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VIVEK COLLEGE OF COMMERCE

VIVEK COLLEGE OF COMMERCE

UNIVERSITY OF MUMBAIPROJECT ONNIFTY FIFTY

SUBMITTED BYKINJAL R BHADRESHWARAT. Y. B. COM. (FINANCIAL MARKETS)

SEMESTER VIACADEMIC YEAR 2013-14

PROJECT GUIDEDEBJANI CHAKRABORTI

VIVEK EDUCATION SOCIETYSVIVEK COLLEGE OF COMMERCESIDDHARTH NAGAR GOREGAON (WEST)MUMBAI - 400104.

CERTIFICATE

I, Debjani Chakraborti, hereby certify that Kinjal R Bhadreshwara of Third Year Bachelor of Commerce (Financial Markets), Vivek College of Commerce, Has successfully completed project on Establishment And Growth of NSE in Semester VI of the academic year 2013-14

Internal ExaminerExternal Examiner

Co-ordinator Principal

DECLARATION

I, Kinjal R Bhadreshwara, student of Bachelor of Commerce (Financial Markets)Semester VI , Vivek College of Commerce, hereby declare that I have completed the project on Establishment and Growth of NSE in the academic year 2013-14.

The information submitted is true and original to the best of my knowledge.

Signature DateKinjal R Bhadreshwara

AcknowledgementTo list who all helped me is difficult because they are so numerous and the depth is so enormous.I would like to acknowledge the following as being idealistic channel and fresh dimension in the completion of this project.I take this opportunity to thank the University of Mumbai for giving me chance to do this project.I would like to thank my principal, Dr. Nandita Roy, for providing the necessary facilities required for completion of this project.I take this opportunity to thank our co-ordinator Mrs. Debjani Chakraborti for his moral support and guidance.I would also like to express my sincere gratitude towards my project guide Debjani Chakraborti whose guidance and care made the project successful.I would like to thank my college library, for having provided various reference books and magazines related to my project.Lastly, I would like to thank each and every person who directly or indirectly helped me in the completion of the project, especially my parents and my peers who supported me throughout my project.

Kinjal R BhadreshwaraEXECUTIVE SUMMARYS&P CNX Nifty, also called theNifty 50or simply theNifty, is astock market index, and one of several leading indices for large companies which are listed onNational Stock Exchange of India.[1], index based derivatives and index funds. Nifty is owned and managed byIndia Index Services and Products Ltd.(IISL), which is a joint venture betweenNSEandCRISIL(Credit Rating and Information Services of India Ltd). (IISL) is India's first specialized company focused upon the index as a core product.IISLhas a marketing and licensing agreement withStandard & Poor'sfor co-branding equity indices. 'CNX' in its name stands for 'CRISIL NSE Index'.

INDEXS. N.ContentPage no

1)Chapter- 1

Introduction8

History of Nifty15

2)Chapter-2

Securities Listed in Nifty17

Promoters19

3)Chapter-3

Eligibility Criteria21

NSE Mission24

Envisioned Mission25

4)Chapter-4

NSE Products31

NSE Indices32

5)Conclusion

6)Bibliography

CHAPTER-1

INTRODUCTION The S&P CNX Nifty is the headline index on the National Stock Exchange of India Ltd. (NSE). The Index tracks the behavior of a portfolio of blue chip companies, the largest and most liquid Indian securities. It includes 50 of the approximately 1430 companies listed on the NSE, captures approximately 65% of its float-adjusted market capitalization and is a true reflection of the Indian stock market. The S&P CNX Nifty covers 21 sectors of the Indian economy and offers investment managers exposure to the Indian market in one efficient portfolio. The Index has been trading since April 1996 and is well suited for benchmarking, index funds and index based derivatives.

Partnership :-

The S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between the NSE and CRISIL. IISL is Indias first specialized company focused on an index as a core product. IISL has a licensing and marketing agreement with Standard & Poors, who is a world leader in index services.

Highlights :- The S&P CNX Nifty is a 50 stock, float-adjusted market-capitalization weighted index for India, accounting for 21 diversified sectors of the economy. It is used for a variety of purposes, such as benchmarking fund portfolios, index based derivatives and index funds. The S&P CNX Nifty is derived from economic research and is created for those interested in investing and trading in Indian equities.

Market Representation. :-The S&P CNX Nifty stocks represent about 65% of the total float-adjusted market capitalization of the National Stock Exchange (NSE).

Diversification. :-The S&P CNX Nifty is a diversified index, accurately reflecting the overall market. The reward-to-risk ratio of S&P CNX Nifty is higher than other leading indices, offering similar returns but at lesser risk.

