Principal functions of the stock market

Enabling mobilizing resources for investing straight from the investors. Supplying liquidness for the investors and monitoring. Disciplining company direction. The two major stock exchanges in India are National Stock Exchange ( NSE ) and Bombay Stock Exchange ( BSE ) .

National Stock Exchange ( NSE )

With the liberalisation of the Indian economic system, it was found inevitable to raise the Indian stock market trading system on par with the international criterions. On the footing of the recommendations of high powered pherwani commission, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporation, Selected Commercial Bankss and others.

The National Stock Exchange ( NSE ) is India ‘s taking stock exchange covering assorted metropoliss and towns across the country.NSE was set up by taking establishments to supply a modern, to the full automated screen-based trading system with national reach.The Exchange has brought approximately alone transparence, velocity & A ; efficiency, safety and market unity. It has set up installations that serve as a theoretical account for the securities industry in footings of systems, patterns and processs.

NSE has played a catalytic function in reforming the Indian securities market in footings of microstructure, market patterns and trading volumes. The market today uses state-of-art information engineering to supply an efficient and transparent trading, cleaning and colony mechanism, and has witnessed several inventions in merchandise & A ; services viz. demutualization of stock exchange governess, screen based trading, compaction of colony rhythms, dematerialization and electronic transportation of securities, market of debt and derivative instrument and intensive usage of information engineering.

NSE Nifty

S & A ; P CNX Nifty is a good diversified 50 stock index accounting for 22 sector of the economic system. It is used for a assortment of intents such as benchmarking fund portfolios, index based derived functions and index fund.

NSE came to be owned and managed by India index services and merchandise Ltd. ( IISL ) , which is a joint venture between NSE and CRISIL.IISL is India ‘s first specialized company focused upon the index as a nucleus merchandise. IISL have a consulting and licensing understanding with standard & A ; Poor ‘s ( S & A ; P ) , who are universe leaders in index services. CNX stands for CRISIL NSE Indices. CNX ensures common stigmatization of indices, toreflect the individualities of both the boosters, i.e. NSE and CRISIL.Thus, ‘C ‘ bases for CRISIL, ‘N ‘ bases for NSE and X stands for Exchange or Index. The S & A ; P prefix belongs to the US-based Standard & A ; Poor ‘s Financial Information Services.

Bombay Stock Exchange

The Bombay Stock Exchange is one of the oldest stock exchange in Asia. It was established as “ The Native Shares & A ; Stock Brokers Association ” in 1875. It is the first stock exchange in the state to obtain lasting acknowledgment in 1956 from the Government of India under the Securities Contracts ( Regulation ) Act,1956.The Exchange ‘s polar and pre-eminent function in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide.

SENSEX

The Stock Exchange, Mumbai ( BSE ) in 1986 came out with a stock index that later became the barometer of the Indian stock market.

SENSEX is non merely scientifically designed but besides based on globally accepted building and reappraisal methodological analysis. First complied in 1986, SENSEX is a basket of 30 constitute stock stand foring a sample of big, liquid and representative companies. The basal twelvemonth of SENSEX is 1978-79 and the base value is 100. The index is widely reported in both domestic and international markets through print every bit good as electronic media.

The Index was ab initio calculated based on the ” FullMarket Capitalization ” methodological analysis but was shifted to the free-float methodological analysis with consequence from September 1, 2003.The ” Free-flat Market Capitalization ” methodological analysis of index building is regarded as an industry best pattern globally. All major index suppliers like MSCI, FTSE, STOXX, S & A ; P and Dow Jones use the Free-float methodological analysis.

Due to is broad credence amongst the Indian investors ; SENSEX is regarded to be the pulsation of the Indian stock market. As the oldest index in the state. It provides the clip series informations over a reasonably long period of clip. Small admiration, the SENSEX has over the old ages become one of the most outstanding trade names in the state.

The SENSEX captured all these events in the most judicial mode. One can place the roars and flops of the Indian stock market through SENSEX.

The launch of SENSEX in 1986 was subsequently followed up in January 1989 by debut of BSE National Index ( Base:1983-84=100 ) .It comprised of 100 stocks listed at five major stock exchanges.the Exchange launched dollar -linked version of BSE -100 INDEX ie.Dollex-100 on May 22,2006.

