BOMBAY STOCK EXCHANGE

Presented By:
Harisankar N K
Ebin Joy
Ashiq Isham
BOMBAY STOCK
EXCHANGE
 Bombay Stock Exchange is the oldest stock exchange
in Asia
 Spanning three centuries in its 133 years of existence
 BSE was established as "The Native Share & Stock
Brokers' Association" in 1875.
 BSE is the first stock exchange in the country which
obtained permanent recognition (in 1956) from the
Government of India under the Securities Contracts
(Regulation) Act 1956.
 BSE is the world's number 1 exchange in terms of the
number of listed companies and the world's 5th in
transaction numbers
Contd..
 The market capitalization as on December 31, 2007
stood at USD 1.79 trillion
 It is an index of 30 stocks representing 12 major
sectors.
 The BSE Index, SENSEX, is India's first stock market
index that enjoys an iconic stature , and is tracked
worldwide
 BSE has two of world's best exchanges, Deutsche
Börse and Singapore Exchange, as its strategic
partners.
 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
Contd..
 BSE provides an efficient and transparent market for
trading in equity, debt instruments and derivatives.
 BSE is the first exchange in India and the second in the
world to obtain an ISO 9001:2000 certification.
 It is also the first exchange in the country and second
in the world to receive Information Security
Management System Standard BS 7799-2-2002
certification for its BSE On-line Trading System (BOLT)
 More than 4900 companies listed in BSE
Contd..
 In 2006, BSE launched the Directors Database and
ICERS (Indian Corporate Electronic Reporting System)
to facilitate information flow and increase transparency
in the Indian capital market.
 BSE also has a wide range of services to
empower investors and facilitate smooth
transactions:
1)Investor Services
2)BSE On-line Trading (BOLT)
3)BSEWEBX.Com
4)Surveillance
5)BSE Training Institute
BENEFITS OF STOCK
EXCHANGE
FROM THE POINT OF VIEW OF COMMUNITY:

3) It assist the economic development by providing a body of

interested investors.
4) it uploads the position of superior enterprises and assist
them in raising further funds.
5) It encourages capital formation
6) Government can undertake projects of national
importance and social value raising funds through the sale
of its securities on the stock exchange.
7) It is the stock exchanges that central bank of a
country can control credit by undertaking open
market operations (purchase and sale of securities)
FROM THE COMPANY POINT OF VIEW :

1. A company whose shares quoted on stock

exchange they enjoy better reputation and credit.
2. The market for the shares of such a company is
naturally widened.
3. The market price of securities is likely to be higher
in relation to its earnings, dividends and property
values. This raises the bargaining power of the
company in the event of a takeover, merger or
amalgamation.
FROM THE INVESTORS POINT OF VIEW:
1. Liquidity of the investment is increased
2.The securities dealt on a stock exchange are good
collateral security for loans.
3. The stock exchange safeguards interests of investors
through strict enforcement of rules and regulations.
4. The present net worth of investments can be easily
known by the daily quotations.
5. His risk is considerably less when he holds or
purchases listed securities.
OBJECTIVES OF BSE
1)To safeguard the interest of investing public
having dealings on the exchange.
2)To establish and promote honorable and just
practices in securities transactions.
3)To promote, develop and maintain well-
regulated market in securities.
4)To promote industrial development in the
country through efficient resource
mobilization by the way of investment in
corporate securities.
 
INDICES OF BSE
 Broad Market Indices:
1)Sensex 2)Bse 100 3)Bse 200 4)Bse500
5)Bse Mid Cap 6) Bse Small Cap
 Sectoral Indices
1)Bse Auto 2)Bankex 3)Capital Goods
4)Consumerable Goods
5)Fmcg 6)IT, Power
 Dollar Linked Indices
1)Dollex30 2)Dollex100 3)Dollex 200
USAGE OF BSE INDICES
BSE Indices are being used for the following
purposes:
1)Dissemination on the BSE trading terminals
and BSE website.
2)Underlying for derivative products
3)Sale through BSE datafeed service (Real-
time, Historic & EOD)
4)Licensing for Index Funds and Exchange
Traded Funds
5)Benchmark for Mutual Funds
6)Licensing for Index Linked Structured
WHO SELECTS THE SCRIP
They are selected by the Index Committee.