Liquidity. :-Market impact cost is the best measure of the liquidity of a stock. It accurately reflects the costs faced when actually trading an index. For a stock to qualify for inclusion in the S&P CNX Nifty, it has to reliably have market impact cost below 0.50 %, when doing S&P CNX Nifty trades of Rupees (Rs) 20 million. The current impact cost of the S&P CNX Nifty for a portfolio size of Rs 20 million is 0.13%.

Hedging Effectiveness.-The basic risk of the S&P CNX Nifty futures is lower than other index portfolios, due to the liquidity of the S&P CNX Nifty constituent stocks and of the NSE. In addition, the S&P CNX Nifty has higher correlations with typical investment portfolios in India, compared to other indices. These two factors allow for effective hedging of the Index.

Index Family:-S&P CNX Defty. The S&P CNX Defty is a U.S. dollar-denominated index based on the S&P CNX Nifty. This index was developed to provide a benchmark of Indian stocks to international investors, providing them with an instrument for measuring returns on their equity investment in dollar terms. This ensures that the risk arising out of currency fluctuation is covered through the S&P CNX Defty.

Nifty Fifty:-

This article refers to an informal investing term. For the Indian stock index, seeS&P CNX Nifty. For the motor scooter, see theHonda Spree. For the Canon lens, seeEF 50mm f/1.8 II.Nifty Fiftywas an informal term used to refer to 50 popularlarge capstocks on theNew York Stock Exchangein the 1960s and 1970s that were widely regarded as solidbuy and holdgrowth stocks.The fifty are credited with propelling thebull marketof the early 1970s. Most are still solid performers, although a few are now defunct or otherwise worthless. The long bear market of the 1970s that lasted until 1982 caused valuations of the nifty fifty to fall to low levels along with the rest of the market, with most of these stocks under-performing the broader market averages. A notable exception was Wal-Mart, the best performing stock on the list, with a 29.65% compounded annualized return over a 29 year period. Because of the under-performance of most of the nifty fifty list, it is often cited as an example of unrealistic investor expectations for growth stocks. However, those who held on until the late 1990s bull market saw many of the stocks return to market valuations.

Characteristics:-The stocks were often described as "one-decision", as they were viewed as extremely stable, even over long periods of time.The most common characteristic by the constituents were solid earnings growth for which these stocks were assigned extraordinary high price-earnings ratios. Fifty times earnings was not uncommon.NIFTY means National Index for Fifty

Eligibility Criteria:-Selection of the index set is based on the following criteria: Liquidity (Impact Cost) Float-Adjusted Market Capitalization Float Domicile Eligible Securities Other Variables

Liquidity:- For inclusion in the index, the security should have traded at an average impact cost of 0.50 % or less during the last six months, for 90% of the observations. Impact cost is the cost of executing a transaction in a security in proportion to its index weight, measured by market capitalization at any point in time. This is the percentage mark up suffered while buying/selling the desired quantity of a security compared to its ideal price -- (best buy + best sell)/2.

Float-Adjusted Market Capitalization:- Companies eligible for inclusion in the S&P CNX Nifty must have at least twice the float-adjusted market capitalization of the current smallest index constituent.

Float:- Companies eligible for inclusion in the S&P CNX Nifty should have at least 10% of its stock available to investors (float). For this purpose, float is stocks which are not held by the promoters and associated entities (where identifiable) of such companies.

Domicile:- The company must be domiciled in India and trade on the NSE.

Eligible Securities:- All common shares listed on the NSE (which are of equity and not of a fixed income nature) are eligible for inclusion in the S&P CNX Nifty index. Convertible stock, bonds, warrants, rights, and preferred stock that provide a guaranteed fixed return are not eligible.

Other Variables:- A company which comes out with an IPO is eligible for inclusion in the index if it fulfills the normal eligibility criteria for the index impact cost, float-adjusted market capitalization and float -- for a three-month period instead of a six-month period.

Timing of Changes:- The index is reviewed semi-annually, and a six-week notice is given to the market before making any changes to the index constituents.

Additions :- The complete list of eligible securities is compiled based on the float adjusted market capitalization criteria. After that, the liquidity (impact cost) and float adjustment filters are applied to them, respectively. The top ranking companies form the replacement pool. The top stocks, in terms of size (float-adjusted market capitalization) are, then, identified for inclusion in the index from the replacement pool.

Deletions :- Stocks may be deleted due to mergers, acquisitions or spin-offs. Otherwise, as noted above, twice a year a new eligible stock list is drawn up to review against the current constituents. If this new list warrants changes in the existing constituent list, then the smallest existing constituents are dropped in favor of the new additions.

