Capital Market Index

Prerpared BySubhasis Raha (06)Anusha Venkat (07)Abhijit Kumar Basu

(16)Romit Talukder (22)Ayush Keshan (23)

Tanushree Dutta (28)

Financial Market

• is a market in which people and entities can trade financial securities, commodities and other fungible items prices that reflect supply and demand.

Types of Financial Market

Stock Market- Provide financing through the issuance of shares Bond Market-Provide financing through the issuance of bonds. Commodity Market- which facilitate the trading of commodities. Money Market which provide short term debt financing and

investment. Derivative Market- which provide instruments for the management

of financial risk. Future Market- which provide standardized forward contracts for

trading products at some future date. Insurance Market- which facilitate the redistribution of various risks. Foreign Exchange Market- which facilitate the trading of foreign

exchange

Capital Market Is defined as a market

in which money is provided for periods longer than a year.

Is a market for securities (debt or equity), where business enterprises and government can raise long-term funds.

Capital Market Instruments

• SECURED PREMIUM NOTES• EQUITY SHARES WITH DETACHABLE WARRANTS• FULLY CONVERTIBLE DEBENTURES WITH INTEREST• EQUIPREF• SWEAT EQUITY SHARES• TRACKING STOCKS• GLOBAL DEPOSITORY RECEIPTS/ AMERICAN DEPOSITORY RECEIPTS• FOREIGN CURRENCY CONVERTIBLE BONDS(FCCBs)• DERIVATIVES• HEDGE FUND• EXCHANGE TRADED FUNDS

Indian Capital Market

Stock Market Index

• A stock market index is a bunch of stocks grouped together to measure a certain sector (utilities, banks, tech stocks, etc.) of the stock market.

Indian Stock Market

• Indian Stock Market is one of the oldest in Asia. Its history dates back to nearly 200 years ago.

• BSE and (NSE) are the country's two leading Exchanges.

• There are 20 other regional Exchanges, connected via the Inter-Connected Stock Exchange(ICSE).

BOMBAY STOCK EXCHANGE• Location-Mumbai,India• Founded1875• Owner-Bombay Stock Exchange

Limited• Key people-Madhu Kannan (CEO & 

MD)• Currency-Indian rupee • No. of listings-5,133• MarketCapUS$1 trillion (Dec 2011)• Indexes

BSE SensexBSE Small CapBSE Mid-CapBSE 500

• Websitewww.bseindia.com

NATIONAL STOCK EXCHANGE• Type-Stock Exchange• LocationMumbai,India• Founded1992• Key peopleRavi Narain (MD) • No. of listings1,646• MarketCapUS$985 billion (Dec 2011)• Indexes

S &P NIFTY JUNIORS &P CNX 500

S& P CNX NIFTY(Standard & Poor's CRISIL NSE Index)

• CNX Nifty Junior• CNX 100 (= S&P CNX Nifty + CNX Nifty

Junior)• S&P CNX 500 (= CNX 100 + 400 major

players across 72 industries)• CNX Midcap (introduced on 18 July 2005

replacing CNX Midcap 200)

Stock Market IndexIndia

• Stock market indices are the barometers of the stock market.

• They mirror the stock market behavior with respect to various economic conditions.

• 2 most important indexes which are followed daily are SENSEX and NIFTY( NSE FIFTY).

• Nifty is more stable than Sensex. This is mainly due to improved diversification and better liquidity position in Nifty

BSE

• SENSEX- The Barometer of Indian Capital Markets

• 'BSE MID-Cap' index and 'BSE Small-Cap' index to track the performance of companies having smaller market capitalization.

• BSE-500 Index - represents more than 93% of the listed universe Companies with large market capitalization.

BSE Sector Series (90/FF) Indices

• BSE Auto Index• BSE BANKEX• BSE Capital Goods Index• BSE Consumer Durables Index• BSE FMCG Index• BSE Healthcare Index• BSE IT Index• BSE Metal Index• BSE Oil & Gas Index• BSE Power Index• BSE Realty Index

NSE S&P CNX Nifty - is a well

diversified50stock index accounting for21 sectors of the economy.

S&P CNX 500 - The S&P CNX 500 is India’s first broad based benchmark of the Indian capital market.

• CNX Midcap - The primary objective of the CNX Midcap Index is to capture the movement and be a benchmark of the midcap segment of the market.

NSE• CNX MNC Index - The CNX MNC Index comprises 50 listed companies

in which the foreign shareholding is over 50% .

• CNX PSE Index – The CNX PSE Index includes only those companies that have over 51%of their outstanding share capital held by the Central Government and/or State Government, directly or indirectly.

• S & P CNX DEFTY Index- S&P CNX Deftyis S&P CNX Nifty, measured in dollars

• S&P CNX Industry Indices -S&P CNX 500 Equity Index is desegregated into 72 Industry sectors which are separately maintained by IIS

Ways of calculating Stock Index(SENSEX)

• Free – float Market Capitalization - An index constructionmethodology that takes into consideration only freefloatmarket capitalization of a company for the purpose of index calculation and assigning weight to stocks in the index.

Index at time ti= t0 * (FFMC at ti / FFMC at t0)

FFMC= Free Float Market Capitalization(ΣFiPi)

ti= current time

t0= previous time

Market Capitalization

= No of Shares * Price of share

Base Market capitalization Adjustment

Due to right issueDue to bonus issue

The formula for adjusting the Base Market capitalization is as follows:

New Base Marketcapitalization= Old Base Marketcapitalizationx(New Marketcapitalization/Old Marketcapitalization)

Bibliography

• http://en.wikipedia.org/wiki/BSE_SENSEX• http://

en.wikipedia.org/wiki/National_Stock_Exchange_of_India

• http://en.wikipedia.org/wiki/S%26P_CNX_Nifty• http://

www.rediff.com/money/2008/feb/21bspec.htm• http://www.indianmba.com/Faculty_Column/FC316/

fc316.html

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