This committee consists of all sorts of

individuals including academicians, mutual
fund managers, finance journalists,
independent governing board members and
other participants in the financial markets. 
SCRIP SELECTION
CRITERIA
Market capitalization: The company should
have a market capitalization in the Top 100
market capitalization’s of the BSE. Also the
market capitalization of each company should
be more than 0.5% of the total market
capitalization of the Index.
Trading frequency: The company to be included
should have been traded on each and every
trading day for the last one year. Exceptions can
be made for extreme reasons like share
suspension etc.
Number of trades: The scrip should be among
the top 150 companies listed by average
number of trades per day for the last one year.
contd..

Industry representation: The companies

should be leaders in their industry group.

Listed history: The companies should have a

listing history of at least one year on BSE.

Track record: In the opinion of the index

committee, the company should have an
acceptable track record.
FREE-FLOAT CAPITALIZATION METHOD

§ world wide accepted method

§ best methods for calculating a stock market index

§ Free-float is a variation of the market cap method

§ determined by the percentage of floated shares to

outstanding
FREE-FLOAT BANDS

SAMPATH KUMAR KUMARASWAMY 09/06/09

FREE FLOAT SHARES

vHoldings by founders/directors/ acquirers which has

control element,
vHoldings by persons/ bodies with "controlling
interest", Government holding as promoter/acquirer,
vHoldings through the FDI Route, Strategic stakes by
private corporate bodies/ individuals,
vEquity held by associate/group companies (cross-
holdings), Equity held by employee welfare trusts,
vLocked-in shares and shares which would not be sold
in the open market in normal course.
MARKET CAPITALIZATION

ü It is the worth of the company in terms of shares

ü Based on this market capitalization values only

companies are classified into "large-cap", "mid-cap"
and "small cap"

ü Market Capitalization = No. of outstanding shares

x Current market price of one share
IN CASE OF BONUS SHARES

sensex will be based on some adjustment in the

total market capitalization

Total market capitalization (new) = Total market

capitalization(old) x [ New market capitalization
of stock / old market capitalization of stock]
KINDS OF SHARES

ØSmall Caps (small market Capitalization less

lie in between $300 million - $2billion),

ØLarge Caps (large Capitalization in between

$10billion - $200billion),

ØMid Caps (lie in between Small & Large)

