Presented By :

Aditya Bhujbal M-3005Sushant Gawali M-3010Pritam Jadhav M-3013 Nikhil Kurle M-3025Kaustubh Patil M-3038

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A, B, C,… of Stock Market

Stock Market Indices

Aditya

Pritam Jadhav M-

3013

Agenda

The Stock Market is a very broad term which involves trading of variety of entities.

This presentation provides basics of some of the terms & understanding of stock market indices at macro level.

In this we will focus on BSE, NSE, NIFTY, SENSEX.

Introduction to stock

About Stock Market

History of stock market indices

Introduction of stock market indices

Why do we need stock market indices?

Stock index calculation

Types stock market indices

A stock is a small share that represents a partial ownership of a company.

Stocks are issued by companies in order to raise capital.

Stock is also referred to as equity, & it is limited to particular number of shares.

Introduction to Stock

About Stock Market

“Stock market” is a term used to describe the physical location where the buying and selling of stocks take place.

The correct term to be used in pertaining to the physical location for trading stocks is “stock exchange.”

The Stock market in India consists of about approx. twenty two stock exchanges.

The stock exchanges constitute a market where securities issued by the Central & State Govt., Public bodies & Joint Stock companies are traded.

The early history of stock market indices

Stock market indices are vital to macroeconomists as well as to actors in the financial world, indices consistently build on the long term are essential to assess those regularities that help understanding the actual behavior of financial actors, the evolution of the economy and its position in international comparisons.

Stock market indices : INTRODUCTION

• A stock market index tracks the movement of a market as a whole. Other indices track the performance of sectors, regions and different class of security.

• The basic data used to calculate an index are securities prices, but the calculation of an index means weighting price changes appropriately to reflect company size and the availability of securities to investors.

Why do we need Stock market indices?

1. They provide a historical comparison of returns on money invested in the stock market against other forms of investments such as gold or debt.

2. They can be used as a standard against which to compare the performance of an equity fund.

3. It is a lead indicator of the performance of the performance of the overall economy or a sector of the economy.

Stock index calculation

• Index level = Σ(P1 * Q1) / Σ(P0 * Q0)* Base index value.

P1 = Current value securities Q1 = No.of currently outstanding shares

P0 = Base period price of securities

Q0 = Base period quantity of securities

Types of stock market indices

• Free float capitalization weighted indices

• Price weighted indices

• Fundamentally based stock indices

KP

Kaustubh Patil M-3038

• NATIONAL STOCK EXCHANGE (NSE)• BOMBAY STOCK EXCHANGE (BSE)• STOCK MARKET INDICES- NIFTY DOW JONES FTSE INDEX

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INTRODUCTION

• MUMBAI BASED STOCK EXCHANGE• LARGEST STOCK EXCHANGE• MARKET CAPITALIZATION- 47,01,923 CRORE• MOST SIGNIFICANT

FEATURES

• OWNED BY SET OF FINANCIAL INSTITUDE, BANKS, INSURANCE COMPANY

• FOREIGN INVESTMENT• WIDE RANGE• 2ND LARGEST STOCK MARKET IN SOUTH ASIA• 3RD LARGEST IN WORLD• 2ND FASTEST GROWING IN WORLD• GROWTH- 16.6%

INNOVATINS

• Setting up the first clearing corporation "National Securities Clearing Corporation Ltd." in India.

• Co-promoting and setting up of National Securities Depository Limited, first depository in India

• Setting up of S&P CNX Nifty.• Being the first and the only exchange to trade GOLD ETFs

(exchange traded funds) in India.• NSE has also launched the NSE-CNBC-TV18 media centre in

association with CNBC-TV18.• NSE.IT Limited, setup in 1999 , is a 100% subsidiary of the

National Stock Exchange of India

MARKETS

Currently, NSE has the following major segments of the capital market:

• Equity• Futures and Options• Retail Debt Market• Wholesale Debt Market• Currency futures

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BOMBAY STOCK EXCHANGE (BSE)