Index Construction Approaches The S&P CNX Nifty is computed using a float-adjusted, market capitalization weighted methodology*, wherein the level of the index reflects the total market value of all the stocks in the index relative to a particular base period. The methodology also takes into account constituent changes in the index and corporate actions such as stock splits, rights issuance, etc., without affecting the index value.

HISTORY :- Below we have made up what we believe is the modern Nifty 50 based on the original nifty 50 and also adding in some exposure to banking, energy, technology & Internet. TheNifty 50 Best Stock Picksdates back to the 1960s and 1970s. TheNifty 50 Best Stock Picksare composed mostly of large-cap blue-chip that outperformed the market during that era. The underlining belief is that companies that are market leaders and have strong brands will continue to outperform the market over the long run and be safer investments.

NYSE Nifty Fifty constituents :- NYSE American Home Products American ly Corp. AMP Inc. Anheuser-Busch Avon Products Baxter International Black & Decker Bristol-Myers Burroughs Corporation Chesebrough-Ponds The Coca-Cola Company Digital Equipment Corporation Dow Chemical Eastman Kodak Eli Lilly and Company Emery Air Freight First National City Bank General Electric Gillette Halliburton HeubleinBrewing Company IBM International Flavors and Fragrances International Telephone and Telegraph J.C. Penney Johnson & Johnson Louisiana Land and Exploration Lubrizol Minnesota Mining and Manufacturing(3M) McDonald's Merck & Co. MGIC Investment Corporation PepsiCo Pfizer Philip Morris Cos. Polaroid Procter & Gamble Revlon Schering Plough Joe Schlitz Brewing Schlumberger Sears, Roebuck and Company Simplicity Pattern Squibb S.S. Kresge Texas Instruments Upjohn The Walt Disney Company

CHAPTER 2SECURITIES LISTED IN NIFTY FIFTY

S. N.SCRIPTS

1ALLAHABAD BANK

2ANDHRA BANK

3ALSTOM PROJECTS INDIA LTD

4ASHOK LEYLAND LTD

5AUROBINDO PHARMA LTD

6BAJAJ HINDUSTAN LTD

7BEML LIMITED

8CESC LTD

9CHENNAI PETROLEUM CORP LT

10CUMMINS INDIA LTD

11DIVIS LABORATORIES LTD

12EDUCOMP SOLUTIONS LTD

13THE GE SHPG.LTD

14GVK POW. & INFRA LTD.

15HINDUSTAN CONSTRUCTION CO

16HOTEL LEELA VENTURES LTD

17IDBI BANK LIMITED

18THE INDIAN HOTELS CO. LTD

19THE INDIA CEMENTS LIMITED

20INDIAN BANK

21IVRCL INFRAST & PROJ LTD.

22JSW STEEL LIMITED

23LANCO INFRATECH LTD.

24LUPIN LIMITED

25MOSER-BAER (I) LTD

26MPHASIS LIMITED

27MAHANAGAR TELEPHONE NIGAM

28NAGARJUNA CONSTRN. CO. LT

29ORACLE FIN SERV SOFT LTD.

30PATEL ENGINEERING LTD.

31PETRONET LNG LIMITED

32PIRAMAL HEALTHCARE LTD

33PRAJ INDUSTRIES LTD

34PUNJ LLOYD LIMITED

35REL. NAT. RESOURCES LTD.

36ROLTA INDIA LTD

37SHIPPING CORP OF INDIA LT

38SINTEX INDUSTRIES LTD

39STERLING BIOTECH LTD

40SYNDICATE BANK

41TATA CHEMICALS LTD

42TATA TEA LTD

43TECH MAHINDRA LIMITED

44TITAN INDUSTRIES LTD

45TATA TELESERV(MAHARASTRA)

46ULTRATECH CEMENT LIMITED

47UNITED PHOSPHORUS LIMITED

48VIJAYA BANK

49VOLTAS LTD

50WELSPUN GUJ ST. RO. LTD.

Promoters of Nifty Fifty:-S&P CNX Nifty is a well-diversified 50 stock index accounting for 23 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives, structured products, ETFs and index funds. S&P CNX Nifty is based upon solid economic research and is well respected internationally as a pioneering effort in better understanding how to make a stock market index.

Highlights:- S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is Indias first specialized company focused upon the index as a core product. IISL has a licensing and marketing agreement with Standard and Poors (S&P), who are world leaders in index services. Market Representation:- S&P CNX Nifty stocks represent about 66.96% of the total free float market capitalization of the universe of the stocks traded on NSE as on June 29, 2012. Diversification:-S&P CNX Nifty is a diversified index, accurately reflecting overall market conditions. The reward to-risk ratio of S&P CNX Nifty is higher than other leading indices, making it a more attractive portfolio hence offering similar returns, but at lesser risk. Liquidity:-Market impact cost is the best measure of the liquidity of a stock. It accurately reflects the costs faced when actually trading an index. For a stock to qualify for possible inclusion into the S&P CNX Nifty, it has to reliably have market impact cost of below 0.50 % when doing S&P CNX Nifty trades of Rs. 20 million.

