A

PROJECT REPORT
ON
WORKING ON NATIONAL STOCK EXCHANGE
AT
COOMPANY NAME
Submitted
By

Mr. / Ms
ROLL No. / Hall Ticket No. 1234567
Submitted in partial fulfillment of the requirement for the
award of degree of

BACHELOR OF BUSINESS ADMINISTRATION

DEPARTMENT OF BUSINESS ADMINISTRATION

COLLEGE
(Affiliated to OSMANIA UNIVERSITY)
HYDERABAD
1

ABSTRACT
In this study Investment in the share market has been analyzed, and for
which I surveyed the market and interviewed registered broker, sub- broker
and investors through which I analyze the working of NSE. The study is all
about how NSE works.
The capital market is the market for securities, and NSE helps
investors a platform where companies and governments can raise and trade
on long term funds. It is a market in which money is lent for periods longer
than a year. The NSE includes the stock market and the derivative market.
Financial regulators, such as the Securities and Exchange Board of India
(SEBI), oversee the capital markets in their designated countries to ensure
that investors are protected against fraud.
The project finds, that of the three major components of cost of trading
in NSE viz. user charges (brokerage fees, exchange transaction charges and
DP chargers), impact cost and statutory levies (STT, service tax on
brokerage, stamp duty etc.), the user charges and the impact cost have been
falling over the years due to rising competition and technology. This has led
to a decline in Indias cost of trading in NSE, though it remains high relative
to other emerging economies such as Brazil and Russia primarily due to high
STT levels.
2

TABLE OF CONTENTS

CHAPTER NO.

CHAPTER NAME

PAGE NO.

INTRODUCTION

1-13

II

LITERATURE REVIEW

14-79

III

COMPUTER PROFILE

80-91

DATA ANALYSIS AND

92-99

IV

INTERPRETATIONS

FINDINGS AND SUGGESTIONS

100-106

VI

BIBLOGRAPHY

107-108

INTRODUCTION
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.

The Indian securities market consists of primary (new issues) as well

as secondary (stock) market in both equity and debt. The primary market
provides the channel for sale of new securities, while the secondary market
deals in trading of securities previously issued. The issuers of securities issue
(create and sell) new securities in the primary market to raise funds for
investment. They do so either through public issues or private placement.
There are two major types of issuers who issue securities.

OTHER LEADING CITIES IN STOCK MARKET

OPERATIONS
Ahmedabad gained importance next to Bombay with respect to cotton textile
industry. After 1880, many mills originated from Ahmedabad and rapidly
forged ahead. As new mills were floated, the need for a Stock Exchange at
Ahmedabad was realized and in 1894 the brokers formed "The Ahmedabad
Share and Stock Brokers' Association".
What the cotton textile industry was to Bombay and Ahmedabad, the jute
industry was to Calcutta. Also tea and coal industries were the other major
industrial groups in Calcutta. After the Share Mania in 1861-65, in the 1870's
there was a sharp boom in jute shares, which was followed by a boom in tea
shares in the 1880's and 1890's; and a coal boom between 1904 and 1908. On
June 1908, some leading brokers formed "The Calcutta Stock Exchange
Association".
In the beginning of the twentieth century, the industrial revolution was on the
way in India with the Swadeshi Movement; and with the inauguration of the
Tata Iron and Steel Company Limited in 1907, an important stage in
industrial advancement under Indian enterprise was reached.

Indian cotton and jute textiles, steel, sugar, paper and flour mills and all
companies generally enjoyed phenomenal prosperity, due to the First World
War.
In 1920, the then demure city of Madras had the maiden thrill of a stock
exchange functioning in its midst, under the name and style of "The Madras
Stock Exchange" with 100 members. However, when boom faded, the
number of members stood reduced from 100 to 3, by 1923, and so it went out
of existence.
In 1935, the stock market activity improved, especially in South India where
there was a rapid increase in the number of textile mills and many plantation
companies were floated. In 1937, a stock exchange was once again organized
in Madras - Madras Stock Exchange Association (Pvt) Limited. (In 1957 the
name was changed to Madras Stock Exchange Limited).

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 were anxious 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:

WHAT ARE THE SENSEX & THE NIFTY

The Sensex is an "index". What 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. 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.

TYPES OF TRADERS/INVESTORS IN THE STOCK

MARKET
INVESTORS: Those who expect minimum 30-40% appreciation and are
willing to hold between two months to a few years. They enter only long
positions and usually select scrip based on fundamental analysis. Mediumlong term investors can utilize technical analysis to time their entry and profit
booking better.
DAY TRADERS: Day traders enter long/short traders to square up the same
day. They usually base decisions on technical, information or at times, gut
feel.

SHORT-TERM TRADERS
Short-term traders expect 5-20% returns within 2 days to 3 weeks. They
enter long as well as short positions. These include: Position trading, where
one either buys a stock and holds for the required appreciation, or sells from
an existing long (or borrowed) position to cover at a lower level.

10

THE POPULARITY OF SHORT-TERM TRADING IS ON

THE RISE DUE TO THE FOLLOWING REASONS:

It provides an opportunity to make substantial profits in a short period

and ensures continuous rotation of capital.

As against long-term investment, short-term trading has limited

downside because of strict stop losses.

One can leverage on margin in case of short-term trading in futures.

Short-term trading in options requires smaller investment and has

limited risk.

11

NEED AND SCOPE FOR THE STUDY

The unique nature of capital market instruments forces the investors to
depend strongly on the Fundamental or Technical analysis to guide
them in their investment decisions.
The technical analysis is aimed at examining the price & volume
movements of each stock.
It is essential that no investor can buy or sell shares on a whim. It
requires a serious research as lot of funds are involved in the
investment.
The investors can be guided with regard to investment decisions of
specific stocks to buy or sell.
As more People are investing money in stock market, this study will be
very useful to me in my future too.
I will be able to recommend the buy calls or sell calls to
investors/traders on any sectors by using all the technical indicators
carefully.

12

SIGNIFICANCE OF THE STUDY

This is a limited study which takes into consideration the responses of
30-40 people. This data can be explored to take in the trends across the
industry. The significance for the industry lies in studying these trends that
emerge from the study. It is a rapidly changing and evolving sector. People
are only beginning to wake up to its vast possibilities. A study like this can
attempt to guide the future of the industry based on current trends.

SIGNIFICANE FOR THE RESEARCHER:

To facilitate and provide all the useful information of the study, which
can be helpful to make decision for investing money in right shares which is
profitable to investors as well as brokers.

13

OBJECTIVES

To study the movement and behavior of the NSE market.

To study the movement of individual NSE scrip price.

To study in general about technical analysis in NSE stock market.

To study about the trends (forward /reversal) in NSE stock market.

To identify when to buy or sell the shares in NSE.

To identifying gauge the overbought and oversold positions in a in

NSE scrip.