INTRODUCTION

• OLDEST STOCK MARKET IN ASIA• ESTABLISHED AS “NATIVE SHARE & STOCK

BROKER ASSOCIATION”• PERMANENT RECOGNISATION• MAJORE ROLE

FEATURES

• GROWTH OF INDIAN CORPORATE SECTOR• LINKED WITH MAJORE CORPORATE• NUMBER 1 EXCHANGE IN TERMS OF LISTED

COMPANY• WORLDS 5TH IN HANDLING TRANSACTION

THROUGH ELECTRONIC TRADING SYSTEM• MARKET CAPITALIZATION- $1.6 TRILLION• POPULAR STOCK MARKET INDEX- SENSEX

INNOVATION

• 1ST NATIONAL LEVEL STOCK EXCHANGE TO LAUNCH WEBSITE IN VARIOUS LANGUAGE

• SUCCESSFULLY LAUNCHED A REPORTING PLATFORM FOR CORPORATE BOND

• IN 2006 LAUNCHED DIRECTORS DATABASE AND ICERS TO FACILITATE INFORMATION AND INCREASE TRANSPARENCY

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NIFTY

INTRODUCTION

• The S&P CNX Nifty, or simply Nifty, is the leading index for large companies on the National Stock Exchange of India. It consists of 50 companies representing 24 sectors of the economy, and representing approximately 47% of the traded value of all stocks on the National Stock Exchange of India. "

FEATURES

• The average total traded value for the last six months of all Nifty stocks is approximately 77% of the traded value of all stocks on the NSE

• Nifty stocks represent about 61% of the total market capitalisation as on August 31, 2004.

• Impact cost of the S&P CNX Nifty for a portfolio size of Rs.5 million is 0.10%

• S&P CNX Nifty is professionally maintained and is ideal for derivatives trading.

DOW JONES INDEX

• World's most popular stock market indices.• It tracks the performances of 30 important ant

stocks in America. • Most famous international American

companies included are Bank of America, Dupont, Cococola,Microsoft, Pfizer etc

• There are companies from every important sectors like Information technology, Computers, Banking, Pharmaceuticals etc.

FTSE Index

• FTSE index is managed by FTSE Group, • There are various indices in FTSE like FTSE100,

FTSE 30etc. • These indices primarily reflect the

performance of London Stock Exchange• FTSE 100 is an index which tracks the

performance of top 100 companies. • It reflect 80 percent market capitalisation of

LSE.

Aditya

Nikhil Kurle M-3025

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Launched in the year 1986.

BSE Sensex is a value-weighted• index composed of 30 stocks.

SENSEX is a basket of 30 • constituent stocks.

SENSEX-The Barometer of Indian

Capital Market

Cont……

The base period of SENSEX is 1978- 79 and the base value is 100 index points.

SENSEX is calculated every 15 seconds.

SENSEX is calculated using the "Free-float Market Capitalization" methodology.

SENSEX Milestone

25th July 1990 15th Jan 1992

29th Feb 1992

11th Feb 2000

7th Feb 2006

30th Oct 2006

Cont….

6th July 2007

9th Oct 2007

15th Oct 2007

29th Oct 2007

21th Jan 2008

02th March 2010

BSE INDEX FAMILY

BSE 100 BSE 200 BSE 500 BSE Mid capand BSE small cap

BSE PSU

Base Year 1983-84 1989-90 Feb. 1, 1999 2002-2003 February 1,1999

Base IndexValue

100 100 100 1000 1000

Date ofLaunch

Jan. 3, 1989

May 27, 1994

Aug. 9, 1999 April 11, 2005 June 4, 2001

Number ofscrips

100 200 500 Variable torepresent 15%and 5% marketcapitalisation

The BSE is asub set of 500index. BSE-500index

Indexcalculationfrequency

Real Time

Real Time Real Time Real Time Real Time

Aditya

Aditya Bhujbal M-3005

NSE INDEX FAMILY

• S & P CNX Nifty• CNX Nifty Junior• CNX 100• S & P CNX 500• CNX Midcap• Nifty Midcap 50• S & P CNX Defty

What is Stock?

