securities outside the
exchange mechanism without any documentary evidence
to relate such transactions.
$ "Dabba Trading" also known as "Bucketing" is the
process used by brokers to route their clients trades
outside the Stock/Commodity exchange.
$ In such trading, the broker either does not execute any
trade or matches and execute trades on its own terminal.

C AUGHT DABBA TRADING :

Pradeep Kumar Bansal, who was the target of the Sebi-NSE

operation, was a fairly big fish in the dabba trade. He operates from
a non-descript address at Byculla in central Mumbai, but his office,
packed with sophisticated equipment and gadgetry, acts as the hub
for his nationwide operations.
His firm, Bansal Sharevest Securities Pvt Ltd has multiple trading
memberships on Indian stock exchanges including: the National
Stock Exchange (derivatives segment), the Interconnected Stock
Exchange of India and the Calcutta Stock Exchange. He is also a subbroker to his own broking firm, earning commissions on its deals.
(Sebi has now banned promoters/directors from acting as subbrokers to their own brokerage firm after a separate investigation).

S CAMS

IN

C APITAL M ARKET
Harshad Mehta

He was known as the 'Big Bull'. However, his bull run did not last too long.
He triggered a rise in the Bombay Stock Exchange in the year 1992 by trading in shares at a
premium across many segments. Taking advantages of the loopholes in the banking system,
Harshad and his associates triggered a securities scam diverting funds to the tune of Rs 4000
crore (Rs 40 billion) from the banks to stockbrokers between April 1991 to May 1992.
Harshad Mehta worked with the New India Assurance Company before he moved ahead to try
his luck in the stock markets. Mehta soon mastered the tricks of the trade and set out on
dangerous game plan. Mehta has siphoned off huge sums of money from several banks and
millions of investors were conned in the process. His scam was exposed, the markets crashed
and he was arrested and banned for life from trading in the stock markets.
He was later charged with 72 criminal offences. A Special Court also sentenced Sudhir Mehta,
Harshad Mehta's brother, and six others, including four bank officials, to rigorous imprisonment
(RI) ranging from 1 year to 10 years on the charge of duping State Bank of India to the tune of
Rs 600 crore (Rs 6 billion) in connection with the securities scam that rocked the financial
markets in 1992. He died in 2002 with many litigations still pending against him.

S CAMS

IN

C APITAL M ARKET
Ketan Parekh

Ketan Parekh followed Harshad Mehta's footsteps to swindle corers of rupees from banks. A
chartered accountant he used to run a family business, NH Securities.
Ketan however had bigger plans in mind. He targetted smaller exchanges like the Allahabad
Stock Exchange and the Calcutta Stock Exchange, and bought shares in fictitious names.
His dealings revolved around shares of ten companies like Himachal Futuristic, Global TeleSystems, SSI Ltd, DSQ Software, Zee Telefilms, Silverline, Pentamedia Graphics and
Satyam Computer (K-10 scrips).
Ketan borrowed Rs 250 crore from Global Trust Bank to fuel his ambitions. Ketan alongwith
his associates also managed to get Rs 1,000 crore from the Madhavpura Mercantile Cooperative Bank.
According to RBI regulations, a broker is allowed a loan of only Rs 15 crore (Rs 150 million).
There was evidence of price rigging in the scrips of Global Trust Bank, Zee Telefilms, HFCL,
Lupin Laboratories, Aftek Infosys and Padmini Polymer.

A DVANTAGES OF ONLINE
TRADING .

Instant Access

Convenience

Monetary Savings

Value Added Services.

D ISADVANTAGES OF ONLINE
TRADING :

Investing alone:

Security

Personalized services