CHAPTER 3Eligibility Criteria for Selection of Constituent Stocks

The constituents and the criteria for the selection judge the effectiveness of the index. S&P CNX Nifty is unique in this respect. Selection of the index set is based on 3 criteria: Liquidity Floating Stock Others

Liquidity:-For inclusion in the index, the security should have traded at an average impact cost of 0.50% or less during the last six months for 90% of the observations, for the basket size of Rs. 20 Million. Impact cost is cost of executing a transaction in a security in proportion to the weightage of its market capitalization as against the index market capitalization at any point of time. This is the percentage mark up suffered while buying / selling the desired quantity of a security compared to its ideal price = (best buy + best sell) /2

Floating Stock :-The companies eligible for inclusion in the S&P CNX Nifty Index should have free float of at least 10%. Free float factor (Investible Weight FactorIWF) for each company in the index will be determined based on the public shareholding of the companies as disclosed in the shareholding pattern submitted to the stock exchanges by these companies on a quarterly basis. Promoters holding, government holding in case of public sector undertaking, shares held by promoters through ADRs/ GDRs, associate companies, employee welfare trusts, strategic stakes by corporate bodies, investments under Foreign Direct Investment (FDI) category (where identifiable) and public lock-ins are subtracted to arrive at Free Float factor.

Others:- A company which comes out with an IPO will be eligible for inclusion in the index, if it fulfills the normal eligibility criteria for the index like impact cost, market capitalization and free float, for a 3 month period.

Method of Computation:- S&P CNX Nifty is computed using free float market capitalization method, wherein the level of the index reflects the total free float market value of all the stocks in the index relative to a particular base market capitalization value. The method also takes into account constituent changes in the index and importantly corporate actions such as stock splits, rights, new issue of shares etc. without affecting the index value. Base Date and Value The base period selected for S&P CNX Nifty index is the close of prices on November 3, 1995, which marks the completion of one year of operations. The value of the index has been set at 1000 and a base capital of Rs.2.06 trillion.

Index Governance:- A professional team at IISL, a company setup by NSE and CRISIL manages S&P CNX Nifty. There is a three-tier governance structure comprising the Board of Directors of IISL, the Index Policy Committee, and the Index Maintenance Sub-Committee.

NSE MISSION

i) MISSION STATEMENT :- The National Student Exchange (NSE) is a not-for-profit, membership consortium of accredited, four-year colleges and universities in the United States, its territories, and Canada which have joined together for the purpose of sharing their educational resources and exchanging students among its member institutions.The only program of its kind offering tuition reciprocal exchanges across the United States and Canada, NSE serves as the national resource for inter-institutional study opportunities.NSE offers study opportunities at diverse university settings and provides access to a wide array of courses and programs; field experiences, co-op, and internship options; and resident assistant, honors, and study abroad experiences.NSE is administered by a central office staff and governed by a Council elected from within the membership. Funding comes from institutional membership fees and student application fees.NSE, with a reputation for quality service, maintains a strong and viable consortium through continuous communication and on-going assessment of the needs and interests of the membership.

ii) ENVISIONED FUTURE :-The National Student Exchange will be recognized as the premier network of U.S. and Canadian colleges and universities which provides service to both institutions and their students.Institutions will seek membership in order to access both the services of NSE for their students and the resources of the entire network.NSE will be identified as the model for higher education networking and resource sharing world-wide.Through NSE, member campuses will build cooperative programs that will make access and quality the hallmarks of their memberships.The position of NSE coordinator will be respected and recognized nationally as a trained professional who abides by the Principles of Professional Practice for NSE Coordinators and provides quality service to students, peer coordinators, and member universities.

iii) METHOD OF COMPUTATIONS&P CNX Nifty is computed using market capitalization weighted method, wherein the level of the index reflects the total market value of all the stocks in the index relative to a particular base period. The method also takes into account constituent changes in the index and importantly corporate actions such as stock splits, rights, etc without affecting the index value.

iv) BASE DATE AND VALUE :-

The base period selected for S&P CNX Nifty index is the close of prices on November 3, 1995, which marks the completion of one year of operations of NSE's Capital Market Segment. The base value of the index has been set at 1000 and a base capital of Rs.2.06 trillion.

