ACNOWLEDGEMENT

I feel deeply indebted towards people who have guided

me in this project. It would have not have been possible
to make such an extensive report without the help,
guidance and input from them. Most of my information
source has been from professional books and websites.
I would firstly like to express my gratitude towards my
mentor Dr. Roshan Kumar for having shown so much of
flexibility & guiding in such a way that that helped me a
lot in preparation of this project. He helped me in
deciding the project topic. He showed a lot of openness
in his approach and I would like to thank him for his
support in a way that has led to proper & effective
learning
 INDEX
S No. Topic Page
number
1 INDRODUCTION 5

2 ORGIN OF STOCK MARKET IN INDIA 5

3 STOCK MARKET IN INDIA 7

4 SECURITIES - TYPE 8

5 FUNCTION OF STOCK EXCHANGE 11

6 LEGAL FARMEWORK IN INDIA 12

7 SOME STOCK MARKET TERM 13

8 PARTICIPANT OF STOCK MARKET 16

9 NSE 17

10 BSE 25

11 SENSEX CALCULATION 31

12 SEBI 36
 INTRODUCTION
TO
STOCK MARKET
The Securities Contract (Regulation) Act, 1956 [SCRA] defines ‘Stock Exchange’ as any body of
individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or
controlling the business of buying, selling or dealing in securities. Stock exchange could be a
regional stock exchange whose area of operation/jurisdiction is specified at the time of its
recognition or national exchanges, which are permitted to have nationwide trading since
inception. NSE was incorporated as a national stock exchange.

Stock market is an organized set-up with a regulatory body and the members who trade in
shares are registered with the stock market and a regulatory body. Stock markets exist in
different cities all over the world with each market having a different set of "listed" shares.
Thus, the shares listed in the Bombay Stock Exchange (BSE) will be different from those in the
Delhi Stock Exchange (DSE), because a company may not want to be listed in a particular stock
exchange or may not fit the eligibility requirements of the particular exchange. The stock
market is also called the secondary market as it involves trading between two investors.

ORIGIN
The origin of stock market in India goes back to the end of the eighteenth century when long
term negotiable securities were first issued. However, for all practical purposes, the real
beginning occurred in the middle of the nineteenth century after the enactment of the
Companies Act in 1850, which introduced the features of limited liability and generated
investor interest in corporate securities.

An important early event in the development of the stock market in India was the formation of
the native share and stock brokers Association at Bombay in 1875, the precursor of the present
day Bombay stock exchange. This was followed by the formation of exchanges / associations in
Ahmedabad (1894), Calcutta (1908) and Madras (1937). In addition a large number of
ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during
depressing times subsequently.

Stock exchanges are intricacy inter woven in the fabric of a nation’s economic life. Without a
stock exchange the savings of the community – the sinews of economic progress and
productive efficiency would remain underutilised. The task of mobilisation and allocation of
savings could be attempted in the old days by a much less specialised institution than the stock
exchanges. But as the business and industry expanded and the economy assumed more
complex nature, the need for permanent finance arose. Entrepreneurs needed money for long
term whereas investors demanded liquidity – the facility to convert their investments into cash
at any given time. The answer was a ready market for investments and this was how the stock
exchange come into being.

The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Ltd (NSE) are the 2
primary exchanges in India. In addition there are 22 regional stock exchanges. However the BSE
and NSE have established themselves as the two leading stock exchanges and account for about
80 % of the equity volume traded in India. The average daily turnover in cash segment of BSE in
2009-10 is around ₹ 5,651 crore (source: BSE) while at NSE it was ₹16,959 crore. (source:NSE)

The BSE has over 6000 stocks listed and has market capitalisation of around ₹ 9, 68,000 crore.
Most key securities are traded on both the exchanges and hence the investor could buy them
on either exchange. Both exchanges have different settlement cycle, which allows the investors
to shift their positions on the bourses.
 Securities
Securities are instrument representing ownership (stocks), a debt agreement (bonds) or the
rights to ownership (derivatives). Securities are a form of ownership that can be easily traded
on a secondary market. Securities allow you to own the underlying asset without taking
possession. For this reason, securities are very easily traded, or very liquid. They are easy to
price, and so are a great indication of the underlying value of the asset. The invention of
securities helped the creation of the huge success of the financial markets.

There Are Three Types of Securities

1. Equity Securities - These allow you to own shares of a corporation. The most
direct way is to buy stocks of a company yourself. One can also profit by buying shares of a
mutual fund, which invests in the stocks for you. The secondary market for equity derivatives is
the stock market, such as the BSE and the NASDAQ.

One can also buy stocks of a new company before it hits the stock exchange. The shares of this
Initial Public Offering (IPO) are bought from investment banks, like Goldman Sachs or Morgan
Stanley.

Shares are also known as stock. There are 2 types of stock:

i. Common Stock Common stock is, well, common. When people talk about stocks they
are usually referring to this type. In fact, the majority of stock is issued is in this form. We
basically went over features of common stock in the last section. Common shares represent
ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote
per share to elect the board members, who oversee the major decisions made by management.
Over the long term, common stock, by means of capital growth, yields higher returns than
almost every other investment. This higher return comes at a cost since common stocks entail
the most risk. If a company goes bankrupt and liquidates, the common shareholders will not
receive money until the creditors, bondholders and preferred shareholders are paid.

ii. Preferred Stock Preferred stock represents some degree of ownership in a company but
usually doesn't come with the same voting rights. (This may vary depending on the company.)
With preferred shares, investors are usually
guaranteed a fixed dividend forever. This is different than common stock, which has variable
dividends that are never guaranteed. Another advantage is that in the event of liquidation,
preferred shareholders are paid off before the common shareholder (but still after debt
holders). Preferred stock may also be callable, meaning that the company has the option to
purchase the shares from shareholders at any time for any reason (usually for a premium).
Some people consider preferred stock to be more like debt than equity. A good way to think of
these kinds of shares is to see them as being in between bonds and common shares.