In order to carry through the demand of the market participants for still broader, section particular and sector specific indices, the Exchange has continuously been increasing the scope of its indices. The launch of BSE -200 Index in 1994 was followed by the launch of BSE-500 Index and 5 sectoral indices in 1999.in 2001, BSE launched the BSE-PSU Index, DOLLEX-30 and the state ‘s first free-float based index-the BSE TECK index. The exchange shifted all its indices to a free float methodological analysis ( except BSE PSU index ) in a phased mode.

The values of all BSE indices are updated every 15 seconds during the market hours and displayed through the BOLT system.All BSE-Indices are reviewed sporadically by the “ Index Committee ” of the Exchange.

BSE besides has a broad scope of services to authorise investors and ease smooth minutess:

Investor Services: The section of investor services redresses grudges of investors.BSE was the first exchange in the state to supply an sum of Rs.1 million towards the investor protection fund ; it is an sum higher than that of any exchange in the country.BSE launched a countrywide investor awareness programme-Safe Investing in the Stock Market ‘ under which 264 programmes were held in more than 200 metropoliss.

The BSE online Trading ( BOLT ) : BSE On line Trading ( BOLT ) facilitates on line screen based trading in securities.BOLT is presently runing in 25000 bargainer workstations located across over 450 metropoliss in India.

BSEWEBX.com: In February 2001, BSE introduced the universe ‘s first centralized exchange based internet trading system.BSEWEBX.com. This inaugural enables investors anyplace in the universe to merchandise on the BSE platform.

Surveillance: BSE ‘s On Line Surveillance System ( BOSS ) proctors on a existent -time footing the monetary value motions, volume places and member ‘s places and existent -time measuring of default hazard, market Reconstruction and coevals of cross market qui vives.

BSE Training Institute: BTI imparts capital market preparation and enfranchisement, in coaction with reputed direction instituted and universities. It offers over 40 classs on assorted facets of the capital market and fiscal sector. More than 20000 people have attended the BTI programmes.

Chapter 3

Company PROFILE

Company PROFILE

Sharewealth Securities Ltd is the first corporate member of National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd from THRISSUR, the Cultural Capital of Kerala. Sharewealth is besides a Depository Participant with CDSL ( Central Depository Services ( India ) Ltd ) .

Sharewealth Securities Ltd has two group companies, Sharewealth Commodities Pvt Ltd ( Member: MCX-Multi Commodity Exchange Ltd ) and Sharewealth Financial Services Ltd ( AMFI Registered Mutual Fund Distributor ) .

Registered offices of Sharewealth Group of companies are at Thrissur.

Promoters of the Company

Sharewealth is promoted by a group of Financial Market Professionals holding more than 20 old ages of experience in Financial Markets, and assorted professional very important persons from different Fieldss of entrepreneurship.

Mr. T.B.Ramakrishnan ( Ramki ) – Chief executive officer is taking the nucleus squad of Sharewealth, which has a extremely competent diversified Board of Directors. Mr.Ramki is a Stock Market Analyst, Ex. Treasurer & A ; Governing Council Member of Cochin Stock Exchange Ltd ( 1998-2000 ) and former Kerala Regional Head of Sharekhan who has got more than 20 old ages of experience in Financial Markets.

Dr.Anil Menon, Mr.Joseph P Antony, Mr.T.V.N Girish Kumar, Mr.N.C.Peethambaran ( Group Company Director ) and Mr. Mani Paul ( Group Company Director ) are Working Directors of the company.

Mr.N.C.Chummar, Mr.A.Unnikrishnan, Mr.T.S.Rajan, Mr.P.S.Balakrishnan, Mr.N.Nandakumar, Mr. Vincent Paliakkara ( Group Company Director ) , Dr.Saifu Kokkat ( Group Company Director ) & A ; Advocate A.Y.Khalid are other managers.

Mr.Anchery Ramanathan is the Chairman and Mr.C.G.Surendran is the Vice-Chairman of the company.

MISSION OF THE COMPANY

“ To educate turning puting populace in a simple & A ; practical manner to assist them to protect their difficult earned money and to do more money from fiscal & A ; trade good markets ” , which we mean by

“ Wealth creative activity simplified ”

Servicess PROFILE

Equities

The Equities subdivision provides with an penetration into the equities section of NSE & A ; BSE and besides provides real-time quotation marks and statistics of the equities market. In-depth information sing listing of securities, merchandising systems & A ; procedures, uncluttering and colony, hazard direction, merchandising statistics etc are available.