14

RESEARCH METHODOLOGY

RESEARCH PROBLEM
In this research work, the main purpose is to analyze the Indian stock price
movement and behavior using technical analysis of NSE.
SOURCES OF DATA:
The study was done using the secondary data. The secondary data was
collected from Securities and Exchange Board of India (SEBI) and National
Stock Exchange (NSE). The data for stock price and volume are published by
SEBI and NSE.

RESEARCH DESIGN:
The framework within which the study is based is Analytical in nature.
Type of study

: Analytical Research

Data Collection: Open, close, high and low price of each company for three
months Downloaded from the website www.nseindia.com.
TOOLS & TECHNIQUES
1. Moving Averages
2. Exponential Simple Moving Average
3. Rate of Change (ROC)
4. Relative Strength Index (RSI)
5. Moving Average Convergence and Divergence (MACD)
6. Stochastics

15

LIMITATIONS OF THE STUDY

Biased answers are unavoidable.
All the companies listed in NSE was not studied due to time constraint,
the study was restricted to overall study of the NSE sector.
As the share price movements changes from time to time, the prediction
of trend will also change.
The research is confined to to the study of NSE
Some respondents i.e. management of ATS Pvt Ltd were reluctant to
divulge personal information which can affect the validity of all
responses.
In a rapidly changing industry, analysis on one day or in one segment can
change very quickly. The environmental changes are vital to be
considered in order to assimilate the findings.

16

17

INTRODUCTION NATIONAL STOCK EXCHANGE (NSE)

The National Stock Exchange (NSE), located in Bombay, is India's first debt
market. It was set up in 1993 to encourage stock 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 sector companies.
The Organization
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.
18

NSE Group

NSCCL

IISL

NCCL

NSETECH

NSE

NSE.IT

DotExIntl. Ltd.
NSDL

19

Listing
NSE plays an important role in helping an Indian companys 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.
BENEFITS AT NSE
1. A premier market place
2. Visibility
3. Largest exchange
4. Unprecedented reach
5. Modern infrastructure
6. Transaction speed
7. Short settlement cycles
8. Broadcast of corporate announcements
20

NOMINAL LISTING FEES

Visibility
Nominal
listing fees

Largest
exchange

Investor
service
centers

Unprecede
nted reach
A premier
market
place

Trade
statistics
for listed
companies

Modern
infrastruct
ure

Broadcast
of
corporate
announce
ments

Transactio
n speed
Short
settlement
cycles

21

Introduction of SENSEX
SENSEX, first compiled in 1986, was calculated on a "Market CapitalizationWeighted" methodology of 30 component stocks representing large, wellestablished 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
22

the country, it provides the 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.

23

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.
SAMPLE SIZE
Data for analysis I have chosen analysis National Stock Exchange (NSE)
performance over the years and also compared it to BSE. I have chosen the
data analysis on the basis of volume of trade.

24

Definition of Free-float
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.

25

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.
The BSE Index Cell does the day-to-day maintenance of the index within the
broad index policy framework set by the BSE Index Committee. The BSE
Index Cell ensures 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 provides affords investors the

26

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.
27

Depository
What is a Depository?
A depository holds shares and other securities of investors in electronic form.
Through Depository Participants (DPs), it also provides services related to
transactions in securities. Its structure and functioning are similar to the
Bank. Presently in India, there are two depository viz. National Securities
Depository Limited (NSDL) and Central Depository Services (I) Limited
(CDSL). Both of them are registered with SEBI.
What is a DP?
DP is a member of a Depository who offers its services to hold securities of
Investors (Beneficial Owners) in dematerialized form. DP is like a Bank
branch. It is an agent of the depository. DP works as an interface between
Depository and Investors. DPs are required to be registered with SEBI. If an
investor wants to avail the services offered by Depository, he has to open a
Demat account with DP similar to opening of a bank account with a branch
of the bank.
Depository is responsible for keeping stocks of investors in electronics form.
There are two depositories in India, NSDL (National Securities Depository
Ltd) and CDSL (Central Depository Services Ltd).
28

CDSL (Central Depository Services Ltd.)

CDSL was promoted by Bombay Stock Exchange Limited (BSE) jointly with
leading banks such as State Bank of India, Bank of India, Bank of Baroda,
HDFC Bank, Standard Chartered Bank, Union Bank of India and Centurion
Bank.
CDSL was set up with the objective of providing convenient, dependable and
secure depository services at affordable cost to all market participants. Some
of the important milestones of CDSL system are:
CDSL received the certificate of commencement of business from SEBI in
February, 1999.
Honourable Union Finance Minister, Shri Yashwant Sinha flagged off the
operations of CDSL on July 15, 1999.
Settlement of trades in the demat mode through BOI Shareholding Limited,
the clearing house of BSE, started in July 1999.
All leading stock exchanges like the National Stock Exchange, Calcutta
Stock Exchange, Delhi Stock Exchange, The Stock Exchange, Ahmedabad,
etc have established connectivity with CDSL.

29

As at the end of Dec 2007, over 5000 issuers have admitted their securities
(equities, bonds, debentures, commercial papers), units of mutual funds,
certificate of deposits etc. into the CDSL system.
About NSDL
Although India had a vibrant capital market which is more than a century old,
the paper-based settlement of trades caused substantial problems like bad
delivery and delayed transfer of title till recently. The enactment of
Depositories Act in August 1996 paved the way for establishment of
National Securities Depository Limited (NSDL), the first depository in
India. This depository promoted by institutions of national stature responsible
for economic development of the country has since established a national
infrastructure of international standards that handles most of the securities
held and settled in dematerialised form in the Indian capital market.
Using innovative and flexible technology systems, NSDL works to support
the investors and brokers in the capital market of the country. NSDL aims at
ensuring the safety and soundness of Indian marketplaces by developing
settlement solutions that increase efficiency, minimise risk and reduce costs.
At NSDL, we play a quiet but central role in developing products and
services that will continue to nurture the growing needs of the financial
services industry.
30

In the depository system, securities are held in depository accounts, which is

more or less similar to holding funds in bank accounts. Transfer of ownership
of securities is done through simple account transfers. This method does
away with all the risks and hassles normally associated with paperwork.
Consequently, the cost of transacting in a depository environment is
considerably lower as compared to transacting in certificates Promoters /
Shareholders
NSDL is promoted by Industrial Development Bank of India Limited (IDBI)
- the largest development bank of India, Unit Trust of India (UTI) - the
largest mutual fund in India and National Stock Exchange of India Limited
(NSE) - the largest stock exchange in India. Some of the prominent banks in
the country have taken a stake in NSDL.
NSDL Facts & Figures
As on December 31, 2008

Number of certificates eliminated (Approx.) : 550 Crore

Number of companies in which more than 75% shares are dematted :

2282

Average number of accounts opened per day since November 1996 :

3636

Presence of demat account holders in the country : 78% of all pincodes

in the country.