2. Debt Securities -Debt instrument represents a contract whereby one party lends
money to another on pre-determined terms with regards to rate and periodicity of interest,
repayment of principal amount by the borrower to the lender. In the Indian securities markets,
the term ‘bond’ is used for debt instruments issued by the Central and State governments and
public sector organizations and the term ‘debenture’ is used for instruments issued by private
corporate sector. These allow you to provide loans, called bonds, to a company or even a
country. Ratings companies, like Standard & Poor's, Moody's and Fitch's evaluate how likely it is
the bond will be repaid. To ensure a successful bond sale, borrowers must pay higher interest
rates if their rating is below AAA. If the ratings are very low, they are known as junk bonds.
Despite their risk, investors buy junk bonds because they offer a higher interest rate.

3. Derivative Securities - Equity derivatives offer retail investors another way to

participate in the price action of an underlying security. Derivative is a product whose value is
derived from the value of one or more basic variables, called underlying. The underlying asset
can be equity, index, foreign exchange (forex), commodity or any other asset. Derivative
products initially emerged as hedging devices against fluctuations in commodity prices and
commodity-linked derivatives remained the sole form of such products for almost three
hundred years. The financial derivatives came into spotlight in post-1970 period due to growing
instability in the financial markets. However, since their emergence, these products have
become very popular and by 1990s, they accounted for about two thirds of total transactions in
derivative products. The value of an equity derivative comes, at least in part, from the value of
the underlying security. Investors who trade in equity derivatives seek to transfer certain risks
associated with the underlying security to another party. Not surprisingly, there are many
equity derivatives traded throughout the world. Here we look at some equity derivatives:
i. Stock Options
Stock options, the most popular equity derivative, provide investors a way to hedge the risk or
speculate by taking on additional risk. Holding a stock option provides the right, but not the
obligation, to buy (call options) or sell (put options) a quantity of stock at a set price by an
expiration date. Since they are traded on exchanges and centrally cleared, stock options have
liquidity and transparency working for them, two important factors when considering equity
derivatives.

The primary factors that determine the value of an option are the time premium that decays as
the option approaches expiration, the intrinsic value that varies with the price of the underlying
stock, and the volatility of the stock. Time premium decays exponentially as the option
approaches the expiration date, eventually becoming worthless after that date. The intrinsic
value is the amount an option is in the money. When the stock price climbs, the intrinsic value
of an in-the-money call option will rise as well. Intrinsic value gives option holders added
leverage over owning the stock itself. The higher the volatility of the stock the greater the
premium an option buyer must pay to own the option. Of course, this provides the option seller
with higher income potential if they sell an option at the peak of its volatility.

ii. Single Stock Futures

A single stock future (SSF) is a contract to deliver, in most cases, 100 shares of a specified stock
on a designated date in the future. The market price of SSFs is based on the price of the
underlying stock plus the carry cost of interest minus any dividends paid over the term of the
contract. By locking the interest rate into the price of the contract, you know the carrying cost
in advance.

Trading SSFs requires a lower margin than the underlying stock as investors typically use a 20%
margin to buy them. The lower margin gives investors more leverage than they would get
trading stocks. SSFs are not subject to day trading restrictions or to the uptick rule for short
sellers.

iii. Warrants
Stock warrants are rights to buy a stock at a certain price until a predetermined date. Similar to
call options, investors can exercise stock warrants at a fixed price. When issued, the price of a
warrant is always higher than the underlying stock price. The major difference is that stock
warrants normally have a long-term time limit before they expire, such as five or even 15 years.
When an investor exercises a stock warrant, the company issues new common
shares to cover the transaction. This is different from call options, where the call writer must
provide the shares should the call option be exercised.

Function of stock exchange

The efficient functioning of a stock exchange creates a conductive climate for an active and
growing primary market for new issues. It enables entrepreneurs to raise resources for their
companies and business ventures through Public issues (IPO). An active and healthy secondary
market in existing securities leads to positive environment among investors. Some of the
important functions of stock exchange are:

i. Providing liquidity and marketability to existing securities: the

basic function of a stock exchange is the creation of a continuous market where securities are
bought and sold. It gives the investors a chance to disinvest and reinvest. This provides both
liquidity and easy marketability to already existing securities in the market.

ii. Pricing of securities: share prices on a stock exchange are determined by the
forces of demand and supply. A stock exchange is a mechanism of constant valuation through
which the prices of securities are determined. Such a valuation provides important instant
information to both buyers and sellers in the market.

iii. Safety of transaction: the membership of a stock exchange is well regulated and
its dealings are well defined according to the existing legal framework. This ensures that the
investing public gets a safe and fare deal on the market.

iv. Contributes to economic growth: A stock exchange is a market in which

existing securities are resold or traded. Through this process of disinvestment and reinvestment
savings get channelized into their most productive investment avenues. This leads to capital
formation and economic growth.
v. Spreading of equity cult: The stock exchange can play a vital role in ensuring
wider share ownership by regulating new issues, better trading practices and taking effective
steps in educating the public about the investment.

vi. Providing scope for speculation: The stock exchange provides sufficient
scope within the provisions of law for speculative activity in a restricted and controlled manner.
It is generally accepted that a certain degree of health speculation is necessary to ensure
liquidity and price continuity in the stock market.

LEGAL FRAMEWORK OF STOCK MARKETS

. Securities Contracts (regulation) Act, 1956

. securities contracts (regulation) Rules, 1957

. SEBI Act, 1992

. The Depositories Act, 1996

. Indian Contracts Act, 1872

. Indian Companies Act, 1956

 BASIC TERMS USED IN STOCK MARKET
CIRCUIT BREAKERS

Refers to any of the measures used by stock exchanges during large sell-offs to avert panic
selling. It is sometimes called as "collar”. After an index has fallen a certain percentage, the
exchange might activate trading halts or restrictions on program trading. For example, if the
Dow Jones Industrial Average falls by 10%, the NYSE might halt market trading for one hour.
There are other circuit breakers for 20% and 30% falls.

SHORT SELLING

The selling of a security that the seller does not own, or any sale that is completed by the
delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy
the stock at a lower amount than the price at which they sold short. Selling short is the
opposite of going long. That is, short sellers make money if the stock goes down in price. This is
an advanced trading strategy with many unique risks and pitfalls. Novice investors are advised
to avoid short sales. Short selling is partly banned in India.

