Transforming Live Usha

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Transforming Live, Inventing Future

A

Project ReportOn

PROJECT TITLE(Stock Market )

By

Usha I Desai

Tilak Maharashtra University, Pune

(Deemed Under Section 3 of UGC Act 1956 Vide Notification No.F.9-19/85-U3dated 24th April By the Government of India)

Vidyapeeth Bhavan, Gultekdi, Pune-411 037

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A

Project Report

On

PROJECT TITLE

In partial fulfillment of requirements for the degree of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY:

Usha I Desai

Under the Guidance of

Kirandevi Saraf Institute of Complete Learning

S.V.Road, Malad (West) Mumbai-400 064

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ACKNOWLEDGEMENT

I wish to express my sincere gratitude to all those persons who extended their help, guidance and suggestions without which it would not have been possibleto complete the project report.I am deeply indebted to my guideProf.Dixsha Nath

For his valuable and enlightened guidance and who encouraged me incompilation of my project.

I am really thankful to Kirandevi Saraf Institute of Complete

Learning , who has been the chief facilitator of this project and I couldenhance my knowledge in the field of capital market.I am very much thankful to Director (Academies) for guidance.

Usha I DesaiP.R.No.07408014965

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CERTIFICATECERTIFICATE

This is to certify that the project titledThis is to certify that the project titled

Stock Markets in IndiaStock Markets in India is a bonafide work carried outis a bonafide work carried out by Mr. /Ms.by Mr. /Ms. Usha Ishwarlal DesaiUsha Ishwarlal Desai Student of Master of Student of Master of

Business Administration Semester 3Business Administration Semester 3 rdrd /5/5 thth ,,

Specialization inSpecialization in FINANCEFINANCE PRNo 07408014965PRNo 07408014965 under Tilak Maharashtra University in the yearunder Tilak Maharashtra University in the year

2010.2010.

Head of the department Examiner Examiner

Internal External

Date:

Place: University Seal

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SUPERVISOR/ GUIDE CERTIFICATE

This is to certify that the Project titled Stock Markets in India , is a bonafide work carried out by Ms.

Usha Ishwarlal Desai , a candidate for the award of the

Master of Business Administration of Tilak Maharashtra

University, Pune has been completed under my

guidance and direction.

Signature of the Guide

Date: Name:

Place: Designation:

Institute:

Acknowledgement

The completion of any project depends upon the co-operation, coordination and combinedefforts of several resources of knowledge, inspiration & energy.

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Words fall short acknowledging immense support lent to me yet I will try to give full creditto the deserver's.My sincere thanks goes to Mr. Vikas Shrotriya (HOD DMS) giving me an opportunity todiscover more knowledge. I am also thankful to Mr. S. P. Kabra (Director,Prabhat financialservices) for his support, guidance and cooperation throughout to accomplish this project alsoexpressing deep sense of gratitude to my Project guide, Ms. Shilpi Kuntal (Lecturer) for her valuable guidance, continuous encouragement and tremendous patience in discussing my problems, have been of the greatest help in bringing out my task in present shape. I amequally grateful to all my other teachers for their complete support.It would be unfair on my part if I do not thank my colleagues for their continuous helpwithout which this work could never have been accomplished. They made me realize theimportance of teamwork and also the leadership skills. I am grateful to all of them standingwith me and supporting me in this project.

(Usha I Desai)

Preface

In the present situation where stock market is going up and down, it is necessary to invest

consciously in the market whatever it is, this is the study about the last two year fluctuation in

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stock market which enables the investor in taking decision regarding investment. This studytells the factor which directly or indirectly affects the market and some basic information notonly share market but also other market such as derivatives or commodity market for the newinvestors or the students who have some interest in stock market. The objective of selectingthe topic is to know about the market trends of the stock market and the information relatedto the investment for the future investor. The study of fluctuations of stock market makes theinvestor aquatinted with the factor affecting the investment and Stock prices can be volatileand some analysts argue that this volatility is excessive. This is not easy to prove, since it isdifficult to assess certainty about future earnings and dividends. Companies tend to smoothdividends, so they will be less volatile than stock prices. Volatile stock prices do not have amajor impact on consumption and capital spending since there is a good chance that pricemovements in one direction may be reversed.

Contents

1. Abstract

2. Research Methodology

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2.1 Title of the Study2.2 Duration of the Project2.3 Objective of Study2.4 Type of Research2.5 Scope of Study2.6 Limitation of Study

3. Core Study

4. SWOT

5. Conclusion

6. Bibliography

Executive summary

A market is an environment that allows buyers and sellers to trade or exchange goods,services, and information. These interactions define demand and supply characteristics and

are therefore fundamental to economies. A market can be defined as a place where any type

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of trade takes place. Markets are dependent on two major participants buyers and sellers.Buyers and sellers typically trade goods, services and/ or information. Historically, marketswere physical meeting places where buyers and sellers gathered together to trade. Although physical markets are still vital, virtual marketplaces supported by IT networks such as theinternet have become the largest and most liquid. Some markets are very competitive, with anumber of vendors selling the same kinds of products or services. Conversely, some marketshave low or no competition, particularly if the industry is protected by governmentlegislation.The number of buyers and sellers involved will have a direct bearing on the price of the goodor service to be sold, and has become known as the law of supply and demand. Where thereare more sellers than buyers, the availability of supply will push down prices. If there aremore buyers than sellers, the increased demand will push up prices.Markets can appear spontaneously when there are goods or services to be exchanged, or theycan be planned and regulated .Free markets operate under laissez-fare conditions, in thatthe government does not intervene in how the market operates. These markets may bedistorted if a seller gains monopoly power by managing the majority of supply (or indeed if a buyer develops monophony power by managing demand). Governments or trade bodies oftenstep in when such distortions undermine the smooth functioning of free markets. Thecurrency markets are the largest continuously traded markets in the world. Twenty four hoursa day, seven days a week, governments, banks, investors and consumers are buying andselling every currency, leading to massive money flows constantly changing hands. Stock markets have become highly complex markets that allow investors to buy shares incompanies or in funds that aggregate companies or industries together. Most stock marketstoday are primarily electronic networks, although they often maintain a physical location for buyers, sellers and market makers to interact directly. Markets originally started as

marketplaces usually in the center of villages and towns, for the sale or barter of farm produce, clothing and tools. These kinds of street markets developed into a whole variety of consumer-oriented markets, such as specialist markets, shopping centers, supermarkets, or even virtual markets such as eBay. With the rising price of oil and food, commodity marketsare once again under the spotlight. Commodities underpin economic activity. Commoditymarkets include: energy (oil, gas, coal and increasingly renewable energy sources such as biodiesel), soft commodities and grains (wheat, oat, corn, rice, soya beans, coffee, cocoa,

sugar, cotton, frozen orange juice, etc), meat, and financial commodities such as bonds.