31

Central Securities Depository (CSD)

A Central Securities Depository (CSD) is an organization holding
securities either in certificated or uncertificated (dematerialized) form, to
enable book entry transfer of securities. In some cases these organizations
also carry out centralized comparison, and transaction processing such as
clearing and settlement of securities. The physical securities may be
immobilised by the depository, or securities may be dematerialised (so that
they exist only as electronic records).
International Central Securities Depository (ICSD) is a central securities
depository that settles trades in international securities and in various
domestic securities, usually through direct or indirect (through local agents)
links to local CSDs. ClearStream International (earlier Cedel), Euro clear and
SIX SIS are considered ICSDs. While some view The Depository Trust
Company (DTC) as a national CSD rather than an ICSD, in fact DTC -- the
largest depository in the world -- holds over $2 trillion in non-US securities
and in American Depository Receipts from over 100 nations.

32

Functions

Safekeeping Securities may be in dematerialized form, book-entry

only form (with one or more "global" certificates), or in physical form
immobilized within the CSD.

Deposit and Withdrawal Supporting deposits and withdrawals

involves the relationship between the transfer agent and/or issuers and
the CSD. It also covers the CSD's role within the underwriting process
or listing of new issues in a market.

Dividend, interest, and principal processing, as well as corporate

actions including proxy voting Paying and transfer agents, as well as
issuers are involved in these processes, depending on the level of
services provided by the CSD and its relationship with these entities.

Other services CSDs offer additional services aside from those

considered core services. These services include Securities Lending
and Borrowing, Matching, and Repo Settlement

Pledge - Central depositories provide pledging of share and securities.

Every country require to provide legal framework to protect the
interest of the pledgor and pledgee.

33

However, there are risks and responsibilities regarding these services that
must be taken into consideration in analyzing and evaluating each market on
a case-by-case basis.
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
34

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.
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

35

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 portfolio management 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
36

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 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.

37

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 to India, 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. This 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;

38

 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);
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.

39

What Does Foreign Institutional Investor - FII Mean?

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;
40

(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 India and 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.
Participatory notes (P- Notes)
Participatory notes (PNs / P-Notes) are instruments used by investors
or hedge funds that are not registered with the SEBI (Securities & Exchange
Board of India) to invest in Indian securities. Participatory notes are
41

instruments that derive their value from an underlying financial instrument

such as an equity share and, hence, the word, 'derivative instruments'. SEBI
permitted FIIs to register and participate in the Indian stock market in 1992.
Indian based brokerages buy Indian-based securities and then issue PNs to
foreign investors.
Any dividends or capital gains collected from the underlying securities go
back to the investors.
Participatory notes are instruments used for making investments in the stock
markets. However, they are not used within the country. They are used
outside India for making investments in shares listed in that country. That is
why they are also called offshore derivative instruments.
In the Indian context, foreign institutional investors (FIIs) and their subaccounts mostly use these instruments for facilitating the participation of
their overseas clients, who are not interested in participating directly in the
Indian stock market. For example, Indian-based brokerages buy India-based
securities and then issue participatory notes to foreign investors. Any
dividends or capital gains collected from the underlying securities go back to
the investors. According to an expert group constituted by the finance
ministry in India, in August 2004, participatory notes constituted about 46 per
cent of the cumulative net investments in equities by FIIs.

42

Any entity investing in participatory notes is not required to register with

SEBI (Securities and Exchange Board of India), whereas all FIIs have to
compulsorily get registered. Trading through participatory notes is easy
because participatory notes are like contract notes transferable by
endorsement and delivery. Secondly, some of the entities route their
investment through participatory notes to take advantage of the tax laws of
certain preferred countries. Thirdly, participatory notes are popular because
they provide a high degree of anonymity, which enables large hedge funds to
carry out their operations without disclosing their identity.
Participatory notes in brief is as follows :
What are participatory notes or PNs? Participatory notes are instruments used
by foreign funds which are not registered to trade in domestic Indian Capital
Markets. PNs are derivative instruments issued against an underlying security
permitting holders to get a share in the income from the security.
How does it work? Investors who buy PNs deposit their funds in US or
European operations of Foreign Institutional Investors (FII) operating in India
. The FII uses its proprietary account to buy stocks.
Why do investors use PNs? Reason for using PNs is to keep investor name
anonymous, some investors have used them to save transaction and overhead
costs.

43

Tax officials fear that PNs are becoming a favourite with a host of Indian
money launderers who use them to first take funds out of country through
hawala and then get it back using PNs.
Participatory Notes Crisis of 2007
On the 16th of October, 2007, SEBI (Securities & Exchange Board of India)
proposed curbs on participatory notes which accounted for roughly 50% of
FII investment in 2007. SEBI was not happy with P-Notes because it is not
possible to know who owns the underlying securities and hedge funds acting
through PNs might therefore cause volatility in the Indian markets.
However the proposals of SEBI were not clear and this led to a knee-jerk
crash when the markets opened on the following day (October 17, 2007).
Within a minute of opening trade, the Sensex crashed by 1744 points or about
9% of its value - the biggest intra-day fall in Indian stock-markets in absolute
terms. This led to automatic suspension of trade for 1 hour. Finance Minister
P.Chidambaram issued clarifications, in the meantime, that the government
was not against FIIs and was not immediately banning PNs. After the markets
opened at 10:55 am, they staged a remarkable comeback and ended the day at
18715.82, down just 336.04 from Tuesdays close after tumbling to a days
low of 17307.90.

44

This was, however not the end of the volatility. The next day (October 18,
2007), the Sensex tumbled by 717.43 points 3.83 per cent to 17998.39,
its second biggest fall. The slide continued the next day when the Sensex fell
438.41 points to settle at 17559.98 at the end of the week, after touching the
lowest level of that week at 17226.18 during the day.
The SEBI chief, M.Damodaran held an hour long conference on the 22nd of
October to clear the air on the proposals to curb PNs where he announced
that funds investing through PNs were most welcome to register as FIIs,
whose registration process would be made faster and more streamlined. The
markets welcomed the clarifications with an 879-point gain its biggest
single-day surge on October23, thus signaling the end of the PN crisis.
SEBI issued the fresh rules regarding PNs on the 25th of October, 2007
which said that FIIs cannot issue fresh P-Notes and existing exposures were
to be wound up within 18 months.

45

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.
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.
46

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

traders

including

banks,

financial

institutions,insurance companies, mutual funds, primary dealers etc. to

transact through the Exchanges. In this context the introduction of derivatives

47

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
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.
48

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 BandraKurla 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.

49

THE BOARD COMPRISES

Name

Mr CB Bhave

Mr KP Krishnan

Mr Anurag Goel

Designation

Chairman SEBI

Dr KM Abraham

Mr Mohandas Pai

of the SEBI Act, 1992)

Member (S.4(1)(b) of the

Ministry of Finance

SEBI Act, 1992)

Secretary, Ministry of Member (S.4(1)(b) of the

Corporate Affairs

Judicial Academy,
Hyderabad

Mr MS Sahoo

CHAIRMAN (S.4(1)(a)

Joint Secretary,

Director, National
Dr G Mohan Gopal

As per

SEBI Act, 1992)

Member (S.4(1)(d) of the

SEBI Act, 1992)

Whole Time Member, Member (S.4(1)(d) of the

SEBI

SEBI Act, 1992)

Whole Time Member, Member (S.4(1)(d) of the

SEBI

SEBI Act, 1992)

Director, Infosys

50

Member (S.4(1)(d) of the

SEBI 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 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.