DEMATERIALISATION

Dematerialisation in short called as ‘demat’ is the process by which an investor can get physical
certificates converted into electric form maintained in an account with the Depository
Participant. The investors can dematerialize only those share certificates that are already
registered in their name and belong to the list of securities admitted for dematerialisation at
depositories.

DEPOSITARY

Depository is a facility for holding securities, which enables securities transaction to be

processed by book entry. To achieve this depositary holds share in immobilized forms or
dematerialized form. There are two major Depositories in India – National Securities
Depositories Limited (NSDL) and Central Depository services Ltd. (CDS). Depository holds
beneficiary owner's shares in electronic form through a registered Depository participant.
Depository participant is an agent to depositary which is authorized to offer depositary services
to investors. They are the intermediaries between the depository and the investors. The
relationship between the DPs and the depository is governed by an agreement made between
the two under the Depositories Act. In a strictly legal sense, a DP is an entity who is registered
as such with SEBI under the sub section 1A of Section 12 of the SEBI Act. As per
the provisions of this Act, a DP can offer depository-related services only after obtaining a
certificate of registration from SEBI.

Benefits of depository :

> Bad delivery eliminated

> Immediate transfer of shares

> No stamp duty on such transfers

> Elimination of risks that are normally associated in dealing with Physical certificates - loss /
theft / mutilation due to careless handling / forgery / etc.

>Reduced transaction cost

> transparency

MARGIN MONEY
Margin is a line of credit issued to an investor typically from a brokerage firm using other
investments held in the account as collateral. Margin money is a minimum amount in your
account with bank/brokers for trading stocks. It is fixed by brokers. If your account balance is
not sufficient for trading, the brokers sell your holding and maintain the amount. Before selling
the security the broker makes a call and that is called margin call.

SETTLEMENT CYCLE
The period of time between the settlement date and the transaction date that is allotted to the
parties of a transaction to satisfy the transaction's obligations. The buyer must make payment
within the settlement period, while the seller must deliver the purchased security within this
period. Depending on the type of security traded, the exact length of the settlement period will
differ. The settlement period is often quoted as T+1, T+2 or T+3; which means the transaction
date plus one, two or three days. For stocks, the settlement period is three days (T+3) after the
transaction. This means that the buyer must transfer cash to the seller, and the seller must
transfer ownership of the stock to the buyer within three days after the trade was made. For
certificates of deposit and commercial paper, the transaction must be settled on the same day.

Bull Market
A financial market of a group of securities in which prices are rising or are expected to rise. Bull
markets are characterized by optimism, investor confidence and expectations that strong
results will continue. It's difficult to predict consistently when the trends in the market will
change.

The use of "bull" to describe markets comes from the way the bull attack their opponents. A
bull thrusts its horns up into the air. These actions are metaphors for the movement of a
market. If the trend is up, it's a bull market.

Bear Market
A market condition in which the prices of securities are falling, and widespread pessimism
causes the negative sentiment to be self-sustaining. As investors anticipate losses in a bear
market and selling continues, pessimism only grows. Although figures can vary, for many, a
downturn of 20\% or more in multiple broad market indexes, such as the Dow Jones Industrial
Average (DJIA) or Standard & Poor's 500 Index (S&P 500), over at least a two- month period, is
considered an entry into a bear market.

The use of "bear" to describe markets comes from the way the animals attack their opponents.
A bear swipes its paws down. These actions are metaphors for the movement of a market. If
the trend is down, it's a bear market.

LISTED SECURITIES
The securities of the companies which have signed listing agreement with a stock exchange are
called listed securities.

PERMITED SECURITIES
To facilitate the market participants to trade in securities of such companies which are active
on other stock exchanges but are not listed on that particular stock exchange, trading in such
securities is facilitated as “ permitted securities “ as per relevant norms of the stock exchange.

Free-float
Shareholding of investors that would not, in the normal course come into the open market for
trading are treated as 'Controlling/ Strategic Holdings' and hence not included in free- float.
Specifically, the following categories of holding are generally excluded from the definition of
Free-float:

. Shares held by founders/directors/ acquirers which has control element

. Shares held by persons/ bodies with "Controlling Interest"

. Shares held by Government as promoter/acquire

. Holdings through the FDI Route

. Strategic stakes by private corporate bodies/ individuals

. Equity held by associate/group companies (cross-holdings)

. Equity held by Employee Welfare Trusts

. Locked-in shares and shares which would not be sold in the open market in normal course.

The remaining shareholders fall under the Free-float category.

Blue chip
Blue chip stock is qualified as a high-quality and usually high-priced stock. It has high price
because of public confidence in company's long record of steady earnings. The name "blue
chip" came about because in the game of poker the blue chips have the highest value

Blue Chip Company is very strong financially, with a solid track record of producing earnings and
only a moderate amount of debt. It also has a strong name in its industry with dominant
products or services. Typically, these companies are large (international) corporations that have
been in business for many years and are considered to be very stable. There is no formal
requirement for being a blue chip.
Blue chip index is indicator used to measure and report value changes in representative stock
groupings. It is often price-weighted; it means that stocks with the highest prices will have the
most influence and those with the lowest, the least influence. Example: BSE’s SENSEX is a blue
chip index.

Index
An Index shows how a specified portfolio of share prices is moving in order to give an indication
of market trends. It is a basket of securities and the average price movement of the basket of
securities indicates the index movement, whether upwards or downwards. Example: SENSEX,
NIFTY

PARTICIPANTS OF STOCK MARKET

1. Issuer of securities
2. Investors 3.
3. Intermediaries like Merchant Banker, Broker, etc.
 National Stock Exchange
The National Stock Exchange (NSE) is a stock exchange located at Mumbai, Maharashtra, India.
It is the 16th largest stock exchange in the world by market capitalization and 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. Though a
number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most
significant stock exchanges in India, and between them are responsible for the vast majority of
share transactions. The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National
Stock Exchange Fifty), an index of fifty major stocks weighted by market capitalisation.

NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies

and other financial intermediaries in India but its ownership and management operate as
separate entities. There are at least 2 foreign investors NYSE Euronext and Goldman Sachs who
have taken a stake in the NSE. NSE is the third largest Stock Exchange in the world in terms of
the number of trades in equities. It is the second fastest growing stock exchange in the world
with a recorded growth of 16.6%.

Origin
The National Stock Exchange of India was promoted by leading financial institutions at the
behest of the Government of India, and was incorporated in November 1992 as a tax-paying
company. In April 1993, it was recognized as a stock exchange under the Securities Contracts
(Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital market (Equities) segment of the NSE commenced
operations in November 1994, while operations in the Derivatives segment commenced in June
2000
Innovations by NSE
NSE pioneering efforts include:

1. Being the first national, anonymous, electronic limit order book (LOB) exchange to trade
securities in India. Since the success of the NSE, existent market and new market
structures have followed the "NSE" model.
2. NSE is also the first exchange to propose an investor grievance cell and an investor
protection fund
3. Setting up the first clearing corporation "National Securities Clearing Corporation Ltd."
in India. NSCCL was a landmark in providing innovation on all spot equity market (and
later, derivatives market) trades in India.
4. Co-promoting and setting up of National Securities Depository Limited, first depository
in India.
5. Setting up of S&P CNX Nifty.
6. NSE pioneered commencement of Internet Trading in February 2000, which led to the
wide popularization of the NSE in the broker community.
7. Being the first exchange that, in 1996, proposed exchange traded derivatives,
particularly on an equity index, in India. After four years of policy and regulatory debate
and formulation, the NSE was permitted to start trading equity derivatives
8. Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in
India.
9. NSE has also launched the NSE-CNBC-TV18 media centre in association with CNBC-

Exchange of India. A Vertical Specialist Enterprise, NSE.IT offers end-to-end Information

Technology (IT) products, solutions and services.
10. NSE (National Stock Exchange) was the first exchange in the world to use satellite
communication technology for trading, using a client server based system called
National Exchange for Automated Trading (NEAT). For all trades entered into NEAT
system, there is uniform response time of less than one second.

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

1. Equity

2. Futures and options

3. Retail debt market

4. Wholesale debt market

5. Currency futures

6. Mutual fund

7. Stocks lending and borrowing

In August 2008 currency derivatives were introduced in India with the launch of Currency
Futures in USD INR by NSE. Currently it has also launched currency futures in euros, pounds and
yen. Interest Rate Futures were introduced for the first time in India by NSE on 31 August 2009,
exactly one year after the launch of Currency Futures.

NSE became the first stock exchange to get approval for interest rate futures, As recommended
by SEBI-RBI committee, on 31 August 2009, a futures contract based on 7% 10 Year
Government of India (Notional) was launched with quarterly maturities.

Working Hours
NSE's normal trading sessions are conducted from 9:15 am India Time to 3:30 pm India Time on
all days of the week except Saturdays, Sundays and Official Holidays declared by the Exchange
(or by the Government of India) in advance. This timing is not valid for currency segment of
National Stock Exchange. The exchange, in association with BSE (Bombay Stock Exchange Ltd.),
is thinking of revising its timings from 9.00 am India Time to 5.00 pm India Time.

There were System Testing going on and opinions, suggestions or feedback on the New
Proposed Timings are being invited from the brokers across India. And finally on 18 November
2009 regulator decided to drop their ambitious goal of longest Asia Trading Hours due to strong
opposition from its members.

On 16 December 2009, NSE announced that it would advance the market opening to 9:00 am
from 18 December 2009. So NSE trading hours will be from 9.00 am till 3:30 pm India Time.

However, on 17 December 2009, after strong protests from brokers, the Exchange decided to
postpone the change in trading hours till 4 Jan 2010.

NSE new market timing from 4 Jan 2010 is 9:00 am till 3:30 pm India Time
 NSE Milestones

 NSE launches new brand identity for NIFTY Indices

 Proposed NSE IFSC-SGX Connect receives regulatory dispensations
 NSE EMERGE achieves 200th SME listing milestone
 NSE Commodities Segment gets recognition from CBDT
2019 - 2020  NSE opens Centre for Behavioral Science at IIMA
 Launch of Interest Rate Options on Government of India bonds
 NSE Indices launches Nifty BHARAT Bond Index Series
 NSE declared world’s largest derivatives exchange 2019 by WFE
 NSE launches Request for Quote (RFQ) Platform in Debt Securities

 Launched Commodity Derivatives segment, goBidMobile app for governmentsecurities and Tri-PartyRepo of Corporat
 Weekly option on NIFTY 50 was launched
 E-voting for corporates
2018 - 2019
 NSE derivatives access was extended to US clients
 Signs Post-Trade Technology and StrategicPartnership Agreement withNasdaq
 MoU with London Stock Exchange Group

 Launched currency derivatives on Non-FCYINR pairs

2017 - 2018  Launched NIFTY SME EMERGE Index and 72 fixed income and three hybrid indices
 Entered into a MOU with The Colombo Stock Exchange (CSE)

2016 - 2017  Promoted NSE IFSC, the International Stock Exchange in India’s first IFSC SEZ at GIFT City Gandhinagar

 Launched NIFTY 50 index futures trading onTAIFEX

2015 - 2016  Launched platform for sovereign gold bondissuance
 Launched an electronic book-building platform forthe private placement ofdebt securities

 Entered into a memorandum of understanding to enhance co-operation with the London Stock Exchange Group
2014 - 2015
 Renamed CNX NIFTY to NIFTY 50

 Launched NMF-II platform for mutual funds

 Launched NBF II segment for interest rate futures
2013 - 2014
 Launched trading on India VIX index futures
 Commenced trading onNIFTY 50 (then known asCNX NIFTY) on the OsakaExchange

2012 - 2013  Launched the New Debt Segment (NDS)

  Commenced trading in index futures and options contracts on the FTSE 100 index
2011 - 2012
 Launched SME-specific EMERGE platform for the listing and trading of securities of SMEs

2010 - 2011  Commenced trading in index futures and options on global indices, namely the S&P 500 and Dow Jones Industrial Ave

Indices
NSE has also set up as index services firm known as India Index Services & Products Limited
(IISL) and has launched several stock indices, including:

1. S&P CNX Nifty (Standard & Poor's CRISIL NSE Index)

2. CNX Nifty Junior
3. CNX 100 ( S&P CNX Nifty + CNX Nifty Junior)
4. S&P CNX 500 ( CNX 100 + 400 major players across 72 industries)
5. CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)
 Exchange Trade Funds On NSE

NSE has a number of exchange traded funds. These are typically index funds and
GOLD ETFs. Some of the popular ETF's (Equity ETFs on NSE) available for trading
on NSE are:

1. Nifty – Benchmark ETF (NIFTYBEES) 2.

2. Junior Nifty – Benchmark ETF (JUNIORBEES) 3.
3. Bank – Benchmark ETF (BANKBEES) 4.
4. PSU Bank – Benchmark ETF (PSUBNKBEES) 5.
5. Shariah – Benchmark ETF (SHARIABEES) 6.
6. S&P CNX Nifty UTI Notional Depository Receipts Scheme (UTISUNDER) 7.
7. KOTAK PSU Bank ETF (KOTAKPSUBK) 8.
8. Reliance Banking ETF (RELBANK) 9.
9. Quantum Index ETF (QNIFTY) 10.
10. KOTAK NIFTY (KOTAK NIFTY) 11.
11. Most Shares M50 ETF (M50) 12.
12. Infrastructure – Benchmark ETF (INFRABEES) 13.
13. Most Shares M100 ETF (M100)

Certifications

NSE also conducts online examination and awards certification, under its
programmes of NSE's Certification in Financial Markets (NCFM). Currently,
certifications are available in 19 modules, covering different sectors of financial
and capital markets. Branches of the NSE are located throughout India. NSE, in
collaboration with reputed colleges and institutes in India, has been offering a
short-term course called NSE Certified Capital Market Professional (NCCMP)
since August 2009, in the campuses of the respective colleges/ institutes.
 BOMBAY STOCK EXCHANGE (BSE)
The Bombay Stock Exchange (BSE) (formerly, The Stock Exchange, Bombay) is a
stock exchange located on Dalal Street, Mumbai and is the oldest stock exchange
in Asia. The equity market capitalization of the companies listed on the BSE was
US$1 trillion as of December 2011, making it the 6th largest stock exchange in
Asia and the 14th largest in the world. The BSE has the largest number of listed
companies in the world.

As of December 2011, there are over 5,112 listed Indian companies and over
8,196 scrips on the stock exchange, the Bombay Stock Exchange has a significant
trading volume. The BSE SENSEX, also called "BSE 30", is a widely used market
index in India and Asia. Though many other exchanges exist, BSE and the
National Stock Exchange of India account for the majority of the equity trading in
India. While both have similar total market capitalization (about USD 1.6 trillion),
share volume in NSE is typically two times that of BSE.

Hours of Operation

Session Timing

Beginning of the day Session 8:30 – 9:00

Pre-open trading session 9:00 – 9:15

Trading Session 9:15 – 15:30

Position Transfer session 15: 30 15:50

Closing Session 15:50 – 16:05

BSE's normal trading sessions are on all days of the week except Saturday,
Sundays and holidays declared by the Exchange in advance
 HISTORY
The Bombay Stock Exchange is the oldest exchange in Asia. It traces its history to
the 1850s, when four Gujarati and one Parsi stockbroker would gather under
banyan trees in front of Mumbai's Town Hall. The location of these meetings
changed many times, as the number of brokers constantly increased. The group
eventually moved to Dalal Street in 1874 and in 1875 became an official
organization known as 'The Native Share & Stock Brokers Association'. In 1956,
the BSE became the first stock exchange to be recognized by the Indian
Government under the Securities Contracts Regulation Act. The Bombay Stock
Exchange developed the BSE SENSEX in 1986, giving the BSE a means to measure
overall performance of the exchange. In 2000 the BSE used this index to open its
derivatives market, trading SENSEX futures contracts. The development of
SENSEX options along with equity derivatives followed in 2001 and 2002,
expanding the BSE's trading platform. Historically an open outcry floor trading
exchange, the Bombay Stock Exchange switched to an electronic trading system
in 1995. It took the exchange only fifty days to make this transition. This
automated, screen-based trading platform called BSE On-line trading (BOLT)
currently has a capacity of 8 million orders per day. The BSE has also introduced
the world's first centralized exchange-based internet trading system,
BSEWEBx.co.in to enable investors anywhere in the world to trade on the BSE
platform. The BSE is currently housed in Phiroze Jeejeebhoy Towers at Dalal
Street, Fort area.

TIMELINE
2021

Date BSE Milestones

January 29, 2021 SEBI and BSE launch Innovation Sandbox web portal

June 07, 2021 BSE touches record milestone of over 7 crore registered users
BSE sets up an agency (BSE Administration and Supervision Limited - BSAL) to administer and
June 11, 2021
supervise activities of SEBI Registered Investment Advisors
2020

Date BSE Milestones

February 03, 2020 BSE’s RFQ platform for debt securities goes live
BSE becomes India's First Exchange to Introduce and adopt India Good Delivery Standards for GOLD
June 11, 2020
and SILVER: BIS IS 17278 :2019
July 03, 2020 BSE partners with LIC Mutual Fund for BSE eKYC services
 BSE gets exemptive relief under CFTC Regulation 30.10; enables members to accept futures and options
November 05, 2020
orders from customers located in the US
November 14, 2020 BSE StAR MF Launches Corp Direct – A Direct Investment Portal for Corporates

2019

Date BSE Milestones

BSE announces launch of a mobile app for retail investors to gain direct access in auction of G-sec and T-
January 31, 2019
bills from February 1st, 2019
March 22, 2019 Indian Clearing Corporation Limited recognized by Bank of England

March 27, 2019 BSE gets approval from SEBI and RBI to launch Futures on Overnight Call Rate MIBOR
BSE becomes India’s first ever stock exchange to get certified with International Standard for Business
May 13, 2019
Continuity Management System (ISO22301:2012) BCMS
May 15, 2019 BSE launches BSE StAR MF app to provide comfort of doing business anytime, anywhere!