Sharewealth is the registered member of NSE, giving equities at the most importance.

Derived functions

The term “ Derivative ” indicates that it has no independent value, i.e. its value is wholly “ derived ” from the value of the implicit in plus. The implicit in plus can be securities, trade goods, bullion, currency, unrecorded stock or anything else. In other words, Derivative means a forward, hereafter, option or any other intercrossed contract of pre determined fixed continuance, linked for the intent of contract fulfilment to the value of a specified existent or fiscal plus or to an index of securities.

With Securities Laws ( Second Amendment ) Act, 1999, Derivatives has been included in the definition of Securities. The term Derivative has been defined in Securities Contracts ( Regulations ) Act, as: –

A Derivative includes: –

a. a security derived from a debt instrument, portion, loan, whether secured or unbarred, risk instrument or contract for differences or any other signifier of security ;

b. a contract which derives its value from the monetary values, or index of monetary values, of implicit in securities ;

Depository

A depositary can be compared to a bank. A depositary holds securities like portions, unsecured bonds, bonds, Government Securities, units etc. of investors in electronic signifier. Besides keeping securities, a depositary besides provides services related to minutess in securities. At present two Depositories viz. National Securities Depository Limited ( NSDL ) and Central Depository Services ( I ) Limited ( CDSL ) are registered with SEBI.

A depositary interfaces with the investors through its agents called Depository Participants ( DPs ) . If an investor wants to avail the services offered by the depositary, the investor has to open an history with a DP. This is similar to opening an history with any subdivision of a bank in order to use the bank ‘s services.

The Depository installations include,

Dematerialization, Dematerialization, repurchase/redemption of units of common financess, electronic colony of trades in stock exchanges, reception of non-cash corporate benefits such as fillip, in electronic signifier, transmittal of securities, and other installations like keeping debt instruments in the same history, availing stock lending/borrowing installation, etc.

Sharewealth provides you all Depository services.

Commodities

Any merchandise that can be used for commercialism or an article of commercialism which is traded on an authorized trade good exchange is known as trade good. The article should be movable of value, something which is bought or sold and which is produced or used as the topic or swap or sale. In short trade good includes all sorts of goods. Forward Contracts ( Regulation ) Act ( FCRA ) , 1952 defines goods as every sort of movable belongings other than actionable claims, money and securities.

In current state of affairs, all goods and merchandises of agricultural ( including plantation ) , mineral and fossil beginning are allowed for trade good trading recognized under the FCRA. The national trade good exchanges, recognized by the Cardinal Government, permits trade goods which include cherished ( gold and Ag ) and non-ferrous metals ; cereals and pulsations ; ginned and un-ginned cotton ; oil-rich seeds, oils and oilcakes ; raw jute and jute goods ; sugar and Gur ; murphies and onions ; java and tea ; gum elastic and spices.etc.

Sharewealth is the registered member of MCX.

Common Fund

Common fund is a mechanism for pooling the resources by publishing units to the investors and puting financess in securities in conformity with aims as disclosed in offer papers.

Investings in securities are spread across a broad cross-section of industries and sectors and therefore the hazard is reduced. Diversification reduces the hazard because all stocks may non travel in the same way in the same proportion at the same clip. Common fund issues units to the investors in conformity with quantum of money invested by them. Investors of common financess are known as unit holders.

The net incomes or losingss are shared by the investors in proportion to their investings. The common financess usually come out with a figure of strategies with different investing aims which are launched from clip to clip. A common fund is required to be registered with Securities and Exchange Board of India ( SEBI ) which regulates securities markets before it can roll up financess from the populace. Sharewealth has the AMFI enrollment and ushers in all types of Mutual Fund.

Initial public offering

An Initial Public Offer ( IPO ) is the merchandising of securities to the populace in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its bing securities or both for the first clip to the populace. This paves manner for listing and trading of the issuers securities. The sale of securities can be either through book edifice or through normal public issue.

IPOs can be a hazardous investing. For the single investor, it is tough to foretell what the stock will make on its initial twenty-four hours of trading and in the close hereafter since there is frequently small historical informations with which to analyse the company. Besides, most IPOs are of companies traveling through a ephemeral growing period, and they are hence capable to extra uncertainness sing their hereafter value.

Insurance