51

HISTORICAL PERSPECTIVE
The history of Indian stock market is about 200 years old. Prior to this the
hundis and 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)
52

which brought substantial transparency in share market practices and thus

managed to bring in trust of not only domestic investors but also the
international ones.
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.

For even more similarities, scroll back up and look at the first chart from
1990-2002. Now, scroll down and look at the 2003-2012 Present stage.
Notice how similar they are? The markets went up for completely different
53

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 to 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.
KEEP DOING WHAT YOURE DOING
Sure, the market may be a bit unstable right now, and we may certainly be
headed for a time where the market falls further, but that shouldnt be of
much concern to you if youre investing for the next 10, 20, 30 or more years.
If you want to try and time the market or predict what the next hot sector is,
thats fine, but the best thing most people can do is to just continuously invest
in a diversified portfolio. If you keep buying even as the market falls, youre
just adding more shares at a lower price.

Could you make more money if you only invested at the low points and sold
at the high points compared to dollar cost averaging? Sure, but the likelihood
of succeeding on a regular basis is low. For most people, the best thing to do
is to just continue investing bi-weekly, monthly, or quarterly into the same
diversified portfolio regardless of market conditions. When markets are
choppy or headed down, youre just buying stocks or funds on sale.
54

KEY MILESTONES
Following is the timeline on the rise and rise of the Sensex through Indian
stock market history.
1830'sBusiness 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 fourdigit figure for the first time and closed at 1,001 in the wake of a good
monsoon season and excellent corporate results.
55

July 1991 Rupee devalued by 18-19 %

2000, January 15, 1992 On January 15, 1992, the Sensex crossed the 2,000mark and closed at 2,020 followed by the liberal economic policy initiatives
undertaken by the then prime minister P.V.Narasimha rao.
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 4,000mark 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 5,000mark 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.

56

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.
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-

57

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 12,000mark 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

58

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 789 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

59

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 trading days 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
60

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. 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.

61

21000, September, 2010 the Sensex averaged 5249.6 reaching an all time
high of 21005.0 in November of 2010
20500, February, 2011the Sensex fall down by 500 points after reaching an
alltime high in September of 2011
19000, March, 2012the Sensex came down to 19000 by falling down by
more 1500 points in March of 2012
17000, June, 2012the Sensex came down to 17000 by falling down by more
2000 points in June of 2012

62

MYTHS OF STOCK MARKET

1. You can tell if a Stock is cheap or expensive by the Price to Earnings
Ratio.
False: PE ratios are easy to calculate, that is why they are listed in
newspapers etc. But you cannot compare PEs on companies from different
industries, as the variables those companies and industries have are different.
Even comparing within an industry, PEs dont tell you about many financial
fundamentals and nothing about a stocks value.
2. To make Money in theStock Market,you must assume High Risks.
False: Tips to Lower your Risk:
Do not put more than 10% of your money into any one stock
Do not own more than 2-3 stocks in any industry
Buy your stocks over time, not all at once
Buy stocks with consistent and predictable earnings growth
Buy stocks with growth rates greater than the total of inflation and
interest rates
Use stop-loss orders to limit your risk

63

3.Buy Stocks on the Way Down and Sell on the Way Up.
False: People believe that a falling stock is cheap and a rising stock is too
expensive. But on the way down, you have no idea how much further it may
fall. If a stock is rising, especially if it has broken previous highs, there are no
unhappy owners who want to dump it. If the stock is fairly valued, it should
continue to rise.
4.You can Hedge Inflation with Stocks.
False: When interest rates rise, people start to pull money out of the market
and into bonds, so that pushes prices down. Plus the cost of business goes up,
so corporate earnings go down, along with the stock prices.
5.Young People can afford to take High Risk.
False: The only thing true about this is that young people have time on their
side if they lose all their money. But young people have little disposable
income to risk losing. If they follow the tips above, they can make money
over many years. Young people have the time to be patient.
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
64

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 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.

65

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
66

before the IPO is launched, Existing share Holders get a very liberal bonus
issues as a reward for their faith in risking money when the project was new
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
per law, 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.

67

Before applying for any IPO , analyze 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 the entire money should be paid along
with the application or 50 percent of the entire amount be paid along with the
68

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.

69

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.
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, however desirable 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 your demat account. So you don't have to possess any physical

70

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 or Dematerialized 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

71

Number) card is must for opening a demat account. These are the documents
required to open a demat account
1. Photo Copy of PAN Card (Mandatory)
2. Two Passport size photos
3. Address Proof Ration Card/Passport/Driving License/Voters ID
Card/BSNL Telephone/LIC Policy
4. Latest Bank Statement and photocopy of Bank Passbook.

NSE TRADING TECHNOLOGY

National Stock Exchange of India is one of the leading exchanges in the

world on several key parameters. Number of contracts traded relate directly
to the technology and liquidity of the exchange. NSE ranks* in top 3 globally
for Stock Futures and Index Futures and Options. Technology at the
exchange remains backstage to fulfill the demand for capacity, reliability and
performance ensuring the competitive edge of NSE as Indias number one
exchange platform.
CORE TRADING SYSTEM
NSEs trading system, called National Exchange for Automated Trading
(NEAT), is a state of-the-art client server based application. It has uptime
72

record of over 99% with latency is in single digit millisecond level for all
orders entered into the NEAT system. NSE has been continuously
undertaking capacity enhancement measures so as to effectively meet the
requirements of increased users and associated trading loads.

The core trading applications of NSE run on fault tolerant servers sourced
from Stratus Technologies. Earlier generation of trading system was highly
dependent on the growth of microprocessor industry for improved scalability.
This was creating speed breakers in the growth demanded by Indian market
participants. Some time back NSE re-architected the trading system to
achieve unlimited scalability. The system now has a multi layer architecture
is designed for unlimited scalability at every layer. Each layer of Trading
system can be scaled up by adding more hardware to the layer. The rearchitecting of the system has eased out meeting the ever growing capacity
needs of Trading. This application extensively uses in-memory database
technology to provide for performance needs expected from a Matching
system.

The matching engine response time can be measured in single digit

millisecond for the thousands of transactions processed by the system every
second. To complement the matching engine speed, Market Data is generated
73

and distributed at a very high refresh frequency. Using the Multicasting the
market data access is accessible to all trading members almost
simultaneously.

NSE provides its customers a feature packed Trader Work Station (TWS) two
Front-ends, NEAT & NEAT PLUS for all the market segments. NEATPLUS
TWS is a unified frontend for multiple market segments. Apart from
distributing its own front end NSE also publishes the protocol that can be
used by Independent Software Vendors as well as Sell Side firms to develop
their own in-house systems.

