The presentation is brief introduction to Stock market in India and gives a method of calculation of Sensex and Nifty.

1. Presented By :
SHUBHAM BHUTADA
Aurangabad (MH)

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
Value
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
Nikkei 225 Tokyo Price 225 1949

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. 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
CAUSES OF PRICE FLUCTUATION

29. 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
Cont…