Stock Market (Stock exchange)
Stock exchange is a place where any body who wants to buy a particular security can find an immediate seller or any body who wants to sell his holdings can find a buyer at a reasonable and fair place. The securities contracts Regulation Act 1956 defines stock exchange as an association, organization or body of individuals whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities.
Features of Stock Market
Stock Market is an organized market, where securities of govt. and semi govt. bodies and corporate enterprises or bought and sold. Stock Market deals in second hand or existing securities. Individuals alone can buy and sell securities. The Stock Market does not provide this facility to corporation and partnership firms. In the Stock Market only those securities which are listed in the Stock Market or transacted. Unlisted Securities or not permitted to be dealt in the market. The Stock Exchange to regulate its day-to-day operations.
Functions & Services of Stock Exchange:Provides ready and continuous market Facilitates regular violation of securities Encourages capital formation
Provides proper direction to invest capital
Ensure wide ownership of securities
Facilitates distribution of new securities
Ensure safety of funds
Regulates company management and performance
Mirror of Business cycle
Stock exchange in IndiaThe organized Stock Exchange in the country started at Bombay in 1877. By 1939 there were 8 Stock Exchanges. By 1945 they increased to 21, operation of too many Stock exchanges was considered undesirable.
Following are some of the Stock exchanges:
Bombay Stock exchange Calcutta Stock exchange Madras Stock exchange Delhi Stock exchange Ahmadabad Stock exchange Hyderabad Stock exchange Indore Stock exchange Bangalore Stock exchange
Membership of the Stock exchange
Trading in Securities on any Stock exchange is open to members only.
Who can become members and how..?
Only men of integrity and competence are admitted as members of Stock exchange. Members have to buy a share if the Stock exchange concerned is a corporate body having a share capital. He also to pay Rs.5,000/- as an entrance fee and deposit Rs.20,000/- either in cash or approved Securities. The application for membership is to be made in prescribed form sponsored by two members of five years standing as members. S/E : After, the Board decides upon accepting his application, a membership Card is issued to the applicant.
Methods of Trading:
A person who wants to purchase or sell Securities cannot do it himself. He is not allowed to enter into the hall of the Stock exchange and thus he can not carry a transaction personally. He has to depend up on the Brokers.
There are 2 types of Trading in the Stock exchange viz,
Ready Delivery Contracts Forward Delivery Contracts These are also called as Cash transaction or Cash trading and forward or dealing for the account. There are some important points of distinction between R.D.C & F.D.C The R.D.C are settled either on the date of the transaction or with in 14days from the date of contract. The R.D.C must be settled with in the specified time limit where as the forward contracts can be carried forward to the next settlement day.
Trading Procedure:It is of four types
Choice of a Broker Placing the Order Settlement Transaction Executing the Order
Meaning of Speculation:
Anticipation changes in prices of securities in future is known as Speculation.
Different types of Speculation activities:
Bull Bear Lame Duck Stag
Bull is Speculator who excepts a rise in the price of shares of a company. He is an optimist. He aims at making profit out of expected rise in the price of a particular share. For this purpose he purchases the security for future delivery.
Bear is Speculator who expects a fall in the price of a Security He is pessimist He aims at making profit out of an expected fall in the price of a particular share For this purpose he sell the security for future delivery
case the Bear is unable to strike the bargain immediately, he is said to be struggling like a Lame Duck
is person who applies for shares of a new company with a view to selling the shares allotted to him at a profit.
The First Stock exchange
In 11th century France the courtiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. As these men also traded in debts, they could be called the first brokers.
NATIONAL STOCK EXCHANGEThe National Stock exchange is the centralized Stock exchange of India situated in Delhi
National Stock Exchange of IndiaNational Stock Exchange Limited TypeStock Exchange LocationMumbai, India Coordinates19337N 725135E19.06028N 72.85972E Founded1992 OwnerNational Stock Exchange of India Limited Key peopleMr.RAVI NARAIN Managing Director CurrencyINR No. of listings1587 MarketCapRs 47,01,923 crore(2009 August) IndexesS&P CNX Nifty CNX Nifty Junior S&P CNX 500 Websitehttp://www.nse-india.com/
Bombay Stock exchangeThe Bombay/Mumbai Stock Exchange, or BSE) is the oldest stock exchange in Asia and has the greatest number of listed companies in the world. It is located Dalal street, Mumbai, India.
TypeStock Exchange LocationMumbai, India Coordinates185547N 725001E18.929681N 72.833589E
Founded1875 OwnerBombay Stock Exchange Limited Key peopleMadhu Kannan (CEO) Mahesh L. Soneji (COO) CurrencyINR No. of listings4,700 MarketCapUS$ 1.1 trillion (Aug 29, 2009) VolumeUS$ 980 billion (2006) IndexesBSE Sensex Websitehttp://www.bseindia.com/