Criteria for Selection of Constituent StocksThe constituents and the criteria for the selection judge the effectiveness of the index. Selection of the index set is based on the following criteria:Liquidity (Impact Cost)For inclusion in the index, the security should have traded at an average impact cost of 0.50% or less during the last six months for 90% of the observations for a basket size of Rs. 2 Crores.Impact cost is cost of executing a transaction in a security in proportion to the weight age of its market capitalization as against the index market capitalization at any point of time. This is the percentage mark up suffered while buying / selling the desired quantity of a security compared to its ideal price (best buy + best sell) / 2

v) FLOATING STOCK :-Companies eligible for inclusion in S&P CNX Nifty should have atleast 10% floating stock. For this purpose, floating stock shall mean stocks which are not held by the promoters and associated entities (where identifiable) of such companies.a) A company which comes out with a IPO:-

A company which comes out with a IPO will be eligible for inclusion in the index, if it fulfills the normal eligibility criteria for the index like impact cost, market capitalization and floating stock, for a 3 month period instead of a 6 month period.b) Replacement of Stock from the Index:-A stock may be replaced from an index for the following reasons:Compulsory changes like corporate actions, delisting etc. In such a scenario, the stock having largest market capitalization and satisfying other requirements related to liquidity, turnover and free float will be considered for inclusion.When a better candidate is available in the replacement pool, which can replace the index stock i.e. the stock with the highest market capitalization in the replacement pool has at least twice the market capitalization of the index stock with the lowest market capitalization.With respect to (2) above, a maximum of 10% of the index size (number of stocks in the index) may be changed in a calendar year. Changes carried out for (2) above are irrespective of changes, if any, carried out for (1) above.

vi) Index Maintenance:-

Rebalancing Index maintenance plays a crucial role in ensuring the stability of the index, as well as in meeting its objective of being a consistent benchmark of the Indian equity markets. IISL has constituted an Index Policy Committee, which is involved in the policy and guidelines for managing the S&P CNX Nifty. The Index Maintenance Subcommittee makes all decisions on additions and deletions of companies in the index. Changes in the index level reflect changes in the market capitalization of the index which are caused by stock price movements in the market. They do not reflect changes in the market capitalization of the index, or of the individual stocks, that are caused by corporate actions such as dividend payments, stock splits, and distributions to shareholders, mergers, or acquisitions. vii) Calculation Frequency. :-The index is calculated real-time on all days that the National Stock Exchange of India is open. Corporate Actions and Share Updates Maintaining the S&P CNX Nifty index includes monitoring and completing the adjustments for company additions and deletions, share changes, stock splits, stock dividends, and stock price adjustments due to restructurings or spin-offs. Some corporate actions, such as stock splits and stock dividends, require simple changes in the common shares outstanding and the stock prices of the companies in the index. Other corporate actions, such as share issuances, change the market value of an index and require a divisor adjustment to prevent the value of the index from changing. Adjusting the divisor for a change in market value leaves the value of the index unaffected by the corporate action. Divisor adjustments are made after the close of trading and after the calculation of the closing value of the index. Any change in the index divisor also affects corresponding sub-indices and divisors. Each sub-index is maintained in the same manner as the headline index. Corporate actions such as splits, stock dividends, spin-offs, rights offerings, and share changes are applied on the ex-date. All singular instances of share changes arising out of additional issue of capital, such as ESOPs, QIPs, ADR/GDR issues, private placements, warrant conversions, and FCCB conversions, which have an impact of 5% or more on the issued share capital of the security, are implemented after providing a five days notice period. Share repurchase (buyback) also have the same rules as applicable to share changes. Changes entailing less than 5% impact on the issued share capital are accumulated and implemented on a monthly basis. Where cumulative share changes exceed 5% of the issued share capital within a month, such changes are implemented after providing five days notice period, from the date when such cumulative changes exceeded 5%. Currency of Calculation for the S&P CNX Nifty, all prices are in Indian rupees. Base Date:- The base period for the S&P CNX Nifty index is November 3, 1995, which marked the completion of one year of operations of NSE's Capital Market Segment. The base value of the index has been set at 1000, and a base capital of Rs 2.06 trillion.Index Maintenance plays a crucial role in ensuring stability of the Index as well as in meeting its objective of being a consistent benchmark of the equity markets.

IISLhas constituted anIndex Policy Committee, which is involved in policy and guidelines for managing the CNX Indices. TheIndex Maintenance Sub-committeetakes all decisions on addition/ deletion of companies in any Index.

The index is reviewed every six months (on half-yearly basis) and a six weeks notice is given to the market before making changes to the index set.

Hedging Effectiveness :-

Exhaustive calculations have been carried out to determine the hedging effectiveness of the 50-security index S&P CNX NIFTY against numerous randomly chosen equally-weighted portfolios of different sizes varying from 1 to 100 of small cap, midcap and large cap companies as well as many industry indices/sub-indices provided by CMIE. It was observed that the correlation (R2) for various portfolios and indices using monthly returns data on the S&P CNX Nifty vis-a-vis other indices was significantly higher indicating that the S&P CNX Nifty had higher hedging effectiveness.

