It is the oldest exchange and most of the index heavy weight stocks are traded in this exchange. The BSE 30 includes the top 30 stocks by market capitalization and this represents the Indian Sensex.

1. Presented By :
Dhanashri Academy

2. INDEX
Definition of Stock and Stock market
Types Of Stock Exchange
Stock exchange in World and India
Trading In Stock Market
Demat Account
Importance Of Stock Market in stock trading
Investment in various types of trading
Stock Market Conditions
Calculations Of Indices
Benefits of Investing in shares
Causes Of Price Fluctuation

3. STOCK MARKET OR SHARE
MARKET
 Stocks are issued by companies in order to
raise capitals and are bought by investors in
order to acquire a portion of the company.
 A Stock market is the place where buying and
selling of stocks takes place. Nowadays due to
internet and advanced technology buying and
selling of stocks takes place anywhere in India
and also from foreign country, there is no
need to be physical present in exchanges like
NSE and BSE. Stock markets are perfect
competitive market.

4. Types of Market
1. Normal Market :
Order Traded in regular lot Size
For demat shares, lot size is 1 share
2. Odd Lot Market :
Used for limited physical Market
Order not traded in regular lot Size but both price
& quantity should tally with each other.

5. 3. Spot Market :
Different settlement periods depends
on normal orders
Sell & Purchases takes place on
same date.
4. Auction Market :
Initiated by exchange on behalf of
members
for settlement related reasons
Reasons are shortage and bad
deliveries
Loss is recovered from members

6. Big Stock Markets
NYSE ( New York Stock Exchange)
NASDAQ-America
Dow Jones
S&P‘ 500
Tokyo Stock Exchange
London Stock Exchange
Bombay Stock Exchange, India
National Stock Exchange, India

7. Stock Exchanges in India
There are 22 stock exchanges in India. But,
two of them are biggest.
NSE (National stock exchange) - is the 9th
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.
BSE (Bombay stock exchange) - is the
oldest stock exchange in Asia with a rich
heritage of over 137 years of existence.

9. Bombay Stock Exchange
 Location: Mumbai
 Index: Sensex (SENSitve indEX)
 Consist of group of 30 Stock
 Members: 852
 Date of Launch: 03 January 1986
 Base period:1978-79
 Base Index Value:100
 Sectoral indices
 Timing: 09.30 AM – 03.30 PM
 Listed Co. : over 6000

10. National Stock
Exchange
 Location: Mumbai
 Index: Nifty (National Stock Exchange Fifty)
 Consist of group of 50 Stocks
 Date of Launch: April 1994
 Base period: 1993-94
 Base index value: 1000
 Members 726

11. Stock Broker
 A stockbroker is person who is licensed to
trade in shares.
 Brokers also have direct access to the share
market and can act as your agent in share
transactions.
 For this service they charge a fee i.e.
brokerage.
 They can also offer additional services like
advice on shares, debentures, government
bonds and listed property trusts and non-
listed investment options (cash management
trusts, property and equity trusts.

12. TRADING IN STOCK MARKET
 The market regulator, the Securities and Exchange
Board of India (SEBI), has made it compulsory to
open the demat account if you want to buy and
sell stocks.
 A person want to buy/sell stocks in the stock
market has to first place his/her order with a
broker or can do themselves using online trading
systems.
 The stocks purchased will be sent to the your
demat account. This process is called Rolling
Settlement Cycle.

13. What is Demat account?
DEMAT stands for DEMATerialization. It is
process in which physical paper shares are
converted into paperless (computerized) form.
In India there are two Depository organizations
called NSDL (National Securities Depository
Ltd.) &CDSL (Central Depository Services India
Ltd.)
Brokers and most of Banks provides facility to
open demat account.

14. Important terms in stock market
and in stock trading
Open- The stock price in beginning of Day(i.e. in
morning).
High - The stock price reached at the highest level in
a day.
Low - The stock price reached the lowest level in a
day.

15. Important terms in stock market and
in stock trading
Close - The stock price at which it remains after the end
of market timings or the final price of the stock when
the market closes for a day.
Volume - Volume is nothing but quantity.
Bid - The Buying price is called as Bid price.
Offer - The selling price is called offer price.

16. Investment in Short term, Mid
term and Long term trading
Short Term Trading -
Stock trading done from one week to couple of
months is called short term.
Mid term Trading -
Stock trading done from one month to couple of
months, say six to eight months is called mid term
trading.