A stock is a small share that represents a partial ownership of a company.

Stocks are issued by companies in order to raise capital.

Stock is also referred to as equity, & it is limited to particular number of shares.

How Stocks are priced?

Latest Change 52 Weeks

symbol

price net % time high low volume high low

BCE 31.15 -0.5 -1.5 16:57 31.75 31.1 3,643,000 33 27.2

BGM 17.06 -0.3 -1.6 15:54 17.3 17 207,400 26.9 17.1

IBM 79.82 -0.3 -0.4 16:01 80.68 79.6 4,999,200 99.1 71.9

MSFT 24.67 -0.3 -1.2 16:00 25.05 24.7 73,696,700 27.9 23.8

First Column indicates abbreviation of name of company.

Latest Price indicates current price or closing price of the day (if in newspaper)

Change (net) is difference between the previous day closing price & current stock quote.

Stock Quote Table

How Stocks are priced?

Latest Change 52 Weeks

symbol

price net % time high low volume high low

BCE 31.15 -0.5 -1.5 16:57 31.75 31.1 3,643,000 33 27.2

BGM 17.06 -0.3 -1.6 15:54 17.3 17 207,400 26.9 17.1

IBM 79.82 -0.3 -0.4 16:01 80.68 79.6 4,999,200 99.1 71.9

MSFT 24.67 -0.3 -1.2 16:00 25.05 24.7 73,696,700 27.9 23.8

High indicates the highest price while low indicates lowest price of the stock sold.

Volume describes the no. of shares traded for that day.

The 52- week high & low shows the highest & lowest prices in the previous year.

Stock Quote Table

How Stocks are priced?

PE – Price to Earning ratio. Price per share divided by earning per share.

What is P/E Ratio?

• Definition – “ Price/Earnings ratio. The most common

measure of how expensive a stock is. The P/E ratio is equal to a stock's market capitalization divided by its after-tax earnings over a 12-month period.”

P/E Ratio is calculated as:

eg. If a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share. $43 ..

$1.95= $ 22.05

Security Name Close (Rs.) EPS PE

20 MICRONS 40.55 0.93 43.42

3I INFOTECH 73.65 9.40 7.83

3M INDIA 2,041.20 57.66 35.40

AARTI DRUG 90.35 12.43 7.27

AARTI INDS 44.50 11.01 4.04

AARVE DENIM 56.65 1.05 53.85

ABAN OFFSHOR 1,183.10 59.69 19.82

Security Name Close (Rs.) EPS PE

ABAN OFFSHOR 1,180.50 59.69 19.78

ABB 794.75 16.74 47.49

ACC 922.95 85.58 10.78

ADANI ENTER 486.00 6.60 73.65

ADITYA BIRLA 840.85 13.34 63.03

AKRUTI CITY 484.95 37.15 13.05

ALLAHA.BANK 132.65 17.21 7.71

Sushant Gawali M-3010

Role of Stock Exchange in economy

1. Raising capital for businesses2. Mobilizing savings for investment3. Facilitating company growth4. Redistribution of wealth5. Corporate governance

6. Creating investment opportunities for small investors7. Government capital-raising for development projects8. Barometer of the economy9. Regulation of companies10. Employment Opportunities

Growing job opportunities

Two basic analytical methodology

• Fundamental analysis maintains that markets may misprice a security in the short run but that the "correct" price will eventually be reached. Profits can be made by trading the mispriced security and then waiting for the market to recognize its "mistake" and reprice the security.

• Technical analysis maintains that all information is reflected already in the stock price, so fundamental analysis is a waste of time. Trends 'are your friend' and sentiment changes predate and predict trend changes. Investors' emotional responses to price movements lead to recognizable price chart patterns. Technical analysis does not care what the 'value' of a stock is. Their price predictions are only extrapolations from historical price patterns.

6 Steps of Investment in Share Market

Step 1

Step 3

Step 4

• Developing the vision

•Tips and Hot stocks are risky

Step 2

•Simplicity

Step 6

Step 5

•Consistency in Investment

• Passions

• Start Early

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