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Capital goods markets help businesses to buy durable goods to be used in industrial andmanufacturing processes. A number of services can also be associated with these goods.Transactions tend to be wholesale with large quantities of goods being transacted at low prices. Everyone has seen it and everyone is wishing if he should have buy stocks before thisrally. Albeit it could have been a gamble buying stocks before declaration of election results,it paid off for those who bought. Now that's history. Stock markets are going to be volatile for next few days. Today, i.e. on Tuesday, markets opened in red, went till 3oo points down, thenrecovered and went up to 500 points up and finally settled for flat closing. So what should asmall investor do now? Should he buy stocks or should be selling stocks that he holds. Thisarticle is a COMPLETE guide to the basics of making money in the stock market! If you areconsidering investing in the stock market, you MUST read this article! We have explained allthe concepts and talked about all the "myths" that people have about the stock market!

INTRODUCTION TO THE ORGANIZATION

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In 1980 Mr. Hirikishan Hiralal Bissa has become a B.S.E. card holder with the name of MsHirikishan Hiralal Bissa stock broker In 1995 Mr Shivkumar Bissa become the proprietor of the firmIn 2001 the firm became a corporate with the name Shree Hirikishan Hiralal Stock BrokingPvt ltdDirectors :- Mr Shivkumar Bissa

Mr Maheshkumar H BissaMrs Sarla Vasant Bissa

RESEARCH METHODOLOGY

TITLE OF THE STUDY:-

Study of fluctuations of Indian stock market



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DURATION OF THE PROJECT:- 45 days

OBJECTIVE OF STUDY

To know the basic terminology of stock market.

To make the investor aware about the factors which may affect their investment?

To get the knowledge of other markets such as commodity market and derivatives.

To know the ups and downs of stock market of last two years.To forecast or predict the future trend of stock market which helps in investment.

To know the effect of these fluctuation on the Indian economy.

TYPE OF RESEARCH

Research

Research is defined as human activity based on intellectual application in the investigationof matter. The primary purpose for applied research is discovering, interpreting, andthe development of methods and systems for the advancement of human knowledge on awide variety of scientific matters of our world and the universe. Research can usethe scientific method, but need not do so. Scientific research relies on the application of thescientific method, a harnessing of curiosity. This research provides scientific information andtheories for the explanation of the nature and the properties of the world around us. It makes practical applications possible. Scientific research is funded by public authorities, by

charitable organizations and by private groups, including many companies. Scientificresearch can be subdivided into different classifications according to their academic andapplication disciplines.In this project the research type used is descriptive because this research is the mostcommonly used and the basic reason for carrying out descriptive research is to identify thecause of something that is happening. For instance, this research could be used in order tofind out what age group is buying a particular brand of cola, whether a companys market

share differs between geographical regions or to discover how many competitors a company



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has in their marketplace. However, if the research is to return useful results, whoever isconducting the research must comply with strict research requirements in order to obtain themost accurate figures/results possible.DESCRIPTIVE RESEARCH

Descriptive research is used to obtain information concerning the current status of the phenomena to describe "what exists" with respect to variables or conditions in a situation.The methods involved range from the survey which describes the status quo, the correlationstudy which investigates the relationship between variables, to developmental studies whichseek to determine changes over time.Descriptive research can be of two types:

i. Quantitative descriptive research emphasizes on what is, and makes use of quantitative methods to describe, record, analyze and interpret the present conditions.

Qualitative descriptive research also emphasizes on what is, but makes use of non-quantitative research methods in describing the conditions of the present.

SCOPE OF STUDY

Derivatives

SEBI

Stock exchange

Commodity market

Stock market

Securities

Day trading

Factor affecting Indian stock market

Effect on Indian economy



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LIMITATIONS

Limitations are the limiting lines that restrict the work in some way or other. In this researchstudy also there were some limiting factors, some of them are as under:

1. Data Collection:

The most important constraint in this study was data collection as Secondary data wasselected for study. Secondary data means data that are already available i.e. they refer to the data which have already been collected and analysed by someone else.

2. Time Period:

Time period was one of the main factor as only one month was allotted and the topiccovered in research has a wide scope. So, it was not possible to cover it in a short spanof time.

3. Reliability:

The data collected in research work was secondary data, So, this puts a question mark on the reliability of this data, which a very important factor of this study as conclusionhas been derived from this secondary data only.

4. Accuracy:

The facts and findings of the data cannot be accepted as accurate to some extent asfirstly, secondary data was collected. Secondly, for doing descriptive research timeneeded to be more, because in short period you cannot cover each point accurately.



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Core study

Stock market

A stock market is a public marketfor the tradingof company stock and derivativesat anagreed price; these aresecurities listed on astock exchangeas well as those only traded privately.

The size of the world stock market was estimated at about $36.6 trillion US at the beginningof October 2008. Thetotal world derivatives market has been estimated at about $791 trillionface or nominal value, 11 times the size of the entire world economy. The value of the

derivatives market, because it is stated in terms of notional values , cannot be directlycompared to a stock or a fixed income security, which traditionally refers to anactual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on anevent occurring is offset by a comparable derivative 'bet' on the eventnot occurring.). Manysuch relatively illiquid securities are valued as marked to model, rather than an actual market price.)

The stocks are listed and traded on stock exchanges which are entities a corporation or

mutual organization specialized in the business of bringing buyers and sellers of theorganizations to a listing of stocks and securities together. The stock market in the UnitedStates includes the trading of all securities listed on the NYSE, the NASDAQ, the Amex, aswell as on the many regional exchanges, e.g.OTCBBand Pink Sheets. European examples of stock exchanges include theLondon Stock Exchange, the Deutsche Brse and the ParisBourse, now part of Euro next.

Function and purpose

The stock market is one of the most important sources for companiesto raisemoney. Thisallows businesses to be publicly traded, or raise additional capital for expansion by sellingshares of ownership of the company in a public market. Theliquiditythat an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractivefeature of investing in stocks, compared to other less liquid investments such asreal estate.