May 28, 2019 Interoperability of Clearing Corporation

August 26, 2019 BSE launches India’s first exchange traded interest rate options

October 29, 2019 BSE - Ebix Receives In-principle Approval from IRDAI to Start Insurance Distribution

December 20, 2019 BSE signs pact with Si Consult to strengthen cyber security practices and solutions

2018

Date BSE Milestones

December 22, 2018 BSE launches ‘BSE Startups’, a new platform for entrepreneurs to list their startups

1st October 2018 BSE launches its commodity derivatives segment making it India's 1st Universal Exchange

01st August 2018 BSE Investments Limited acquires 24% stake in CDSL Commodity Repository Limited (CCRL)

01st August 2018 BSE launches ‘chatbot’, “Ask Motabhai”, for faster, more convenient access to stock market information

17th July 2018 BSE building received trademark

30th June 2018 BSE signs MoU with Bombay Metal Exchange

27th June 2018 BSE StAR MF crossed 10000 Mutual Funds Distributors registrations

24th May 2018 BSE signs Memorandum of Understanding with Brink's India Pvt Ltd

BSE becomes India’s first exchange to be recognized as a Designated Offshore Securities Market by the
16th May 2018
US SEC
21st February 2018 BSE signs an MOU with Soybean Processors Association of India (SOPA)

21st February 2018 BSE to launch cross currency derivatives and cross INR options with effect from 27th February 2018

19th January 2018 BSE StAR Mutual Fund introduce e-mandate facility

2017

Date BSE Milestones

India's Premier Stock Exchange BSE and World's largest Insurance Exchange Ebix, Inc. Sign MOU to
26th October 2017
Launch Joint Venture Company, for Setting up Pioneering Insurance Distribution Network in India
22nd August 2017 Asia Index Private Limited launches the S&P BSE Bharat 22 Index
BSE receives SEBI "No Objection" to act as a "Facilitator" in non-competitive bidding in the auction of
1st August 2017
Government Securities and T-Bills
21st July 2017 BSE wins Business World Digital Leadership and CIO Award

23rd March 2017 BSE crosses another milestone of raising Rs.200,111 Crore via the Debt online platforms

16th March 2017 BSE partners with Sentifi for analyzing and reporting social media updates

06th March 2017 Asia Index Private Limited launches S&P BSE SENSEX Next 50 Index

3rd February 2017 BSE becomes India's 1st listed Stock Exchange
Hon’ble Prime Minister of India, Shri Narendra Modi inaugurated India International Exchange (IFSC)
9th January 2017
Ltd, India’s 1st International Exchange
2015 To 2016

Date BSE Milestones

Shri Arun Jaitley, Hon'ble Minister of Finance Unveiled the Commemorative Postage Stamp Celebrating
9th July, 2016
140 glorious years of BSE
BSE gets SEBI approval to launch “BSE–BOND”- Electronic Book Mechanism for issuance of debt
21st Jun, 2016
securities on private placement
9th Jun, 2016 BSE announces commencement of trading of Sovereign Gold Bonds

2nd May, 2016 BSE Migrates Algorithm Trading Test Environment to Cloud Infrastructure
BSE signs Memorandum of Understanding with Korea Exchange (KRX) to launch S&P BSE Sensex
28th Apr 2016
based derivatives contracts at KRX
05th Apr 2016 BSE & CMIE launch world’s first high-frequency data on unemployment and consumer sentiments

28th Mar 2016 BSE StAR Mutual Fund Processes 81,000 orders worth Rs. 270 crore - Record Order in single day
BSE partners with CII (Confederation of Indian Industry) and IICA (Indian Institute of Corporate Affairs)
09th Dec 2015
to launch a one of its kind CSR platform 'Sammaan – The CSR Exchange
13th Oct 2015 BSE becomes the fastest exchange in the world with a median response speed of 6 microseconds

16th July 2015 BSE SME platform successfully completes listing of 100 SMEs under its SME umbrella

09th July 2015 BSE celebrated its 140th Foundation Day

28th May 2015 BSE exceeds 1 billion derivatives contracts on its new Deutsche Börse T7 powered trading platform

18th May 2015 BSE introduces overnight investment product

16th Apr 2015 Asia Index Private Limited launches S&P BSE AllCap, S&P BSE SENSEX Leverage and Inverse Indices

08th Jan 2015 BSE commenced live trading from its Disaster Recovery site in Hyderabad

2011 To 2014
SENSEX EPS
We know that EPS is calculated for all the companies to show how much a
company generates the net profit for every outstanding share. Likewise EPS is
calculated for SENSEX as well so that we can have a better understanding about
the market.

For its calculation we need all the 30 SENSEX scrips (discussed in next part) along
with their free float adjustment factor.

Example: take HDFC bank for example, present EPS for HDFC bank is ₹44 and
free float adjustment factor is 0.85.

Multiply the EPS with adjustment factor which is 44 * 0.85 = 37.4. This 37.4 is the
contribution of the HDFC bank towards SENSEX EPS. Likewise we need to
calculate it for all 30 stocks and add it together to get the final value of Sensex
EPS which would be around ₹ 900 these days.

SENSEX PE

PE Ratio is calculated for companies which show what the investors are ready to
pay for every rupee of earnings. If we calculate the same thing by taking into
account all the 30 Sensex stocks, then we will end up with Sensex PE.
How to calculate?
Consider the HDFC Bank. Multiply the market price of HDFC Bank with the
number of shares outstanding which should be equal to Market Capitalisation.

Market Capitalisation = share price * total shares

Then calculate the net profit by multiplying the EPS with total shares.

Do this for 30 Sensex stocks.

SENSEX PE = sum of market capitalization of 30 SENSEX stock
Sum of net profit of all the 30 SENSEX stock

At present Sensex PE is around 16.41 (30/12/2011) and it provides useful

information about Sensex. Analyst predict the level of Sensex using this number
 only .suppose Sensex PE is 12 and Sensex EPS is 900, then the index should be =
10800. For example if we believe the earnings of the companies would grow at
10 % this year, and then apply the same growth rate to both Sensex PE and EPS
to predict the Sensex next year.

This calculation is only an estimate about the Sensex. The calculation may not be
accurate calculation of Sensex it is just because Sensex is dependent on various
factors that keep on changing with time.