DMA, ALGORITHMIC TRADING AND CO-LOCATION FACILITY

Direct Market Access and Algorithmic trading was allowed in India in April
2008. DMA opened up faster access to Indian markets for financial
institutions across the world. Now a significant movement is going on all
across the world, to consume the liquidity in a better way, and increase
capacities everywhere in the markets. Better algorithms with mathematically
proven strategies that consume liquidity, and faster systems with very low
latency are the need of the day. Since laws of physics have to be obeyed,
members systems have to come closer to the exchange trading systems to
meet the requirements of lower latencies and faster execution. Co-location at
74

exchange premises is the mechanism used by exchanges to achieve these

objectives.

NSE is also the exchange which has been in forefront of implementing Colocation services and Tick-by-Tick market data product among several other
firsts. High frequency and automated trading had taken off in India with
launch of NSEs Co-location services in Jan of 2010. The service allows
renting rack space with low latency connectivity to the exchange with the
mandatory power supply, cooling and security requirements of the industry.
The facility features include dual UPS power source and 100% DG capacity,
multiple precision air conditioning units with N+1 redundancy, standard 42 U
rack with 6KVA power and a 1Gbps network port which will provide order
and market data connectivity. Basic IT services namely Help Desk (24X7),
Hardware Checks, Incident Management (Level 1), On-site coordination,
Daily reports, Named resource (SPOC) for the account and Power ON/OFF /
Boot on request are also provided.

A significant order flow of the exchange is now passing through the Colocation facility especially for Algorithmic Trading and Direct Market
Access(DMA). To complement the High Frequency Trading, Tick By Tick
Market Data feed generating broadcast for every transaction is provided by
75

the exchange. More recently Thomson Reuterss Elektron data solution was
enabled at the co-location center to deliver high-speed connectivity for the
NSE's data.

Compatible with Financial Information Exchange (FIX Protocol), the

Industry-Standard Messaging Protocol, for Equity, Derivatives and Currency
market is achieved through NSEs own connectivity software called as TAP
(Trading Access Point).

NOW APPLICATION SERVICE PROVISIONING

NSE on Web (NOW) - A New Initiative for Members was taken up for
providing a low cost and low time to market deployment option for our
members. NOW is a near zero cost cloud paradigm based trading option.
NOW cloud provides connectivity to NSEs Equity, Derivatives, Currency
Derivatives and Mutual funds segments. NOW all connects with other venues
like NCDEX (Commodity), NMCE and ICEX. The major benefits of using
NOW are almost zero Time to Market, Infrastructure Cost, Maintenance
Cost, System Audit, Connectivity requirement, Upgrades and versioning
overheads. The entire member community be it the newest member or a
veteran have been using NOW successfully for various needs from basic
trading to business continuity trading.

RISK MANAGEMENT
76

Risk containment measures at NSE include capital adequacy requirements of

members, monitoring of member performance and track record, stringent
margin requirements, position limits based on capital, online monitoring of
member positions and automatic disablement from trading when limits are
breached. The margins for the member is calculated first for his clients and
then grossed across clients to arrive at the member's margin. The
methodology applied is based on the Value-at-Risk (VaR) Methodology. The
equity segment uses this for the its risk management whereas for derivative
products Standard Portfolio Analysis of Risk (SPAN) is used. SPAN is a
highly sophisticated, value-at-risk methodology that calculates performance
bond/margin requirements by analyzing the "what-if's" of virtually any
market scenario.

The risk management system computes positions and margins on a real time
basis. The risk computation process consists of various stages starting with
the initialization process in terms of receiving masters information, deposits
of members and receiving on-line data loads from the trading system,
computing the open positions and monitoring the violations on a real time
basis. The risk parameters are computed 5 times a day based on the intra-day
volatility. Final Margins are calculated using the end of day risk parameters
calculated on end of day volatility.

77

NSE introduced Cross Margining in 2008 to enhance liquidity. Cross

margining is available across Cash and F&O segment. The positions of
clients in both the Cash and F&O segments to the extent they offset each
other. The cross margin benefit is calculated in real time taking to account the
clients positions across both segment. The benefit is then grossed across all
clients and passed on to the member.

NSES GLOBAL RANKING FOR SOME PARAMETERS*

Single Stock Futures - 3rd
Stock Index Options - 2nd
Stock Index Futures - 3rd
*Source : WFE (Rankings done for the period Jan - June 2011). Rankings is
based on number of contracts traded.

78

NSE SCHEMATIC

79

NSE INVESTOR SERVICES CELL

Empowerment of investors through education and protection of interest of

investors is one of the primary objectives of NSE. To cater to the needs of
investors, NSE has established its Investor Services Cell at Mumbai,
Chennai, Kolkata and New Delhi.
The Investor Services Cell facilitates resolution of complaints of investors
against the listed corporate entities and NSE members. NSE has accorded
high priority for resolution of investor complaints and therefore the activities
of Investors Services Cell are supervised by a Board Sub-Committee
exclusively constituted for the purpose.

The Investor Services Cell also renders administrative assistance to

arbitration proceedings in respect of arbitration cases that are admitted for
Arbitration under the Exchange's Arbitration Framework.

MEMBERS OF BOARD SUB-COMMITTEE

Mr. Ravi Narain
Ms. Chitra Ramkrishna
Dr. K. R. S. Murthy
Ms. Bhagyam Ramani
Mr. S. B. Mainak

80

NSE PRODUCTS
ALL MARKET REPORTS & HISTORICAL DATA
Access reports and historical data pertaining to all products available on NSE
in this section.

EQUITIES
The Equities section provides you with an insight into the equities segment of
NSE with Current Market Reports, Historical Data and Product Information.
In-depth information regarding listing of securities, trading systems &
processes, clearing and settlement, risk management, trading statistics etc are
available here.
Equities
Indices
Mutual Funds
Exchange Traded Funds
Initial Public Offerings
Security Lending and Borrowing Scheme

81

DERIVATIVES
The Derivatives section provides you with an insight into the derivatives
segment of NSE with Current Market Reports, Historical Data and Product
Information. Real-time quotes and information regarding derivative products,
trading systems & processes, clearing and settlement, risk management,
statistics etc. are available here.
Equity Derivatives
Currency Derivatives
Interest Rate Futures
Global Indices
DEBT
The Debt section provides you with an insight into the debt segment of NSE
with Current Market Reports, Historical Data and Product Information. Large
investors and a high average trade value characterize this segment. Till
recently, the market was purely an informal market with most of the trades
directly

negotiated

and

struck

between

various

participants.