History has shown that the price of shares and other assets is an important part of thedynamics of economic activity, and can influence or be an indicator of social mood. An

economy where the stock market is on the rise is considered to be an up and coming

http://en.wikipedia.org/wiki/Market_systemhttp://en.wikipedia.org/wiki/Market_systemhttp://en.wikipedia.org/wiki/Tradehttp://en.wikipedia.org/wiki/Tradehttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Derivative_(finance)http://en.wikipedia.org/wiki/Security_(finance)http://en.wikipedia.org/wiki/Security_(finance)http://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Notional_amounthttp://en.wikipedia.org/wiki/Actual_cash_valuehttp://en.wikipedia.org/wiki/Actual_cash_valuehttp://en.wikipedia.org/wiki/Mark_to_modelhttp://en.wikipedia.org/wiki/Mark_to_modelhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/NASDAQhttp://en.wikipedia.org/wiki/NASDAQhttp://en.wikipedia.org/wiki/American_Stock_Exchangehttp://en.wikipedia.org/wiki/OTC_Bulletin_Boardhttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/Deutsche_B%C3%83%C2%B6rsehttp://en.wikipedia.org/wiki/Deutsche_B%C3%83%C2%B6rsehttp://en.wikipedia.org/wiki/Paris_Boursehttp://en.wikipedia.org/wiki/Paris_Boursehttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/Companieshttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Share_(finance)http://en.wikipedia.org/wiki/Market_systemhttp://en.wikipedia.org/wiki/Tradehttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Derivative_(finance)http://en.wikipedia.org/wiki/Security_(finance)http://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Notional_amounthttp://en.wikipedia.org/wiki/Actual_cash_valuehttp://en.wikipedia.org/wiki/Mark_to_modelhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/NASDAQhttp://en.wikipedia.org/wiki/American_Stock_Exchangehttp://en.wikipedia.org/wiki/OTC_Bulletin_Boardhttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/Deutsche_B%C3%83%C2%B6rsehttp://en.wikipedia.org/wiki/Paris_Boursehttp://en.wikipedia.org/wiki/Paris_Boursehttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/Companieshttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Share_(finance)


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economy. In fact, the stock market is often considered the primary indicator of a country'seconomic strength and development. Rising share prices, for instance, tend to be associatedwith increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central bankstend to keep an eye on thecontrol and behavior of the stock market and, in general, on the smooth operation of financialsystemfunctions. Financial stability is theraison d'treof central banks.

Exchanges also act as the clearinghouse for each transaction, meaning that they collect anddeliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that thecounterpartycould default on the transaction.

The smooth functioning of all these activities facilitateseconomic growthin that lower costs

and enterprise risks promote the production of goods and services as well as employment. Inthis way the financial system contributes to increased prosperity.

RELATION OF THE STOCK MARKET TO THE MODERN FINANCIAL SYSTEM

The financial system in most western countries has undergone a remarkable transformation.One feature of this development isdisintermediation. A portion of the funds involved insaving and financing flows directly to the financial markets instead of being routed via thetraditional bank lending and deposit operations. The general public's heightened interest in

investing in the stock market, either directly or through mutual funds, has been an importantcomponent of this process. Statisticsshow that in recent decades shares have made up anincreasingly large proportion of households' financial assets in many countries. In the 1970s,in Sweden, deposit accounts and other very liquid assets with little risk made up almost 60 percent of households' financial wealth, compared to less than 20 percent in the 2000s. Themajor part of this adjustment infinancial portfolioshas gone directly to shares but a gooddeal now takes the form of various kinds of institutional investment for groups of individuals,

e.g., pension funds, mutual funds, hedge funds, insurance investment of premiums, etc. Thetrend towards forms of saving with a higher risk has been accentuated by new rules for mostfunds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies areto be found in other industrialized countries. In all developed economic systems, such as theEuropean Union, theUnited States, Japanand other developed nations, the trend has been thesame: saving has moved away from traditional (government insured) bank deposits to morerisky securities of one sort or another.

http://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Financial_systemhttp://en.wikipedia.org/wiki/Financial_systemhttp://en.wikipedia.org/wiki/Raison_d'%C3%83%C2%AAtrehttp://en.wikipedia.org/wiki/Counterpartyhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Disintermediationhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Swedenhttp://en.wikipedia.org/wiki/Swedenhttp://en.wikipedia.org/wiki/Deposit_accounthttp://en.wikipedia.org/wiki/Deposit_accounthttp://en.wikipedia.org/wiki/Deposit_accounthttp://en.wikipedia.org/wiki/Financial_portfoliohttp://en.wikipedia.org/wiki/Industrialized_countrieshttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Financial_systemhttp://en.wikipedia.org/wiki/Financial_systemhttp://en.wikipedia.org/wiki/Raison_d'%C3%83%C2%AAtrehttp://en.wikipedia.org/wiki/Counterpartyhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Disintermediationhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Swedenhttp://en.wikipedia.org/wiki/Deposit_accounthttp://en.wikipedia.org/wiki/Financial_portfoliohttp://en.wikipedia.org/wiki/Industrialized_countrieshttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Japan


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THE STOCK MARKET, INDIVIDUAL INVESTORS, AND FINANCIAL RISK

Riskier long-term saving requires that an individual possess the ability to manage theassociated increased risks. Stock prices fluctuate widely, in marked contrast to the stability of

(government insured) bank deposits or bonds. This is something that could affect not only theindividual investor or household, but also the economy on a large scale. The following dealswith some of the risks of the financial sector in general and the stock market in particular.This is certainly more important now that so many newcomers have entered the stock market,or have acquired other 'risky' investments (such as 'investment' property, i.e., real estate andcollectables).

With each passing year, the noise level in the stock market rises. Television commentators,

financial writers, analysts, and market strategists are all overtaking each other to getinvestors' attention. At the same time, individual investors, immersed in chat rooms andmessage boards, are exchanging questionable and often misleading tips. Yet, despite all thisavailable information, investors find it increasingly difficult to profit. Stock prices skyrocketwith little reason, then plummet just as quickly, and people who have turned to investing for their children's education and their own retirement become frightened. Sometimes thereappears to be no rhyme or reason to the market, only folly.

This is a quote from the preface to a published biography about the long-term value-orientedstock investor Warren Buffett.[4] Buffett began his career with $100, and $105,000 fromseven limited partners consisting of Buffett's family and friends. Over the years he has builthimself a multi-billion-dollar fortune. The quote illustrates some of what has been happeningin the stock market during the end of the 20th century and the beginning of the 21st century.

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Securities and Exchange Board of IndiaSEBI Bhavan, Mumbai Headquarters of SEBIOrganization DetailsHeadquarters Mumbai, Maharashtra, IndiaEstablished 1992Jurisdiction IndiaHead ChairmanChairman C B BhaveTerm February 16, 2008 -Total Staff 525Official Website

Website www.sebi.gov.in

SEBI is the Regulator for the Securities Market in India. Originally set up by theGovernmentof Indiain 1988, it acquired statutory form in 1992 with SEBI Act 1992being passed by theIndian Parliament. Chaired byC B Bhave, SEBI is headquartered in the popular businessdistrict of Bandra-Kurla complex in Mumbai, and has Northern, Eastern, Southern andWestern regional offices in New Delhi, Kolkata, ChennaiandAhmadabad.