SENSEX AND ITS CALCUTATION

The performance of stock market is quantified by calculating an index using
benchmark scrips. SENSEX is calculated since 1986 and initially it was calculated
based on the total market capitalisation methodology and this methodology was
changed in 2003 to free float market capitalisation. Hence, these days, the
Sensex is based on free float market cap of 30 SENSEX stocks traded on BSE
relative to the base value which is 100 (1978-79) and it is calculated every 15
seconds.
Free Float Market Capitalisation is defined as the value of all the shares available
for public trading excluding the promoter equity, holdings through FDI Route,
Holdings by private corporate and holdings by employee welfare fund.

Why free flow market cap?

1. It depicts market more rationally. 2.

2. It removes under influence of government or promoter shareholding, thereby
giving the equal opportunity for companies to be in the Sensex.
3. Almost all the indices in the world are calculated by this methodology. 4.
4. It gives fund managers more authentic information for benchmark comparisons.

SENSEX - Scrip Selection Criteria

1. Equities of companies listed on Bombay Stock Exchange Ltd. (excluding

companies classified in Z group, listed mutual funds, scrips suspended on the last
day of the month prior to review date, scrips objected by the Surveillance
department of the Exchange and those that are traded under permitted
category) shall be considered eligible
 2. Listing History: The scrip should have a listing history of at least three
months at BSE. An exception may be granted to one month, if the average free-
float market capitalization of a newly listed company ranks in the top 10 of all
companies listed at BSE. In the event
that a company is listed on account of a merger / demerger / amalgamation, a
minimum listing history is not required.

3. The scrip should have been traded on each and every trading day in the last
three months at BSE. Exceptions can be made for extreme reasons like scrip
suspension etc.

4. Companies that have reported revenue in the latest four quarters from its core
activity are considered eligible.

5. From the list of constituents selected through Steps 1-4, the top 75 companies
based on free-float market capitalisation (avg. 3 months) are selected as well as
any additional companies that are in the top 75 based on full market
capitalization (avg. 3 months).

6. The filtered list of constituents selected through Step 5 (which can be greater
than 75 companies) is then ranked on absolute turnover (avg. 3 months).

7. Any company in the filtered, sorted list created in Step 6 that has Cumulative
Turnover of >98%, are excluded, so long as the remaining list has more than 30
scrips.

8. The filtered list calculated in Step 7 is then sorted by free float market
capitalization. Any company having a weight within this filtered constituent list
of <0.50% shall be excluded

9. All remaining companies will be sorted on sector and sub-sorted in the

descending order of rank on free-float market capitalization.
 10. Industry/Sector Representation: Scrip selection will generally attempt to
maintain index sectoral weights that are broadly in-line with the overall market.

11. Track Record: In the opinion of the BSE Index Committee, all companies included
within the SENSEX should have an acceptable track record.

BSE Rating
Investment
Scrip Company Full Name Company ISIN Industry (SAMCO
Grade
Code Research)
IT Consulting & Above
500209 INFOSYS LTD. INE009A01021 4.5
Software Average
TATA CONSULTANCY IT Consulting & Above
532540 INE467B01029 5
SERVICES LTD. Software Average
RELIANCE INDUSTRIES Integrated Oil &
500325 INE002A01018 3 Average
LTD. Gas
Above
532174 ICICI BANK LTD. INE090A01021 Banks 4
Average
Above
500180 HDFC BANK LTD. INE040A01034 Banks 4.5
Average
HCL TECHNOLOGIES IT Consulting & Above
532281 INE860A01027 5
LTD. Software Average
Below
532454 BHARTI AIRTEL LTD. INE397D01024 Telecom Services 0.5
Average
Above
532187 INDUSIND BANK LTD. INE095A01012 Banks 4
Average
Below
500112 STATE BANK OF INDIA INE062A01020 Banks 1
Average
Construction & Below
500510 LARSEN & TOUBRO LTD. INE018A01030 0.5
Engineering Average
532755 TECH MAHINDRA LTD. INE669C01036 IT Consulting & 4.5 Above
 Software Average
Above
532215 AXIS BANK LTD. INE238A01034 Banks 4
Average
Cigarettes - Above
500875 ITC LTD. INE154A01025 5
Tobacco Products Average
Above
532977 BAJAJ AUTO LTD. INE917I01010 2/3 Wheelers 4.5
Average
OIL AND NATURAL GAS Exploration & Above
500312 INE213A01029 4
CORPORATION LTD. Production Average
Iron &
Below
500470 TATA STEEL LTD. INE081A01012 Steel/Interm. 0.5
Average
Products
Below
532555 NTPC LTD. INE733E01010 Electric Utilities 0.5
Average
MAHINDRA & MAHINDRA Cars & Utility Below
500520 INE101A01026 0.5
LTD. Vehicles Average
Furniture- Above
500820 ASIAN PAINTS LTD. INE021A01026 4.5
Furnishing-Paints Average
POWER GRID
Below
532898 CORPORATION OF INDIA INE752E01010 Electric Utilities 0.5
Average
LTD.
Above
532978 BAJAJ FINSERV LTD. INE918I01018 Holding Companies 5
Average
Other Apparels & Below
500114 TITAN COMPANY LTD. INE280A01028 1
Accessories Average
Above
500790 NESTLE INDIA LTD. INE239A01016 Packaged Foods 5
Average
ULTRATECH CEMENT Cement & Cement Below
532538 INE481G01011 1
LTD. Products Average
SUN PHARMACEUTICAL Below
524715 INE044A01036 Pharmaceuticals 1
INDUSTRIES LTD. Average
Finance (including Above
500034 BAJAJ FINANCE LTD. INE296A01024 5
NBFCs) Average
MARUTI SUZUKI INDIA Cars & Utility
532500 INE585B01010 3 Average
LTD. Vehicles
500010 HOUSING DEVELOPMENT INE001A01036 Housing Finance 5 Above
 FINANCE CORP. LTD. Average
HINDUSTAN UNILEVER Above
500696 INE030A01027 Personal Products 5
LTD. Average
KOTAK MAHINDRA BANK Above
500247 INE237A01028 Banks 4
LTD. Average

Sensex (also known as the S&P BSE SENSEX) is the index which broadly
represents BSE and the market sentiment. The base year is 1978-1979 with a
base value of 100. There have been many modification to sensex index since
inception. Find below the latest list of companies used to calculate sensex or
sensex 30 or BSE 30 or simply the SENSEX along with information like
Industry of the company, Company’s rating and Investment Grade.

