Varun Bse and Nsc

7/31/2019 Varun Bse and Nsc

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.

What is a Stock

ExchangeStock exchange is that placewhere trading of shares isdone in terms of sale and

purchase.


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The National Stock Exchange (NSE), located inBombay, is India's first debt market. It was set up in

1993 to encourage stock exchange reform throughsystem modernization and competition. It openedfor trading in mid-1994. It was accorded recognition

as a stock exchange by the Department ofCompany Affairs. The instruments traded aresecurities, treasury bills, government security

bonds issued by public sector companies,derivatives etc.

NSE: National Stock

Exchange


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NSE

NSE is the market leader in

securities trading in India

It is 16th largest stock exchange in

the world by market capitalizationand largest in India by daily

turnover and number of trades, for

both equities and derivative

trading.NSE has a market capitalization of

around US$985 billion and over

1,640 listings as of December 2011.


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Contd.

NSE is mutually-owned

by a set of leadingfinancial institutions,

banks, insurancecompanies and otherfinancialintermediaries in India

but its ownership andmanagement operate

as separate entities.


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HOW ARE INDICES OF NIFTYCALCULATED???

NIFTY has been calculated since 1996and initially it was calculated based onthe Total Market Capitalization

methodology and the methodology waschanged in June 2009 to Free FloatMarket Capitalization.

Hence, these days, the NIFTY is basedon the Free Floating Market cap of 50NIFTY stocks traded on the NSE

relative to the base value which is


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Free Float MarketCapitalization??

The value of all the shares available forpublic trading excluding the promoterequity, holdings through FDI Route,

Holdings by private corporate, andholdings by Employee Welfare Funds.


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Importants of free flow market cap.

1. It depicts the market more rationally

2. It removes undue influence ofgovernment or promoter shareholding, there by giving the equalopportunity for companies to be in theSENSEX

3. Almost all the Indices world over arecalculated by this methodology

4. It gives Fund managers more authentic

information for benchmark


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NIFTY is calculated using the "Free-floatMarket Capitalization" methodology, wherein,

the level of index at any point of time reflectsthe free-float market

It reflects value of 50 component stocks

relative to a base period.

The market capitalization of a company isdetermined by multiplying the price of its

stock by the number of shares issued by thecompany.

This market capitalization is furthermultiplied by the free-float factor to


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How NIFTY is calculated?

The formula for calculating the NIFTY=(Sum of free flow market cap of 50benchmark stocks)*Index Factor

where,

Index Factor = 1000/Market Cap Value

in 1995.1000 is the Index value during 1995.


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Market Capitalization is the total

worth of the outstanding (issued )

shares of the company it represents

the total worth of the companyMarket Capitalization = Share Price *

Total Shares


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Example

Assume NIFTY has only 2 stocksnamely SBI and RELIANCE. Totalshares in SBI are 500 out of which 200

are held by Government and only 300are available for public trading.RELIANCE has 1000 shares out of

which 500 are held by promoters and500 are available for trading. Assumeprice of SBI Stock is Rs.100 and

Reliance is Rs.200. Then "free-Floating"


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(300*100+500*200) = 30000+100000= Rs. 130000

Assume Market Cap during the

year 1995 was Rs.25000

Then NIFTY = 130000*1000/25000 =5200.


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NSE NIFTY index milestones / records

Date of Milestone Nifty Index Value (points)

9-Feb-2012---------------5412

11-December-2007----6000

27-September-2007---5000

01-December-2006----4000

30-January-2006-------3000

09-January-2004-------2000

09-March-1992---------1000


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NSE NIFTY index companies and

Industry / Sector Name of Company

Industry / Sector

ACC Ltd---------Cement

Ambuja Cements---Cement

Axis Bank-------Banks Bajaj Auto------Automobiles

BHEL-------------Electrical

BPCL--------------Refinery

Bharti Airtel----Telecom

Cairn India-----Oil exploration

Cipla-------------Pharmaceutical

DLF---------------Construction


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NSE Nifty biggest falls / crashes

Date of Nifty Crash

21-January-2008---------496 22-January-2008---------310

18-May-2006--------------496

17-December-2007------271

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