Organization Structure

Chandrasekhar Bhaskar Bhaveis the sixth chairman of the Securities Market Regulator. Prior to taking charge as Chairman SEBI, he had been the chairman of NSDL ( National SecuritiesDepository Limited) ushering in paperless securities. Prior to his stint at NSDL, he hadserved SEBI as a Senior Executive Director. He is a former Indian Administrative Service officer of the 1975 batch. The Board comprises

http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/C_B_Bhavehttp://www.sebi.gov.in/http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/SEBI_Act_1992http://en.wikipedia.org/wiki/SEBI_Act_1992http://en.wikipedia.org/wiki/Chandrasekhar_Bhaskar_Bhavehttp://en.wikipedia.org/wiki/Bandra-Kurla_complexhttp://en.wikipedia.org/wiki/Bandra-Kurla_complexhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/New_Delhihttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Ahmedabadhttp://en.wikipedia.org/wiki/Chandrasekhar_Bhaskar_Bhavehttp://en.wikipedia.org/wiki/National_Securities_Depository_Limitedhttp://en.wikipedia.org/wiki/National_Securities_Depository_Limitedhttp://en.wikipedia.org/wiki/Indian_Administrative_Servicehttp://en.wikipedia.org/wiki/File:Flag_of_India.svghttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/C_B_Bhavehttp://www.sebi.gov.in/http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/SEBI_Act_1992http://en.wikipedia.org/wiki/Chandrasekhar_Bhaskar_Bhavehttp://en.wikipedia.org/wiki/Bandra-Kurla_complexhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/New_Delhihttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Ahmedabadhttp://en.wikipedia.org/wiki/Chandrasekhar_Bhaskar_Bhavehttp://en.wikipedia.org/wiki/National_Securities_Depository_Limitedhttp://en.wikipedia.org/wiki/National_Securities_Depository_Limitedhttp://en.wikipedia.org/wiki/Indian_Administrative_Service


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Name Designation As per

Mr CB Bhave Chairman SEBICHAIRMAN (S.4(1)(a) of the SEBIAct, 1992)

Mr KP Krishnan Joint Secretary, Ministry of FinanceMember (S.4(1)(b) of the SEBI Act,1992)

Mr Anurag GoelSecretary, Ministry of CorporateAffairs

Member (S.4(1)(b) of the SEBI Act,1992)

Dr G Mohan

Gopal

Director, National Judicial

Academy, Bhopal

Member (S.4(1)(d) of the SEBI Act,

1992)Mr MS Sahoo Whole Time Member,SEBI

Member (S.4(1)(d) of the SEBI Act,1992)

Dr KM Abraham Whole Time Member,SEBIMember (S.4(1)(d) of the SEBI Act,1992)

Mr MohandasPai

Director, InfosysMember (S.4(1)(d) of the SEBI Act,1992)
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Functions and Responsibilities

SEBI has to be responsive to the needs of three groups, which constitute the market:

the issuers of securities the investors the market intermediaries.

SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation andenforcement action in its executive function and it passes rulings and orders in its judicialcapacity. Though this makes it very powerful, there is an appeals process to create

accountability. There is a Securities Appellate Tribunal which is a three member tribunal andis presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. Asecond appeal lies directly to theSupreme Court.

SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively andsuccessively (e.g. the quick movement towards making the markets electronic and paperlessrolling settlement on T+2 basis). SEBI has been active in setting up the regulations asrequired under law.

Stock exchange

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A stock exchange , (formerly asecurities exchange ) is a corporationor mutual organization

which provides "trading" facilities for stock brokersandtraders, to tradestocksand other

securities. Stock exchanges also provide facilities for the issue and redemption of securities

as well as other financial instruments and capital events including the payment of income anddividends. The securities traded on a stock exchange include:shares issued by companies,unit trusts, derivatives, pooled investment products and bonds. To be able to trade a securityon a certain stock exchange, it has to belisted there. Usually there is a central location at leastfor recordkeeping, but trade is less and less linked to such a physical place, as modernmarkets areelectronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and

bonds to investorsis by definition done in the primary marketand subsequent trading is donein thesecondary market. A stock exchange is often the most important component of astock market. Supply and demand in stock markets are driven by various factors which, as in allfree markets, affect the price of stocks (seestock valuation).

There is usually no compulsion to issue stock via the stock exchange itself, nor must stock besubsequently traded on the exchange. Such trading is said to beoff exchange or over-the-counter . This is the usual way that derivatives and bonds are traded. Increasingly, stock

exchanges are part of a global market for securities.The role of stock exchanges

Stock exchanges have multiple roles in theeconomy, this may include the following:

1. RAISING CAPITAL FOR BUSINESSES

The Stock Exchange providescompanieswith the facility to raisecapital for expansionthrough sellingsharesto the investingpublic.

2 .Mobilizing savings for investment

When people draw their savings and invest in shares, it leads to a morerationalallocation of resources because funds, which could have been consumed, or kept in idledepositswith banks, are mobilized and redirected to promote businessactivity with benefits for severaleconomic sectors such as agriculture, commerceandindustry, resulting in stronger economicgrowthand higher productivitylevels and firms.

3. FACILITATING COMPANY GROWTH

Companies view acquisitions as an opportunity to expand product lines, increase distributionchannels, hedge against volatility, increase itsmarket share, or acquire other necessaryStock market Page 21
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businessassets. A takeover bid or amerger agreement through the stock marketis one of thesimplest and most common ways for a company to grow by acquisition or fusion.

4. REDISTRIBUTION OF WEALTH

Stock exchanges do not exist to redistribute wealth. However, both casual and professionalstock investors, through dividends and stock priceincreases that may result incapital gains, will share in the wealth of profitable businesses.

5. CORPORATE GOVERNANCE

By having a wide and varied scope of owners, companies generally tend to improve on their management standards andefficiencyin order to satisfy the demands of these shareholdersand the more stringent rules for public corporations imposed by public stock exchanges and

the government. Consequently, it is alleged that public companies(companies that are owned by shareholders who are members of the general public and trade shares on public exchanges)tend to have better management records than privately-held companies(those companieswhere shares are not publicly traded, often owned by the company founders and/or their families and heirs, or otherwise by a small group of investors). However, some well-documented cases are known where it is alleged that there has been considerable slippage incorporate governanceon the part of some public companies. Thedot-com bubble in the early

2000s, and thesubprime mortgage crisisin 2007-08, are classical examples of corporatemismanagement. Companies likePets.com (2000), Enron Corporation(2001), One.Tel (2001), Sunbeam (2001), Web van (2001), Adelphia (2002), MCI WorldCom (2002),Parmalat(2003),American International Group(2008),Lehman Brothers(2008), andSatyamComputer Services(2009) were among the most widely scrutinized by the media.

7. CREATING INVESTMENT OPPORTUNITIES FOR SMALL INVESTORS

As opposed to other businesses that require huge capital outlay, investing in shares is open to

both the large and smallstock investorsbecause a person buys the number of shares they canafford. Therefore the Stock Exchange provides the opportunity for small investors to ownshares of the same companies as large investors.