As of April 2021, SENSEX constitutes 30 companies.

HOW the SENSEX is calculated

The formula for Calculation the SENSEX :

SENSEX = (SUM OF FREE FLOW MARKET CAP OF 30 BENCHMARK STOCKS) * INDEX FACTOR

INDEX FACTOR = 100

MARKET CAP VALUE IN 1978-79

The market cap is not a static value but keeps changing because they need to account for
special events like rights issue, bonus issues, change of companies in the index so that these
special events don’t affect the continuity of the index.
Example:

Assume SENSEX has only 2 stocks namely SBI and RELIANCE. Total shares in SBI are 500 out of
which 200 are held by government and only 300 are available for pubic trading. RELIANCE has
1000 shares out of which 500 are held by promoters and 500 are available for trading. Assume
price of SBI stock is ₹ 100 and reliance is ₹ 200. Then free float market cap of these 2 companies
= (300 * 100) + (500* 200) = ₹ 1, 30,000.

Assume market cap during the year 1978- 79 was ₹25000

Then SENSEX = (130000* 100) / 25000 = 520

The methodology in the example is exactly followed to calculate the SENSEX, only difference
being the inclusion of 30 stocks.

Like any other index – it tells you how the stock market is performing at any given time – a
higher Sensex means share prices are higher and a lower Sensex means share prices are lower
and that share price movement is captured in the form of free float market capital in the
Sensex.

Sensex and economic growth

Often, Sensex is seen, though wrongly, as a leading indicator of India’s economic strength.
There are many investors who believe that the rise or fall of Sensex on the BSE is directly
related to the strength or weakness of India’s economy. Stock markets, by nature, go up and
down in unpredictable ways. Likewise, Sensex also moves in different directions – depending on
factors, like, corporate performance, availability of money at cheaper rates, sentiments of the
investors’ community, the growth of India’s national income and several other factors –
including global factors. The movement of Sensex usually reflects the investors’ perception of
the company’s future profits. So, it is not necessary that the rise in Sensex is directly related to
the growth of India’s economy. On the other hand, it is not necessary that the fall of Sensex is
due to the weakness in the Indian economy. It is not necessary that Sensex is a barometer of
India’s economy.

Sensex is expressed in number of points indicating the relative price movements of India’s 30
topmost companies as compared to previous day, year, decade or even a minute. The Sensex
changes its value every nano second, in a constant manner, during the market trading hours.
Sensex is the most popular index in Indian Stock Market. It is followed by millions of
stakeholders and general public all over the world. It is synonymous with the strength of
financial markets. Its movement is widely tracked because it is easily understandable by all
people as it is just a number and investors find it extremely simple to follow. It has attained
iconic status in India in the last three decades. It has achieved massive brand value not only in
India but all over the globe. As Such, this is just a start-up or a springboard for several investors
who are testing the stock markets for the first time in India. It is no wonder it has become an
integral part of India’s economy and has become leading economic indicator in India. However,
it is not necessary that it is a barometer of India’s growing economy.

SEBI
The Securities and Exchange Board of India (frequently abbreviated SEBI) is the regulator for
the securities market in India.

It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by
the Indian Parliament. SEBI is headquartered in the business district of Bandra-Kurla complex in
Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi,
Kolkata, Chennai and Ahmedabad.

Controller of Capital Issues was the regulatory authority before SEBI came into existence; it
derived authority from the Capital Issues (Control) Act, 1947.

Initially SEBI was a non-statutory body without any statutory power. However in 1995, the SEBI
was given additional statutory power by the Government of India through an amendment to
the securities and Exchange Board of India Act 1992. In April, 1998 the SEBI was constituted as
the regulator of capital market in India under a resolution of the Government of India. Ajay
Tyagi was appointed chairman of SEBI.

Functions and responsibilities

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

1. The issuers of securities

2. The investors

3. 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 and
enforcement action in its executive function and it passes rulings and orders in its judicial
capacity. 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 and is
presently headed by a former Chief Justice of a High court - Mr Justice NK Sodhi. A second
appeal lies directly to the Supreme Court.

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

SEBI has also been instrumental in taking quick and effective steps in light of the global
meltdown and the Satyam fiasco. It had increased the extent and quantity of disclosures to be
made by Indian corporate promoters. More recently, in light of the global meltdown, it
liberalised the takeover code to facilitate investments by removing regulatory structures. In one
such move, SEBI has increased the application limit for retail investors to ₹ 2 lakh at present.

POWERS
For the discharge of its functions efficiently, SEBI has been invested with the necessary powers
which are:

1. To approve by−laws of stock exchanges. 2.

2. To require the stock exchange to amend their by−laws.
3. Inspect the books of accounts and call for periodical returns from recognised
stock exchanges.
4. Inspect the books of accounts of financial intermediaries.
5. Compel certain companies to list their shares in one or more stock exchanges.
6. Levy fees and other charges on the intermediaries for performing its functions.
7. Grant licence to any person for the purpose of dealing in certain areas.
8. . Delegate powers exercisable by it.
9. Prosecute and judge directly the violation of certain provisions of the companies
Act.
SEBI Committees
1. Technical Advisory Committee
2. Committee for review of structure of market infrastructure institutions
3. Members of the Advisory Committee for the SEBI Investor Protection and
Education Fund
4. Takeover Regulations Advisory Committee
5. Primary Market Advisory Committee (PMAC)
6. Secondary Market Advisory Committee (SMAC)
7. Mutual Fund Advisory Committee
8. Corporate Bonds & Securitization Advisory Committee
9. Takeover Panel
10. SEBI Committee on Disclosures and Accounting Standards (SCODA)
11. High Powered Advisory Committee on consent orders and compounding of
offences
12. Derivatives Market Review Committee
13. Committee on Infrastructure