The

commencement of this segment by NSE has brought about transparency and

efficiency to the debt market.
Retail Debt Market
Wholesale Debt Market
Corporate Bonds
82

83

ADITYA TRADING SOLUTIONS (ATS)

We are a full spectrum investment management house specializing in online
commodity trading. We are one of the earliest members of MCX and
pioneers of online commodity broking in TAMILNADU. ATS is promoted
by young and dynamic entrepreneurs who have years of proven experience in
international derivative markets like NYMEX and worked with several
FORTUNE 500 companies. We are the largest online commodity Trading
Company in Tamilnadu. Our client base consists of a long list of satisfied
institutional and retail client base broking.
MISSION
To provide cost effective Trading, Investment & Risk Management
solutions to our ever increasing client base in a professional and ethical way.
SERVICES
Trading & investment access to MCX, NCDEX, NSE, BSE &Currency
futures
Physical Delivery of commodities
Price risk management & Hedging
Wealth management with capital protection
Research & investment advisory
84

24 X 7 ONLINE BACK OFFICE

When you are a client of ATS you never have to worry about not knowing
your account status. You can access your Trading/Accounts statement any
time, anyplace at your

convenience with help of our 24 X 7 online back

office software.
ONLINE TRADING PLATFORM
We provide you online trading software to help you place your orders at the
click of a button. We ensure that the entire process right from opening your
account to placing an order online is as simple and hassle free as possible.
RESEARCH GUIDANCE
We provide you with highly successful Trading/Investment calls to enhance
your profitability. Our research will guide you in making informed decisions
which will make your WEALTH

GROW.

RESEARCH ON YOUR MOBILE

Imagine how profitable you can be if critical research calls are available
to you on time. We at ATS deliver trading calls to your mobile through SMS
on time, every time.

85

PERSONALIZED SERVICE
We understand that each of our clients have unique set of trading
requirements. We customize our service package to suit your trading needs
PROMOTERS OF THE COMPANY
MR. VIKAS JAIN - ATS FOUNDER
Mr. Vikas Jain is Managing Director of Aditya Trading Solutions Private
Limited (ATS) and started the business along with co-promoter, Mr. Sunish
C V in 2006. Prior to this, Mr. Vikas Jain was the part of Asset Liability
Management Team of Standard Chartered Bank. IN the year 2005 he was
conferred the Best Performer Award for his outstanding performance in the
development of Wholesale Banking by Standard Chartered Bank. Earlier, Mr.
Vikas Jain worked as Risk Manager, in Chemoil Corp, which is the largest
independent oil bunkering company in United States of America and was in
charge of oil trading positions for various group companies in Chemoil Corp.
Mr. Vikas Jain is part of many social service and charity programs and
channels his contributions through the Rotary club of Madras Downtown.
Mr. Vikas Jain is a post graduate in Business Management and holds Master
in Finance from the Institute of Chartered Financial Analysts of India.

86

MR. SUNISH C V DIRECTOR

Mr. Sunish C V is the Co Founder and Director of Aditya Trading
Solutions Private Limited (ATS). Sunish C V has a 10-year professional track
in the field of investment banking, where he has had a challenging career
across various regions and businesses. Excelling in all responsibilities
handled, he has acquired functional expertise in Risk Management, Retail
Broking, Asset Management and corporate planning. As the Manager of the
Risk Mgmt Team in Chemoil Corp of USA, Sunish C V held a number of
leadership roles, particularly in setting up Risk Management Policies and its
implementation throughout various trading desks of Chemoil group across
the world. Prior to this, Sunish C V, held various positions in Systematix
Corporate. He was part of the team which leads the company from a one
branch broking company to its present stature of one of the leading brokerage
houses in India. Sunish C V is a member of the Institute of Chartered
Financial Analysts of India. He also delivers guest lectures at National
Institute of Technology, Trichy, and ICFAI Business School. Sunish C V
graduated in Electronics and Communication Engineering, a Master of
Business Administration from Regional College of Engineering, Trichy and
is a Chartered Financial Analyst. Sunish C V is affiliated with certain nonprofit organizations, including the Rotary Club.

87

MR. SURESH KUMAR P - VICE PRESIDENT

He is a Post graduate in Business administration (Marketing) from NIT
Trichy, and a Bachelor of Engineering (Mechanical) from HCE Chennai. He
had worked with Apex management consulting P ltd as a business consultant
and had advised Murugappa group of companies, Godrej saralee ltd and
Reynolds pens for Business process reengineering, ERP implementation and
productivity improvement.
MS. DIVYA B - FINANCIAL CONTROLLER
She is responsible for Operational development at ATS. She has done M.B.A
(Finance) and associated with ATS since August 2007. She started her career
with ATS as Accounts Assistant, later on appointed as Back Office Manager
before assuming the role of Financial Controller.
MR. MANOHARAN - BUSINESS LEADER
Joined as a Dealer and promoted to Business Leader he has been awarded
Best Branch Manager for 2012. He is the person who gives equal importance
to hard work and smart work. He has over 5 years of industry experience He
has a graduate in Corporate Secretary ship and currently pursuing Master of
Business Administration - (Finance).

88

MR. V SUNIL KUMAR - BRANCH MANAGER

Joined as a Dealer in ATS and was promoted to Branch Manager. He has
even worked with Astron Technologies Pvt Ltd and has over 3 years of
industry experience. He is a commerce graduate
MR. LENISH K - RISK MANAGER
He is in employment with Aditya Trading Solutions Private Limited (ATS)
for the past Four and Half years and showed a significance increase
relationship between clients.
PRODUCTS AND SERVICES EQUITY
The section attempts to assist and guide our valuable investors in their
decision making process with the thorough company-specific in-depth
analysis. Based on the complete evaluation and study of the stocks, done by
our highly experienced and efficient research and analytical team, the
investors, with different risk appetites, may judge their past, present and
likely future position in equity shares. The report covers various aspects like
valuation, revenue projection, future financial position of the business, key
ratios, trading comparables, market data, current positioning of the company
and industry, key developments and other relevant details. To make the
information reader friendly and simpler, it is also presented in tabular and

89

graphical forms. Analysis of impact of any important business, economic or

political development, on the revenues and margins is conduct to give a clear
insight to the investors. Finally an investment call to BUY, SELL,
HOLD, or ACCUMULATE is provided by the analyst. Besides, a
similar approach is followed in offering industry reports as well.
DERIVATIVES
Derivatives are tools used to hedge position of an investor in a future
position. However, in recent times, Futures and Options have also grabbed
investors attention in view of their lucrative returns. A daily derivative
report is provided in order to give an insight on the day-to-day F&O
highlights, overview, pivot table, nifty put call ratio over the month, daily
future open interest gainers & losers and recommendation. We also provide
information on daily trading strategy in the F&O.
IPO
This includes the extensive coverage of the companies entering the capital
market with their Initial Public Offers (IPO). Mostly, investors are unaware
regarding the longevity of these companies operations and where will they
stand in future. Our IPO report, which incorporates all the relevant
information including future earnings forecast, growth and its current market
performance, acts as a complete investment guide. Besides, our specialized
team also ranks the IPO, in order to make the investment decision simpler.
90

MUTUAL FUND
The section includes the daily updates in Mutual funds including New Fund
Offers, Dividend declaration, buying and selling by Mutual funds in equity as
well as in debt market. Besides, it also highlights the in-depth analysis on
mutual funds, in which the news and developments, category wise top gainers
and over all top gainers schemes, portfolio and scheme analysis of top three
schemes are covered along with the updates on NFO and latest dividends.
COMMODITIES
A commodity, the only asset class that is negatively correlated to bonds is a
powerful tool for diversification, and has developed into a new opportunity
for investors to get heavy returns. With ATS, you can cash on the lucrative
opportunity of investing in commodities or the raw materials used to create
the products that people really need, demand for which is endless and ever
increasing. Our report covers various aspects including Agricultural
Commodities, Precious Metals, Base Metals, Energy segment, coupled with
the analysis of impact of the global and domestic news. Finally an investment
call to BUY, SELL, orHOLD, is provided by the analyst, and a similar
approach is followed in offering industry reports as well.