8. GOVERNMENT CAPITAL-RAISING FOR DEVELOPMENT PROJECTS

Governments at various levels may decide to borrow money in order to finance infrastructure projects such as sewage and water treatment works or housing estates by selling another category of securities known as bonds. These bonds can be raised through the Stock

Exchange whereby members of the public buy them, thus loaning money to the government.

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The issuance of such bonds can obviate the need to directly tax the citizens in order tofinance development, although by securing such bonds with the full faith and credit of thegovernment instead of with collateral, the result is that the government must tax the citizensor otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature.

9. BAROMETER OF THE ECONOMY

At the stock exchange, share prices rise and fall depending, largely, onmarket forces. Share prices tend to rise or remain stable when companies and theeconomyin general show signsof stability and growth. Aneconomic recession, depression, or financial crisis couldeventually lead to a stock market crash. Therefore the movement of share prices and in

general of thestock indexescan be an indicator of the general trend in the economy.

Bombay Stock Exchange

Introduction

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, nowspanning three centuries in its 133 years of existence. What is now popularly known as BSEwas established as "The Native Share & Stock Brokers' Association" in 1875.

BSE is the first stock exchange in the country which obtained permanent recognition (in

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1956) from the Government of India under the Securities Contracts (Regulation) Act 1956.BSE's pivotal and pre-eminent role in the development of the Indian capital market is widelyrecognized. It migrated from the open outcry system to an online screen-based order driventrading system in 1995. Earlier an Association of Persons (AOP), BSE is now a corporatizedand demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by theSecurities and Exchange Board of India (SEBI). With demutualization, BSE has two of world's best exchanges, Deutsche Brse and Singapore Exchange, as its strategic partners.

Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by providing it with an efficient access to resources. There is perhaps no major corporate inIndia which has not sourced BSE's services in raising resources from the capital market.

Today, BSE is the world's number 1 exchange in terms of the number of listed companies andthe world's 5th in transaction numbers. The market capitalization as on December 31, 2007stood at USD 1.79 trillion. An investor can choose from more than 4,700 listed companies,which for easy reference, are classified into A, B, S, T and Z groups.

The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature, andis tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEXis constructed on a 'free-float' methodology, and is sensitive to market sentiments and marketrealities. Apart from the SENSEX, BSE offers 21 indices, including 12 sect oral indices. BSEhas entered into an index cooperation agreement with Deutsche Brse. This agreement hasmade SENSEX and other BSE indices available to investors in Europe and America.Moreover, Barclays Global Investors (BGI), the global leader in ETFs through its iShares

brand, has created the 'iShares BSE SENSEX India Tracker' which tracks the SENSEX.The ETF enables investors in Hong Kong to take an exposure to the Indian equity market.

The first Exchange Traded Fund (ETF) on SENSEX, called "SPIcE" is listed on BSE. It brings to the investors a trading tool that can be easily used for the purposes of investment,trading, hedging and arbitrage. SPIcE allows small investors to take a long-term view of themarket.



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BSE provides an efficient and transparent market for trading in equity, debt instruments andderivatives. It has a nation-wide reach with a presence in more than 359 cities and towns of India. BSE has always been at par with the international standards. The systems and processes are designed to safeguard market integrity and enhance transparency in operations.BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000certifications. It is also the first exchange in the country and second in the world to receiveInformation Security Management System Standard BS 7799-2-2002 certification for its BSEOn-line Trading System (BOLT).

BSE continues to innovate. In recent times, it has become the first national level stock exchange to launch its website in Gujarati and Hindi to reach out to a larger number of investors. It has successfully launched a reporting platform for corporate bonds in Indiachristened the ICDM or Indian Corporate Debt Market and a unique ticker-cum-screen aptlynamed 'BSE Broadcast' which enables information dissemination to the common man on thestreet.

In 2006, BSE launched the Directors Database and ICERS (Indian Corporate ElectronicReporting System) to facilitate information flow and increase transparency in the Indiancapital market. While the Directors Database provides a single-point access to information onthe boards of directors of listed companies, the ICERS facilitates the corporate in sharingwith BSE their corporate announcements.

cBSE also has a wide range of services to empower investors and facilitate smoothtransactions:

Investor Services: The Department of Investor Services redresses grievances of investors.

BSE was the first exchange in the country to provide an amount of Rs.1 million towards theinvestor protection fund; it is an amount higher than that of any exchange in the country.BSE launched a nationwide investor awareness programme- 'Safe Investing in the Stock Market' under which 264 programmes were held in more than 200 cities.

The BSE On-line Trading (BOLT): BSE On-line Trading (BOLT) facilitates on-line screen based trading in securities. BOLT is currently operating in 25,000 Trader Workstations

located across over 359 cities in India.



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BSEWEBX.com: In February 2001, BSE introduced the world's first centralized exchange- based Internet trading system, BSEWEBX.com. This initiative enables investors anywhere

in the world to trade on the BSE platform.

Surveillance: BSE's On-Line Surveillance System (BOSS) monitors on a real-time basis the price movements, volume positions and members' positions and real-time measurement of default risk, market reconstruction and generation of cross market alerts.

BSE Training Institute: BTI imparts capital market training and certification, incollaboration with reputed management institutes and universities. It offers over 40 courseson various aspects of the capital market and financial sector. More than 20,000 people haveattended the BTI programmes

Awards

The World Council of Corporate Governance has awarded the Golden Peacock Global CSR Award for BSE's initiatives in Corporate Social Responsibility (CSR).The Annual Reports and Accounts of BSE for the year ended March 31, 2006 and March 312007 have been awarded the ICAI awards for excellence in financial reporting.

The Human Resource Management at BSE has won the Asia - Pacific HRM awards for itsefforts in employer branding through talent management at work, health management at work and excellence in HR through technologyDrawing from its rich past and its equally robust performance in the recent times, BSE willcontinue to remain an icon in the Indian capital market.

History

For the premier stock exchange that pioneered the securities transaction business in India,

over a century of experience is a proud achievement. A lot has changed since 1875 when 318 persons by paying a then princely amount of Re. 1, became members of what today is calledBombay Stock Exchange Limited (BSE).

Over the decades, the stock market in the country has passed through good and bad periods.The journey in the 20th century has not been an easy one. Till the decade of eighties, therewas no measure or scale that could precisely measure the various ups and downs in the Indianstock market. BSE, in 1986, came out with a Stock Index-SENSEX- that subsequently



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became the barometer of the Indian stock market.

The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of BSE National Index (Base: 1983-84 = 100). It comprised 100 stocks listed at five major stock exchanges in India - Mumbai, Calcutta, Delhi, Ahmedabad and Madras. The BSE NationalIndex was renamed BSE-100 Index from October 14, 1996 and since then, it is beingcalculated taking into consideration only the prices of stocks listed at BSE. BSE launched thedollar-linked version of BSE-100 index on May 22, 2006.