Trading in Nifty :-

The National Stock Exchange of India Limited (NSE) commenced trading in derivatives withindex futureson June 12, 2000. The futures contracts on NSE are based on S&P CNX Nifty. The Exchange later introduced trading onindex options based on Niftyon June 4, 2001.

The turnover in the derivatives segment has shown considerable growth in the last year, with NSE turnover accounting for 60% of the total turnover in the year 2000-2001. Further details on index based derivatives are available under theDerivatives (F&O) sectionof the website.

Total Returns Index:-

S&P CNX Nifty reflects the return one would get if investment is made in the index portfolios. As Nifty is computed in real-time, it takes into account only the price movements. However, the price indices do not consider the return from dividend payments of index constituent stocks. Only the capital gains due to price movement is measured by the price index. In order to get a true picture of returns, the dividends received from the index constituent stocks also needs to be included in the index movement. Such an index, which includes the dividends received, is called the Total Returns Index.

The Total Returns Index is an index to reflect the returns on the index from index gain/loss plus dividend payments by constituent index stocks.

CHAPTER 4

NSE PRODUCTS

1)Equitiesi) Equitiesii) Indicesiii) Mutual Fundsiv) Exchange Traded Fundsv) Initial Public Offeringsvi) Security Lending and Borrowing Scheme

2)Derivativesi) Equity Derivativesii) Currency Derivatives iii) Interest Rate Futures

3)Debti) Retail Debt Market ii) Corporate Bonds

1) Equities:-

i) Equities

The securities market has two interdependent and inseparable segments, the new issues (primary) market and the stock (secondary) market. The primary market provides the channel for creation and sale of new securities, while the secondary market deals in securities previously issued. The Stock market or Equities market is where listed securities are traded in the secondary market currently more than 1300 securities are available for trading on the Exchange.ii) IndicesNifty SparklinesThe S&P CNX Nifty is a well diversified50stock index accounting for 22 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, indexandindex funds.

S&P CNX Nifty is owned and managed byIndia Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is Indias first pecialized company focused upon the index as a core product. IISL has a Marketing and licensing agreement with Standard & Poors (S&P), who are world leaders in index services.The S&P CNX Nifty Index represents about 66.90% of the free float market capitalization of the stocks listed on NSE as on December 30, 2011.The total traded value for the last six months of all index constituents is approximately 56.58% of the traded value of all stocks on the NSE.Impact costof the S&P CNX Nifty for a portfolio size of Rs.50 lakhs is 0.08%.S&P CNX Nifty isprofessionally maintainedand is ideal for derivatives tradingFrom June 26, 2009, S&P CNX Nifty is computed based on free float methodologyA stock market index is a measure of the relative value of a group of stocks in numerical terms. As the stocks within an index change value, the index value changes. An index is important to measure the performance of investments against a relevant market index.

iii) Initial Public Offerings (IPOs)A primary market is one that issues new securities on an exchange. The primary markets are where investors can get first crack at a new security issuance. The issuing company offers its equity to investors or groups and receives cash proceeds from the sale, which is then used to fund operations or expand the business. It is the largest source of funds with long or indefinite maturity for the company.

iv) Security Lending and Borrowing Scheme (SLBS)Short Selling means selling of a stock that the seller does not own at the time of trade. Short selling can be done by borrowing the stock through Clearing Corporation/Clearing House of a stock exchange which is registered as Approved Intermediaries (Ais). Short selling can be done by retail as well as institutional investors. The Securities Lending and Borrowing mechanism allows short sellers to borrow securities for making delivery.

2)Derivatives:-i) Equities Derivatives Equity derivative is a class of derivatives whose value is at least partly derived from one or more underlying equity securities. Options and futures are by far the most common equity derivatives. This section provides you with an insight into the daily activities of the equity derivatives market segment on NSE. 2 major products under Equity derivatives are Futures and Options, which are available on Indices and Stocks.