91

ANNOUNCEMENTS
Daily corporate announcements made by the top companies in the BSE and
NSE are covered throughout the day, coupled with the analysts view on the
major business events.
COMPANY INFORMATION
An overall company snapshot captures all the relevant details including
contact information, top management, listings, latest financial results, market
performance, news, shareholding pattern and announcements.
TRADING GUIDELINES
Equity trading is no more risky, as now ATS is there with you to take care of
your investment portfolio by providing assistance in the world of stock
markets.

We

support

our

customers

by

providing

them

timely

recommendations, fact based reliable and "dependable" research calls.

Bundled with this, we also offer value-added tools and services to our
customers to enrich their trading know how.
Investing in equities is considered risky due to the highly volatile nature of
stock markets and their dependence on the varied factors ranging from global
and domestic economic and political situations.

92

However, the high returns from equities offset the underlying risk and can
become the best option for long term wealth accumulation. Hence, before
investing you should always a consult a knowledgeable and experienced
expert who will guide you during the course of investment process.
We want to explain some trading guidelines, please implement our trading
guidelines. Trade management is more important than successful trading tips.
1. Please place stop loss orders in trading system not in your mind,
without stop loss don't trade its nothing but suicide attempt.
2. Trade all our tips, do not select our tips. If you have Rs.50,000
rupees, non risky traders fix your each trade value as Rs.25,000
(50% value of your cash), risky traders fix your each trade value as
Rs.50,000(100% value of your cash).
3. Book 75% quantity at first target then change stop loss to actual
recommended price for remaining quantity, place first target order
in advance, some times price come and go very quickly. Execute
trades very quickly price movements are very sharp in intraday.
4. Small difference is common, you can execute trades with small
difference, do not look for exact recommended entry prices and
target prices.

93

5. If you trade all our tips and maintain all trades equal value then only
profits and losses will be balanced systematically.
6. Please trade with trading discipline; if we protect our capital with
good trading discipline, profits automatically follow otherwise only
luck will dominate you. Dont depend on luck.
7. Always trade with 1 lot after recover your principal amount, you
can trade as you want.
8. Trade in the most active markets and avoid inactive markets. Also,
trade the contract

months with the most open interest. They are

more liquid.
9. What is meaning of trade reverse: For example if we buy and stop
loss trigger, sell at stop loss price then buy position will become sell
position, easy method to reverse to trade: just place double quantity
stop loss order
10. Avoid taking small profits and big losses, never add to a losing
position.

94

95

REQUIREMENTS FOR A COMPANY TO BE LISTED IN NSE

Serial
Criteria

NSE

No.
Capital Required
MINIMUM 10 CRORES

1
(Paid-Up)
Market

MINIMUM 25 CRORES

2
Capitalization
Profit Making

N.A.

3
Record

The net worth of the company has not been wiped out
Net Worth
by the accumulated losses resulting in a negative net

4
Required

worth

96

REQUIREMENT WHEN COMPANY/IES IS/ARE ALREADY LISTED

ON OTHER STOCK EXCHANGE/S
Capital Required
MINIMUM 10 CRORES

5
(Paid-Up)

MINIMUM 25 CRORES

Market Capitalization

At-least two out of the last three financial

7

Profit Making Record

years

Net Worth Required

Minimum 50 cr.

Dividend paying track

Minimum 2 out of the last 3 immediately

record

preceding financial years

At-least three years listing record with any

10

Listing Record
Regional Stock Exchange.

97

INTERPRETATIONS
As per the Table No.1 it is found that:
Capital Required: On NSE for new companies minimum paid up capital requirement is 10
crores, while on BSE the requirement is also 10 crores & for new companies
in high technology the minimum post-issue paid-up equity capital should be
Rs.5 Crores.
Market Capitalization: On NSE the market capitalization should be 25 crores, while on BSE the
minimum market capitalisation should be Rs.50 Crores (in case of new
companies in high technology).
Profit Making Record: On NSE the company must have distributable profits in at least two out of the
last three financial years (an auditors certificate must be provided in this
regard), while for listing company on BSE Company should have profit
making track record for last three years

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Net Worth Required: On NSE the net worth of the company has not been wiped out by the
accumulated losses resulting in a negative net worth, while on BSE the issuer
company should have a post issue net worth (equity capital + free reserves
excluding revaluation reserve) of Rs.20 crores.
Dividend paying track record: On NSE the applicant has paid dividend in at least 2 out of the last 3 financial
years immediately preceding the year in which listing application has been
made(in case),while on BSE the company should have a dividend paying
track record for the last 3 consecutive years and the minimum dividend
should be at least 10%. (when company/ies is/are already listed on other
stock exchange/s).
Listing Record: On NSE the applicant should have been listed on any other recognised stock
exchange for at least last three years, while on BSE the company should have
at least two years listing record with any of the Regional Stock Exchange.

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ANALYSIS OF LISTING FEES

NSE
Initial Listing Fees
Rs.7, 500
Annual Listing Fees
Companies with paid up share and/or debenture capital:
Of Rs.1 crore

4,200

Above Rs.1 crore and up to Rs.5

8,400
crores
Above Rs.5 crores and up to Rs.10
14,000
crores
Above Rs.10 crores and up to
28,000
Rs.20 crores
Above Rs.20 crores and up to
42,000
Rs.50 crores
Above Rs.50 crores

70,000

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The initial listing fees on two major stock exchanges of India are shown
below:
Initial Listing Fees (In Rs.)
NSE

BSE

7,500

20,000

NSE

BSE

NSE, 7,500

BSE, 20,000

With the help of the above chart we can simplify the comparison of listing
fees. These charts depict that listing fees on NSE is much lower than on BSE.