With a view to provide a better representation of the increasing number of listed companies,larger market capitalization and the new industry sectors, BSE launched on 27th May, 1994two new index series viz., the 'BSE-200' and the 'DOLLEX-200'. Since then, BSE has come along way in attuning itself to the varied needs of investors and market participants. In order tofulfill the need for still broader, segment-specific and sector-specific indices, BSE hascontinuously been increasing the range of its indices. BSE-500 Index and 5 sectoral indiceswere launched in 1999. In 2001, BSE launched BSE-PSU Index, DOLLEX-30 and thecountry's first free-float based index - the BSE TECk Index. Over the years, BSE shifted allits indices to the free-float methodology

National Stock Exchange of India

National Stock Exchange Limited

Type Stock Exchange

Location Mumbai, India

Coordinates19337N 725135E / 19.06028N72.85972E / 19.06028; 72.85972

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Owner National Stock Exchange of India Limited

Key people Mr. Ravi Narain (Managing Director & CEO)

Currency INR

No. of listings 1587

MarketCap US$1.46 trillion (2006)

Indexes

S&P CNX NiftyCNX Nifty Junior S&P CNX 500

Website http://www.nse-india.com/ NSE is mutually-owned by a set of leading financial institutions, banks, insurance companiesand The National Stock Exchange of India Limited (NSE ), is a Mumbai-based stock exchange. It is the largest stock exchange inIndiain terms of daily turnover and number of trades, for both equities and derivative trading.[1]. Though a number of other exchangesexist, NSE and the Bombay Stock Exchangeare the two most significant stock exchanges inIndia, and between them are responsible for the vast majority of share transactions. The

NSE's key index is theS&P CNX Nifty, known as the Nifty, an index of fifty major stocksweighted by market capitalisation.

other financial intermediaries in India but its ownership and management operate as separateentities. There are at least 2 foreign investors NYSE Euronext and Goldman Sachs who havetaken a stake in the NSE. As of 2006[update], the NSEVSAT terminals, 2799 in total, cover more than 1500 cities across India . In October 2007, the equitymarket capitalizationof thecompanies listed on the NSE was US$ 1.46 trillion, making it the second largest stock

exchange inSouth Asia. NSE is the third largest Stock Exchange in the world in terms of thenumber of trades in equities. It is the second fastest growingstock exchangein the world witha recorded growth of 16.6%.

Origins

NSE building atBKC

The National Stock Exchange of India was promoted by leadingFinancial institutions at the behest of theGovernment of India, and

was incorporated in November 1992 as a tax-paying company. In

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April 1993, it was recognized as astock exchange under theSecurities Contracts (Regulation)Act, 1956. NSE commenced operations in the WholesaleDebt Market(WDM) segment inJune 1994. TheCapital Market(Equities) segment of the NSE commenced operations in November 1994, while operations in theDerivativessegment commenced in June 2000.

Innovations

NSE has remained in the forefront of modernization of India's capital and financial markets,and its pioneering efforts include:

Being the first national, anonymous, electronic limit order book (LOB) exchange totrade securities in India. Since the success of the NSE, existent market and newmarket structures have followed the "NSE" model.

Setting up the first clearing corporation "National Securities Clearing CorporationLtd." in India. NSCCL was a landmark in providing innovation on all spot equitymarket (and later,derivatives market) trades in India.

Co-promoting and setting up of National Securities Depository Limited, firstdepository in India[2].

Setting up of S&P CNX Nifty. NSE pioneered commencement of Internet Trading in February 2000, which led to the

wide popularization of the NSE in the broker community. Being the first exchange that, in 1996, proposed exchange traded derivatives,

particularly on an equity index, in India. After four years of policy and regulatorydebate and formulation, the NSE was permitted to start trading equity derivatives

Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) inIndia.

NSE has also launched the NSE-CNBC-TV18 media centre in association with

CNBC-TV18, it is the one of the most important stock exchange in the world.

S&P CNX NiftyS&P CNX Nifty is a well diversified50 stock index accounting for 21 sectors of theeconomy. It is used for a variety of purposes such as benchmarking fund portfolios,index based derivativesandindex 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 India's first specialized companyStock market Page 29
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focused upon the index as a core product. IISL has a Marketing and licensing agreement withStandard & Poor's (S&P), who are world leaders in index services.The total traded value for the last six months of all Nifty stocks is approximately 65.68% of the traded value of all stocks on the NSE Nifty stocks represent about 65.34% of the total market capitalization as on Mar 31, 2009.Impact costof the S&P CNX Nifty for a portfolio size of Rs.2 crore is 0.16%S&P CNX Nifty is professionally maintainedand is ideal for derivatives tradingSensex & the NiftyThe Sensex is an "index". What is an index? An index is basically an indicator. It gives you ageneral idea about whether most of the stocks have gone up or most of the stocks have gonedown.

The Sensex is an indicator of all the major companies of the BSE.

The Nifty is an indicator of all the major companies of the NSE.

If the Sensex goes up, it means that the prices of the stocks of most of the major companieson the BSE have gone up. If the Sensex goes down, this tells you that the stock price of mostof the major stocks on the BSE have gone down.

Just like the Sensex represents the top stocks of the BSE, the Nifty represents the top stocksof the NSE.

Just in case you are confused, the BSE, is the Bombay Stock Exchange and the NSE is the National Stock Exchange. The BSE is situated at Bombay and the NSE is situated at Delhi.

These are the major stock exchanges in the country. There are other stock exchanges like theCalcutta Stock Exchange etc. but they are not as popular as the BSE and the NSE.Most of thestock trading in the country is done though the BSE & the NSE.

Besides Sensex and the Nifty there are many other indexes. There is an index that gives youan idea about whether the mid-cap stocks go up and down. This is called the BSE Mid-capIndex.

The reasons for stock prices going "up" and "down"

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Stock prices change every day because of market forces. By this we mean that stock priceschange because of supply and demand. If more people want to buy a stock (demand) thansell it (supply), then the price moves up!

Conversely, if more people wanted to sell a stock than buy it, there would be greater supplythan demand, and the price would fall. (Basics of economics!)Understanding supply and demand is easy. What is difficult to understand is what makes people like a particular stock and dislike another stock. If you understand this, you will knowwhat people are buying and what people are selling. If you know this you will know what prices go up and what prices go down!

To figure out the likes and dislikes of people, you have to figure out what news is positive for a company and what news is negative and how any news about a company will be interpreted by the people.

The most important factor that affects the value of a company is its earnings. Earnings are the profit a company makes, and in the long run no company can survive without them. It makessense when you think about it. If a company never makes money, it isn't going to stay in business. Public companies are required to report their earnings four times a year (once eachquarter).