17. Investment in Short term, Mid
term and Long term trading
Long term trading -
Stock trading done form couple of months to couple
of years is called long term trading.
Companies whose fundamentals are good and have
good future plans then the stocks of these
companies are used for long term trading.
Generally traders having good capital go for long
term trading.

18. Stock Market Conditions
There are two ways to describe the general conditions of
the stock market:
1)BULL MARKET
2)BEAR MARKET
Bull Market -
A Bull Market indicates the constant upward movement of
the stock market. A particular stock that seems to be
increasing in value is described to be bullish.

19. Stock Market Conditions
BEAR MARKET
A bear market indicates the continuous downward
movement of the stock market. stock that seems to
be decreasing in value is described to be bearish.

20. How Sensex Index is calculated
The formula for calculating the
sensex =
(sum of Free Float Market capitalization of
30 benchmark stocks)* Index Factor
Where;
Index Factor = 100/market cap
value in 1978-79.

21. Example on Sensex Index
calculation
Assume sensex has only 2 stocks namely SBI and
RELIANCE. Total shares in SBI are 500 out of 200 are
held by government and only 300 are available for
public 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 Rs. 100 &
Reliance is RS. 200.

22. Example on sensex
calculation
Solution –
Then Free Float Cap of these two
company
= (300*100+500*200)
= 30,000+1,00,000
= 1,30,000
Assume market cap during the year
1978-79 was 25000
Then SENSEX = 1,30,000*100/25000
= 520

23. How Nifty Index is calculated
The National Stock Exchange (NSE)
is associated with Nifty
The calculation of Nifty is same
as we calculated SENSEX. But with
two key differences.
1. Base year is 1995 and base value is
1000
2. Nifty is calculation based on 50 stocks.
everything else remaining the same in
nifty index calculation as well.

24. Example of Nifty Calculation
 Assuming Base index=1000 , Market Cap
index consist of 5 stocks, then
Company Current Market
Capitalisation
(Rs. In Lakhs)
Base Market
Capitalisation
(Rs. In Lakhs)
Reliance 16,68,791.1 16,54,247.5
AB & U 8,72,686.3 8,60,018.25
INFOSYS 14,52,587.65 14,65,218.8
HLL 26,75,613.3 26,69,339.55
Tata Tea 6,60,887.75 6,62,559.3
Total 73,30,566.1 73,11,383.4

25. Cont……..
Index= ( Current Market Capitalisation )
Base Market Capitalisation
Multiply by Base Value
Index= 73,30,566.1 *1000
73,11,383.4
Index= 1002.62

26. Important Indices in the world
Name of
Index
Country Weight No.
Pf
Stock
Base
Year
Base
Valu
e
S & P CNX
Nifty
NSEIL,
India
Market
Capitalisation
50 1995 1000
SENSEX 30 BSE,
India
Market
Capitalisation
30 1978-
79
100
NASDAQ
100
NASDAQ
, USA
Market
Capitalisation
100 1985 125
FTSE 100 UK Market
Capitalisation
100 1984 1000
Hang Seng Hong
Kong
Market
Capitalisation
33 1964 100
Dow Jones USA Price 30 1928

27. Benefits of investing in shares
 Possibility of increase in
value of share
 Income from dividends
 Easy liquidity
 Tax benefits on income
earned such as
exemptions U/s 10(34)
for dividends, Sec 54 for
calculating STCG & LTCG

28. CAUSES OF PRICE FLUCTUATION
1.DEMAND AND SUPPLY
2.BANK RATE
3.SPECULATIVE PRESSURE
4. ACTIONS OF UNDERWRITERS AND OTHER
FINANCIAL INSTITUTIONS
5.CHANGE IN COMPANY’S BOARD OF DIRECTORS

29. Cont…
6. FINANCIAL POSITION OF THE COMPANY
7. TRADE CYCLE
8. POLITICAL FACTORS
9. SYMPATHETIC FLUCTUATIONS
10. OTHER FACTORS:
A. EXPECTED MONSOON
B. PERSONAL HEALTH OF HEAD OF
GOVERNMENT OR CHAIRMAN OF THE
COMPANY
C. OIL PRICES IN THE INTERNATIONAL
MARKET

30. Stock Market India

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