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The FURTHER LISTING FEES on NSE is shown in the chart below:

NSE
4,200 8,400
14,000
70,000

28,000
42,000

Of Rs.1 crore

Rs.1 cr to Rs.5 cr

Rs.5 cr to Rs. 10cr

Rs.10 cr to Rs.20 cr

Rs.20 cr to Rs.50 cr

Above Rs.50 crores

The FURTHER LISTING FEES on BSE is shown in the chart below:

BSE
750

30,000

10,000

15,000

Up to Rs. 5 cr

Rs.5 cr to Rs. 10cr

Rs.10 cr to Rs.20 cr

Above 20 crores*

If we take the initial listing fees so we see that NSE charges less
amount when BSE charges a huge amount & as we travel further the charges
charged by NSE for listing on it is lower than the on BSE.

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103

FINDINGS
The National Stock Exchange (NSE) is India's leading stock exchange
covering various cities and towns across the country. NSE was set up by
leading institutions to provide a modern, fully automated screen-based
trading system with national reach. The Exchange has brought about
unparalleled transparency, speed & efficiency, safety and market integrity.
It has set up facilities that serve as a model for the securities industry in
terms of systems, practices and procedures. NSE has played a catalytic
role in reforming the Indian securities market in terms of microstructure,
market practices and trading volumes. The market today uses state-of-art
information technology to provide an efficient and transparent trading,
clearing and settlement mechanism, and has witnessed several innovations
in products & services viz. demutualization of stock exchange
governance, screen based trading, compression of settlement cycles,
dematerialization and electronic transfer of securities, securities lending
and borrowing, professionalization of trading members, fine-tuned risk
management systems, emergence of clearing corporations to assume
counterparty risks, market of debt and derivative instruments and
intensive use of information technology.

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When I complete the assign project research then I finds some

important points in this report these are given as follows;
There are capital require (paid up) must be minimum 10 crore for
listing in NSE or BSE for a particular company. Initial listing fees for a
particular company in national stock exchange are much lower than on
Bombay stock exchange. Market capitalization of the Bombay stock
exchange is more than national stock exchange. The daily turnover of
national stock exchange is more than Bombay stock exchange on daily
basis.
Stocks in India had a positive performance during the last month. The
SENSEX, a major stock market index based in India, rallied 755 points or
4.45 percent during the last 30 days. Historically, from 1979 until 2012,
the SENSEX averaged 5249.6 reaching an all time high of 21005.0 in
November of 2010 and a record low of 113.3 in December of 1979. The
SENSEX is a major stock market index which tracks the performance of
large companies based in India. A stock market or exchange is the centre
of a network of transactions where securities buyers meet sellers at a
certain price.

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SUGGESTIONS
Brokers should improve their services. SEBI should imply some mere
regulations. So that investors can feel more secure. Small investors cannot
afford daily trading so script call updating facilities should be improved.
Brokerage slabs should be flexible. Compliance department should be
more active in companies.
NSE should work on the reducing the cost of trading to the investor.
Similarly NSEs automated trading system should ensure consistency and
transparency in the trade matching which enhances investors confidence
and visibility of our market.
The trading system in NSE provides unparallel level of trade and posttrade information but this has to be more accurate. The best 5 buy and sell
orders are displayed on the trading system which has to be increased to
best 10 along with the total number of securities available for buying and
selling. This helps the investor to know the depth of the market. Further,
corporate announcements, results, corporate actions etc should also be
available up to date on the trading system.
NSE is the largest exchange in the county in terms of trading volumes.
During the year 2008 and 2010, NSE sensex reported 21000 points but in

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between these and after 2010 also the sensex is falling continuously, this
situations has to be monitored efficiently by the regulatory authorities.
NSE provides a trading platform that extends across the length and
breadth of the country. Investors from 360 centres can avail of trading
facilities on the NSE Trading Network. The Exchange uses the latest in
communication technology to give instant access from every location.
However, the number of centers has to be increased from 360 to 500 and
above.
NSE introduced for the first time in India, fully automated screen
based trading. The Exchange uses a sophisticated telecommunication
network with over 9000 trading terminals connected through VSATs
(Very Small Aperture Terminals). However, there are lots of problems in
security and privacy issues, this has to be well managed by NSE.

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CONCLUSION
After going through all the analysis regarding the stock market in last
ten years, we can say that stock market faces so many ups and down during
this time it comes from its lowest point to its peak at 21000 but then crashed
badly. During its skimming point some scams were held by which it forms its
new peak falls down suddenly and so badly by which investors are afraid to
invest in this market. Now it is revolving around a 19000 -21000 figure.
Though the sensex is a barometer and after seeing such fluctuations one
could be afraid of investing. Still we can say that people can play safe by
investing the blue-chips and undervalued shares.
During year 2006, if we keep aside that brief period of loss that the
market witnessed from may 10 2006 to June 14 2006, investors wealth seem
to have grown double fold with the Sensex touching the 10000, 11000,
12000, 13000 and 14000 levels in the same calendar year. Investor wealth in
terms of market capitalization has been growing in the range of 6.84-12.41%
And talking about year 2007, we can summarize the happenings of
year 2007 as a year which redefined the resistance levels at sensex. Strong
economic data, heavy inflow of funds from FIIs towards the close of previous
calendar year and decent to highly encouraging surge in earnings of top notch
companies all pointed to a rosy 2007. The rupee's rise against the US dollar
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the regulator's decision to restrict investments made through participatory

notes, rising crude oil prices, the sub-prime mortgage woes in US, concerns
over a slowing down US economy and The Left parties' opposition to the
Indo-US nuclear pact, did halt the market's progress at times. But the inherent
strength of the Indian economy, fairly buoyant results quarter after quarter,
the various chops and subsidies announced by the government and sustained
efforts made by the market regulator to keep investor confidence in the
system alive kept the momentum going.
Presently the hike and seek being played by crude prices, inflation and
RBI is affecting our market to a great extent. And adding to the worries are
global slowdown, political instability, serial bomb blasts, negative public
sentiments etc. It is indeed surprising that though the epicenter of the subprime crisis is the US, the tremors are being felt in India. The loss of market
cap in the US is only 14 per cent vis--vis 38 per cent in India.
But even after analyzing the causes for downturn, we can say that India story
has not ended; else $200 billion with institutional investors would have fled
for safer waters. Exports being 14 per cent of GDP, India is less vulnerable to
external shocks than many other Asian nations.
However, Many market Players, Brokers, sub-brokers, trading firms etc. deal
through the Bombay Stock Exchange.
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110

BIBLIOGRAPHY
1. BOOKS
Alexander. G.J, Sharpe. W.F and Bailey. J.V, Fundamentals of
Investments, PHI, 3rd Ed.
Zvi Bodie, Alex Kane, Marcus.A.J, Pitabas Mohanty, Investments,
TMH, 8th Ed.
Prasanna Chandra, Investment Analysis and Portfolio Management,
TMH, 3rd Ed.
Charles.P.Jones, investments: analysis and management, john wiley
&sons, inc. 9th ed.
2. MAGAZINES REFFERED:
Dalaal Street
India Today
Business Times
3. WEBSITES REFFERED:
www.bseindia.com
www.nseindia.com
www.sebi.gov.in
www.moneycontrol.com
www.google.com
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