Dalal Street watches with great attention at these times, which are referred to as earningsseasons. The reason behind this is that analysts base their future value of a company on their earnings projection.If a company's results are better than expected, the price jumps up. If a company's results

disappoint and are worse than expected, then the price will fall.

Of course, it's not just earnings that can change the feeling people have about a stock. Itwould be a rather simple world if this were the case! During the dotcom bubble, for example, the stock price of dozens of internet companies rose without ever making even thesmallest profit. As we all know, these high stock prices did not hold, and most internetcompanies saw their values shrink to a fraction of their highs. Still, this fact demonstrates that

there are factors other than current earnings that influence stocks.



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So, what are "all the factors" that affect the stocks price? The best answer is that nobodyreally knows for sure. Some believe that it isn't possible to predict how stock prices willchange, while others think that by drawing charts and looking at past price movements, youcan determine when to buy and sell. The only thing we do know is that stocks are volatile andcan change in price very very rapidly.

The reasons for which companies issue stocksWhy would the founders share the profits with thousands of people when they could keep profits to themselves? The reason is that at some point every company needs to "raisemoney". To do this, companies can either borrow it from somebody or raise it by selling partof the company, which is known as issuing stock.

A company can borrow by taking a loan from a bank or by issuing bonds. Both methodscome under "debt financing". On the other hand, issuing stock is called equity financing.Issuing stock is advantageous for the company because it does not require the company to pay back the money or make interest payments along the way.

All that the shareholders get in return for their money is the hope that the shares will someday be worth more than what they paid for them. The first sale of a stock, which is issued by the private company itself, is called the initial public offering (IPO).

It is important that you understand the distinction between a company financing through debtand financing through equity. When you buy a debt investment such as a bond, you areguaranteed the return of your money (the principal) along with promised interest payments.

This isn't the case with an equity investment. By becoming an owner, you assume the risk of the company not being successful - just as a small business owner isn't guaranteed a return,neither is a shareholder. Shareholders earn a lot if a company is successful, but they alsostand to lose their entire investment if the company isn't successful.Stock Picking Having understood all the basics of the stock market and the risk involved,now we will go into stock picking and how to pick the right stock. Before picking the right

stock you need to do some analysis.



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There are two major types of analysis:1. Fundamental Analysis2. Technical AnalysisFundamental analysis is the analysis of a stock on the basis of core financial and economicanalysis to predict the movement of stocks price.On the other hand, technical analysis is the study of prices and volume, for forecasting of future stock price or financial price movements.Simply put, fundamental analysis looks at the actual company and tries to figure out what thecompany price is going to be like in the future. On the other hand technical analysis look atthe stocks chart, peoples buying behavior etc. to try and figure out what the stock price isgoing to be like in the future.In this article we will go into the basics of fundamental analysis. Technical analysis is alittle more complicated. It is much more of an "art" than a science. It depends more onexperience and involves some statistics and mathematics, so explaining technical analysis isout of the scope of this article.Calculation of BSE SENSEXThis article explains how the value of the BSE Sensex or sensitive index is calculated. If you are not sure what we mean by the Sensex or what the Sensex is all about, you can findthis out by reading our How to make money in the stock market? article.

The Sensex has a very important function. The Sensex is supposed to be an indicator of thestocks in the BSE. It is supposed to show whether the stocks are generally going up, or generally going down.To show this accurately, the Sensex is calculated taking into consideration stock prices of 30different BSE listed companies. It is calculated using the free-float market capitalization

method. This is a world wide accepted method as one of the best methods for calculating astock market index.

Please note: The method used for calculating the Sensex and the 30 companies that are takeninto consideration are changed from time to time. This is done to make the Sensex anaccurate index and so that it represents the BSE stocks properly.3 important things you must know and follow as an new investor!

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You need to KNOW some unforgettable basics before you enter the world of investing instocks. The stock market is a field dominated by savvy investors who know the ins-and-outsof the market. For people who are not on the inside, the stock market can be a VERYdangerous place. :

Don't even consider "tips" that tell you about "hot stocks". Consider the source: There aremany people in the market who put in all their time and effort in promoting certain stocks.They do this because they have their money invested in those stocks. If they can get enough people to buy the stock and they can get the stock price to rise, they will sell the stock for ahuge price, the stock price will crash and they will walk off to promote another stock.

Always use your own brain: It's extremely important. You must always use your own brain.Relying on the advice of others, no matter how well intentioned it may be, is almost always acomplete disaster. Make sure you dig in and really examine the "facts about the companies" before you invest. Ignore press releases which have very little substance, and rely on "hype"to tell the company's story.And finally the most important tip!!!Only invest money you can afford to lose!! Sure this is a basic point, but many people miss it.You should only invest money that you can honestly afford to lose!! Everyone enters intoinvestments with the idea of earning big profits, but in many cases, this never works.(Especially if you are new to investing in the stock market!)Please understand that the above tips are tips for beginners. Once you really get into the stock market you do not need to follow these rules anymore. But if you are a new investor, youMUST follow these rules. They are for your own safety.But then again, nothing comes free. Everything has a price. You will have to loose some

money, make some bad decisions and then only will you really understand the market. Youcannot understand the market by just looking at it from far. By following these rules, you will basically not loose too much!DerivativesCommodities whose value is derived from the price of some underlying asset like securities,commodities, bullion, currency, interest level, stock market index or anything else are known as

Derivatives.



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In simpler form, derivatives are financial security such as an option or future whose value isderived in part from the value and characteristics of another security, the underlying asset.

It is a generic term for a variety of financial instruments. Essentially, this means you buy a promise to convey ownership of the asset, rather than the asset itself. The legal terms of acontract are much more varied and flexible than the terms of property ownership. In fact, itsthis flexibility that appeals to investors.When a person invests in derivative, the underlying asset is usually a commodity, bond,stock, or currency. He bet that the value derived from the underlying asset will increase or decrease by a certain amount within a certain fixed period of time.

Futures and options are two commodity traded types of derivatives. An options contractgives the owner the right to buy or sell an asset at a set price on or before a given date. On theother hand, the owner of a futures contract is obligated to buy or sell the asset.

The other examples of derivatives are warrants and convertible bonds (similar to shares inthat they are assets). But derivatives are usually contracts. Beyond this, the derivatives rangeis only limited by the imagination of investment banks. It is likely that any person who hasfunds invested an insurance policy or a pension fund that they are investing in, and exposedto, derivatives wittingly or unwittingly.

Shares or bonds are financial assets where one can claim on another person or corporation;they will be usually being fairly standardized and governed by the property of securities laws

in an appropriate country.

On the other hand, a contract is merely an agreement between two parties, where thecontract details may not be standardized.

Derivatives securities or derivatives products are in real terms contracts rather than solid as itfairly sounds.