ii) Currency Derivatives Foreign exchange rates, like any other asset class move depending on various factors, like demand supply, interest rate parity, trade and capital flows, speculators taking positions, clients hedging risk arising from their trade and capital flows etc.Based on the evolving needs of the market place, NSE introduced trading in exchange traded Currency Derivatives contracts on August 29, 2008. NSE launched USDINR contracts in currency derivatives segment. The product had an impressive debut and has shown consistent growth since inception. Within the span of a year and half the volume crossed the mark of USD 4.3 billion.In the context of growing integration of the Indian economy with the rest of the world and a continuous demand for currency derivatives in other currencies, Securities Exchange Board of India and Reserve Bank of India have permitted trading in futures contracts on new currency pairs.NSE therefore now introduces trading in currency futures based on Euro (EUR)-INR, Pound Sterling (GBP) - INR and Japanese Yen (JPY) - INR exchange rates in addition to the existing USDINR contracts.iii) Interest Rate Derivative NSE launched trading in Interest Rate Futures from 30th August 2009. The underlying instrument is a Notional 10 year 7% coupon bearing Government of India (GOI) security.Interest Rate Futures contract offers market participants a standardized product taking a view of the future directions of the market, hedging and creating income strategies. Electronic trading platform of NSE ensures transparency of prices, volumes and trade data.

3)Debt:-i) Retail Debt Market

ii) Corporate bonds

Index Data:- Total Return The S&P CNX Nifty reflects the return one would get if an investment is made in the index portfolio. As the S&P CNX Nifty is computed in real-time, it takes into account only the stock price movements. However, the price indices do not consider the return from dividend payments of index constituent stocks. Only the capital gains and losses due to price movement are measured by the price index. In order to get a true picture of returns, the dividends received from the index constituent stocks also need to be included in the index movement. Such an index, which includes the dividends received, is called the total return index. The total return index reflects the returns on the index from stock prices fluctuation plus dividend payments by constituent index stocks.

Hedging Effectiveness The S&P CNX Nifty has been tested against numerous randomly chosen, equally weighted portfolios of different sizes, varying from 1-to-100 small, mid and large cap companies, as well as many industry indices/sub-indices provided by CMIE, for hedging effectiveness. Using monthly returns data, it was observed that the correlation (R2) for various portfolios and indices on the S&P CNX Nifty was significantly higher than other benchmark indices, indicating that the S&P CNX Nifty had higher hedging effectiveness. Trading in derivative contracts based on S&P CNX Nifty The National Stock Exchange of India Limited (NSE) commenced trading in derivatives with index futures on June 12, 2000. The futures contracts on the NSE are based on the Index CommitteeA professional team at IISL, a company setup by NSE and CRISIL, manages the S&P CNX Nifty. There is a three-tier governance structure comprising the board of directors of IISL, the Index Policy Committee, and the Index Maintenance Subcommittee. IISL has constituted the Index Policy Committee, which is involved in the policy and guidelines for managing the S&P CNX Nifty. The Index Maintenance Sub-committee makes all decisions on additions and deletions of companies in the Index. The S&P CNX Nifty has fully articulated and professionally implemented rules governing index revisions, corporate actions, etc. These rules are carefully considered, using Indian market conditions, to dovetail with operational problems of index funds and index arbitrageurs.

Index PolicyThe S&P CNX Nifty uses transparent, researched and publicly documented rules for index maintenance. These rules are applied regularly to manage changes to the index. Index reviews are carried out semi-annually to ensure that each security in the index fulfills eligibility criteria.

AnnouncementsAll index-related announcements are posted on the NSE Web site. Changes impacting the constituent list are also posted on the Web site. Please refer to the NSE Web site at www.nseindia.comHoliday Schedule, for the calculation of indices, the IISL follows the official holiday schedule. A complete holiday schedule for the year is available on the NSE Website. Please refer to the NSE Web site at www.nseindia.com Real-Time CalculationThe indices are calculated real-time whenever there is a change in price. A security is traded in full accordance with the present methodology. The best bid price of a security exceeds the last calculated price of the security. The best ask price of a security is less than the last calculated price of the security.

Index PrecisionThe level of precision for index calculation is as follows: Index values are published rounded to two decimal places. Share prices are rounded to two decimal places. Shares outstanding are expressed in units. Float-adjusted market capitalization is stated to two decimal places. Index values are calculated to two decimal places. Final settlement prices are published rounded to two decimal places.

Index Dissemination:- Tickers Index Bloomberg Reuters S&P CNX Nifty NIFTY .NSEI Web site Daily index values, index constituents, methodology, and special announcements are available on the NSE Web site at www.nseindia.com.Appendix Index Calculations Formulas The S&P CNX Nifty index is computed by dividing the float-adjusted market capitalization of the index component securities as of current date (MCn) by the float adjusted market capitalization of the same securities as of initial date (MC1) multiplied by the index value as of initial date (I1): In = (I1 *MCn)/MC1 Exchange rate at time The U.S. dollar/Rupee exchange rate is based on a real-time polled indicative data feed, which contains bid/ask rates at a point in time. The polled data is sourced from Thomson Reuters. The data is polled from market participants, including leading nationalized banks, private Indian banks and foreign exchange brokers. The frequency of polled data is more than 3-4 updates per minute, depending on market volatility, totaling more than 1000 updates in a day.The closing value of S&P CNX Defty is computed based on a simple average of the U.S. dollar/Rupee exchange rates received during the last half an hour of trading on the National Stock Exchange of India Ltd. (NSE) and applied to the closing value of the S&P CNX Nifty. Index Contact Information S&P Index Management David M. Blitzer, Ph.D. Managing Director & Chairman of the Index Committee [email protected] +1.212.438.3907 Winnie Wong Manager, Global Indices [email protected] +1.212.438.3526 S&P Product Management Alka Banerjee Vice President, Global Equities [email protected] +1.212.438.3536 India Index Services & Products Limited (IISL) Suresh Narayan Director & Chief Executive Officer [email protected] +91.22.26598221 Sammit Joshi Chief Manager [email protected] +91.22.26598386 S&P Media Relations David Guarino Communications [email protected] +1.212.438.1471 S&P Index Operations & Business Development North America New York Client Services [email protected] +1.212.438.2046 Disclaimer Copyright 2011 by The McGraw-Hill Companies, Inc. Redistribution, reproduction and/or photocopying in whole or in part is prohibited without written permission. All rights reserved. S&P and Standard & Poors are registered trademarks of Standard & Poors Financial Services LLC. This document does not constitute an offer of services in jurisdictions where Standard & Poors or its affiliates do not have the necessary licenses. Standard & Poors receives compensation in connection with licensing its indices to third parties. All information provided by Standard & Poors is impersonal and not tailored to the needs of any person, entity or group of persons. Standard & Poors and its affiliates do not sponsor, endorse, sell, promote or manage any investment fund or other vehicle that is offered by third parties and that seeks to provide an investment return based on the returns of any Standard & Poors index. Standard & Poors is not an investment advisor, and Standard & Poors and its affiliates make no representation regarding the advisability of investing in any such investment fund or other vehicle. A decision to invest in any such investment fund or other vehicle should not be made in reliance on any of the statements set forth in this presentation. Prospective investors are advised to make an investment in any such fund or other vehicle only after carefully considering the risks associated with investing in such funds, as detailed in an offering memorandum or similar document that is prepared by or on behalf of the issuer of the investment fund or other vehicle. Inclusion of a security within an index is not a recommendation by Standard & Poors to buy, sell, or hold such security, nor is it considered to be investment advice. Standard & Poors does not guarantee the accuracy and/or completeness of any Standard & Poors index, any data included therein, or any data from which it is based, and Standard & Poors shall have no liability for any errors, omissions, or interruptions therein. Standard & Poors makes no warranties, express or implied, as to results to be obtained from use of information provided by Standard & Poors and used in this service, and Standard & Poors expressly disclaims all warranties of suitability with respect thereto. While Standard & Poors has obtained information believed to be reliable, Standard & Poors shall not be liable for any claims or losses of any nature in connection with information contained in this document, including but not limited to, lost profits or punitive or consequential damages, even if it is advised of the possibility of same. These materials have been prepared solely for informational purposes based upon information generally available to the public from sources believed to be reliable. Standard & Poors makes no representation with respect to the accuracy or completeness of these materials, the content of which may change without notice. The methodology involves rebalancing and maintenance of the indices that are made periodically during each year and may not, therefore, reflect real time information. Analytic services and products provided by Standard & Poors are the result of separate activities designed to preserve the independence and objectivity of each analytic process. Standard & Poors has established policies and procedures to maintain the confidentiality of non-public information received during each analytic process. Standard & Poor's and its affiliates provide a wide range of services to, or relating to, many organizations, including issuers of securities, investment advisers, broker-dealers, investment banks, other financial institutions and financial intermediaries, and accordingly may receive fees or other economic benefits from those organizations, including organizations whose securities or services they may recommend, rate, include in model portfolios, evaluate or otherwise address. Analytic services and products provided by Standard & Poors are the result of separate activities designed to preserve the independence and objectivity of each analytic process. Standard & Poors has established policies and procedures to maintain the confidentiality of non-public information received during each analytic process.CONCLUTION

This project shows the need of NIFTY 50 stocks for the growth of Indian securities with par with the international securities market. As NSE has improved the capital market of India by providing modern technology such as online trading system such as NOW (NEAT on WEB), NEAT. Nifty gets various product facilities to investors such as Equities, Derivatives and Debt. Nifty has been recent development in Cash market, Derivatives market and Whole sale debt market. In future Nifty has produced various new products to investors. The efficiency of National Stock Exchange helps the investors to enter in capital market easily and also gain confidence of Investors

BIBILOGRAPHYWeb sites:- www.nseindia.com www.wikipedia.com www.sebi.comNIFTY_FIFTY Page 38