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India Commodity Market

The vast geographical extent of India and her huge population is aptly complemented by thesize of her market. The broadest classification of the Indian Market can be made in terms of the commodity market and the bond market. Here, we shall deal with the former in a littledetail.The commodity market in India comprises of all palpable markets that we come across in our daily lives. Such markets are social institutions that facilitate exchange of goods for money.The cost of goods is estimated in terms of domestic currency . India Commodity Market can be subdivided into the following two categories:Wholesale MarketRetail MarketLet us now take a look at what the present scenario of each of the above markets is like.The traditional wholesale market in India dealt with whole sellers who bought goods from thefarmers and manufacturers and then sold them to the retailers after making a profit in the process. It was the retailers who finally sold the goods to the consumers. With the passage of time the importance of whole sellers began to fade out for the following reasons:The whole sellers in most situations, acted as mere parasites that did not add any value to the product but raised its price which was eventually faced by the consumers.The improvement in transport facilities made the retailers directly interact with the producersand hence the need for whole sellers was not felt.In recent years, the extent of the retail market (both organized and unorganized) has evolvedin leaps and bounds. In fact, the success stories of the commodity market of India in recentyears has mainly centered around the growth generated by the Retail Sector. Almost everycommodity under the sun both agricultural and industrial is now being provided at welldistributed retail outlets throughout the country.

Moreover, the retail outlets belong to both the organized as well as the unorganized sector.The unorganized retail outlets of the yesteryears consist of small shop owners who are pricetakers where consumers face a highly competitive price structure. The organized sectors onthe other hand are owned by various business houses like Pantaloons, Reliance, Tata andothers. Such markets are usually selling a wide range of articles agricultural andmanufactured, edible and inedible, perishable and durable. Modern marketing strategies andother techniques of sales promotion enable such markets to draw customers from every



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section of the society. However the growth of such markets has still centered on the urbanareas primarily due to infrastructural limitations.Considering the present growth rate, the total valuation of the Indian Retail Market isestimated to cross Rs. 10,000 billion by the year 2010. Demand for commodities is likely to become four times by 2010 than what it presently is.

Money Market

When thestock prices show a downward trend, then it becomes risky to keep savings there.Although the stock market is associated with highrisks and highreturns, many are risk averse and prefer to invest in the more securemoney market.The money market deals with veryshort term debt securities that mature in less than a year.Since the money market is extremely safe, it yields verylow returns unlike the bond market.The money market securities that are issued by the government or financial institutions or large corporations are very liquid. Since the money market securities trade at very highdenominations it becomes very difficult for the individual investors to have access to it.The money market is a type of adealer market where firms purchase securities in their ownaccount by assuming the risks themselves. Unlike the stock exchanges the money marketsecurities do not operate in exchanges or through brokers. Transactions take place over phone or theelectronic system.One may browse through the following links to have more detailed information about moneymarket.

Money Market Definition

Money Market Definition is simply meant as the short-term debt market. Treasury Bills andcertificate of deposits are regarded as the instruments in the money market.

World Money Market

World Money Market has been providing origination, trading and the distribution of short-term debt instruments across different regions over the world. Find detailed on the worldmoney market.

Money Market Index Money Market Index is a true indicator of the prevailing moneymarket, which renders a clear-cut idea on making investment.

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Money Market Rates

Money Market Rates can be simply defined as the market rates including the broker call loanrate, federal funds rate, rates on bankers' acceptance etc. Get the method of finding the money

market rates.Major Factors That Affect Stock Price in stock market globally When you wish to invest in the stock market, then you should always make a good survey of the whole market. As you know that you cannot predict the stock market, so in that case youneed to know the functioning of the market. There are somemajor factors that affect stock price . So let us discuss about the different factors affecting the stock price in this article.DEMAND AND SUPPLY

One of the major factors affecting stock price is demand and supply. The trend of the stock

market trading directly affects the price. When people are buying more stocks, then the priceof that particular stock increases. On the other hand if people are selling more stocks, then the price of that stock falls. So, you should be very careful when you decide to invest in the

Indian stock market .Market Cap

Never try to guess the worth of a company simply by comparing the price of the stock. Youshould always keep in mind that it is not the stock but the market capitalization of thecompany that determines the worth of the company. So market cap is another factor thataffects stock price."Market Capitalization"?

You probably think that you have never heard of the term market capitalization before.You have! When you are talking about mid-cap, small-cap and large-cap stocks, you

are talking about market capitalization!

Market cap or market capitalization is simply the worth of a company in terms of its shares!To put it in a simple way, if you were to buy all the shares of a particular company, what isthe amount you would have to pay? That amount is called the market capitalization!To calculate the market cap of a particular company, simply multiply the current share price by the number of shares issued by the company! Just to give you an idea, ONGC,has a market cap of Rs.170,705.21 Cr (when this article was written)

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Depending on the value of the market cap, the company will either be a mid-cap or large-cap or small-cap company! Now the question is, how do YOU calculate the market cap of a particular company? You dont! Just go to a website likeMoneyControl.comand look upthe company whose market cap you are interested in finding out! The figure in front of Mkt.Cap will be the market cap value.

News

When you get positive news about a company then it can increase the buyinginterest in themarket. On the other hand, when there is a negative press release, it can ruin the prospect of astock. In this case you should remember that news should not matter much but the overall performance of the company matters more. So, news is another factor affecting stock price.Earning/Price Ratio

Another important factor affecting stock price is the earning/price ratio. This gives you a fair idea of a companysshare price when it is compared to its earnings. The stock becomesundervalued if the price of the share is much lower than the earnings of a company. But if this is the case, then it has the potential to rise in the near future. The stock becomesovervalued if the price is much higher than the actual earning.So, these are themajor factors that affect stock price .

Day Trading

Day trading (and trading in general) is the buying and selling of various financialinstruments, such asfutures, options, currencies, andstocks, with the goal of making a profitfrom the difference between the buying price and the selling price.Day tradingdiffersslightly from other styles of trading in that positions are rarely (if ever) held overnight or when the market being traded is closed.

Day trading was originally only available to financial companies (such as banks), becauseonly they had access to the exchanges and market data. But with recent technology such asthe Internet, individual traders now have direct access to the same exchanges and marketdata, and can make the same trades at very low cost.

Trading Styles

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There are several different styles of day trading, suited to different day trader personalities.The styles range fromshort term tradingsuch as scalping where positions are only held for afew seconds or minutes, to longer termswingand position tradingwhere a position may beheld throughout the trading day. Most day trading systems have a lot of flexibility, and canhave open positions for anywhere from a few minutes to a few hours, depending upon howthe trade is doing (whether it is in profit). Some day traders will trade multiple styles, butmost traders will choose a single style and only take that type of trade.Day trading also has different types of trade,

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