VALUATION OF SENSEX

 Find out the “free-float market cap” of all the

30 companies that make up the Sensex

 Add all the “free-float market cap’s” of all the

30 companies

 Make all this relative to the Sensex

 SENSEX AS ON 11-08-2009

 OPENING - 15,160.24

 HIGH - 15,218.65

 LOW - 14,864.23

 CLOSING - 15,074.59
 Market Capitalization for sensex as on
11august 2009
BSE SENSEX
CONSTITUTION
BSE Sensex constitutes of the following
companies:
 ACC (Cement - Major)
 Bharti Airtel (Telecommunications - Service)
 BHEL (Engineering - Heavy)
 DLF (Construction & Contracting - Real Estate)
 Grasim (Diversified)
 HDFC Bank (Banks - Private Sector)
 HDFC (Finance - Housing)
 Hindalco (Aluminium)
 HUL (Personal Care)
 ICICI Bank (Banks - Private Sector)
Contd..
Infosys (Computers - Software)
ITC (Cigarettes)
Jaiprakash Associates (Construction &
Contracting - Civil)
Larsen & Toubro (Diversified)
Mahindra and Mahindra (Auto - Cars & Jeeps)
Maruti Suzuki (Auto - Cars & Jeeps)
NTPC (Power - Generation/Distribution)
ONGC (Oil Drilling And Exploration)
Ranbaxy Labs (Pharmaceuticals)
Reliance Communications
(Telecommunications - Service)
Contd..
Reliance Industries Limited (Diversified)
Reliance Infrastructure (Power -
Generation/Distribution)
State Bank of India (Banks - Public Sector)
Sterlite Industries (Metals - Non Ferrous)
Sun Pharma (Pharmaceuticals)
Tata Motors (Auto - LCVs/HCVs)
Tata Power (Power - Generation/Distribution)
Tata Steel (Steel - Large)
TCS (Computers - Software)
Wipro (Computers - Software)
15,000, July 6, 2007 The Sensex on July 6,
2007 crossed the magical figure of 15,000 to
touch 15,005 points in afternoon trade. It
took seven months for the Sensex to move
from 14,000 to 15,000 points.
16,000, September 19, 2007 The Sensex
scaled yet another milestone during early
morning trade on September 19, 2007.
Within minutes after trading began, the
Sensex crossed 16,000, rising by 450 points
from the previous close. The 30-share
Bombay Stock Exchange's sensitive index
took 53 days to reach 16,000 from 15,000
The Sensex finally ended with a gain of 654
Contd..
17,000, September 26, 2007 The Sensex
scaled yet another height during early
morning trade on September 26, 2007.
Within minutes after trading began, the
Sensex crossed the 17,000-mark .
18,000, October 09, 2007 The BSE
Sensex crossed the 18,000-mark on October
09, 2007. It took just 8 days to cross 18,000
points from the 17,000 mark. The market set
several new records including the biggest
single day gain of 789 points at close, as
well as the largest intra-day gains of 993
Contd..
19,000, October 15, 2007 The Sensex
crossed the 19,000-mark backed by revival
of funds-based buying in blue chip stocks in
metal, capital goods and refinery sectors.
The index gained the last 1,000 points in
just four trading days.
20,000, October 29, 2007 The Sensex
crossed the 20,000 mark on the back of
aggressive buying by funds ahead of the US
Federal Reserve meeting. The index took
only 10 trading days to gain 1,000 points
after the index crossed the 19,000-mark on
October 15. The major drivers were index
Contd..
21,000, January 8, 2008 The sensex
peaks. It crossed the 21,000 mark in intra-
day trading after 49 trading sessions.
However, it later fell back due to profit
booking.
15,200, June 13, 2008 The sensex closed
below 15,200 mark, Indian market suffer
with major downfall from January 21,2008
14,220, June 25, 2008 The sensex
touched an intra day low of 13,731 during
the early trades, then pulled back and ended
up at 14,220 amidst a negative sentiment
Contd..
12,822, July 2, 2008 The sensex hit an
intra day low of 12,822.70 on July 2nd, 2008.
This is the lowest that it has ever been in the
past year. Six months ago, on January 10th,
2008, the market had hit an all time high of
21206.70. This is a bad time for the Indian
markets, although Reliance and Infosys
continue to lead the way with mostly
positive results.
11801.70, Oct 6, 2008 The sensex closed
at 11801.70 hitting the lowest in the past 2
years.
10527, Oct 10, 2008 The Sensex today
closed at 10527,800.51 points down from
Contd..
14284.21, May 18, 2009 After the result of
15th Indian general election Sensex gained
2110.79 points from the previous close of
12173.42 these creates a new history in
Indian Market. In the Opening Trade itself
sensex gain 15% from the previous day
close this leads to the suspension of 2 hours
trade.After 2 hours sensex again surged this
leads to the suspension of full day trading.
Sensex falls
Some major single-day falls of the Sensex have
occurred on the
following dates

 January 21, 2008 --- 1,408.35 points

 Oct 24, 2008---1070.63 points
 March 17, 2008 --- 951.03 points
 July 6, 2009 --- 870 points
 January 22, 2008 --- 857 points
 February 11, 2008 --- 833.98 points
 May 18, 2006 --- 826 points
 October 10,2008 --- 800.10 points
 
Listing of Securities
The securities are included in the
official list of the stock exchange for
the purpose of trading.. Listing ensures
that the company is solvent and its
existence is legal.
Listing is the official enrollment of the
name of the company in the stock
market
Purpose of Listing
• Detailed information is available
• Transfer of securities is increased if more
info is available
• Continuous dealing increases the value of
security
• Liquidity to shares is ensured
• Safety to deal
• Ensures credit worthiness
• Collateral security for loans
• Market is widened
Objectives of Listing
The objectives of listing are mainly to
provide liquidity to securities;
mobilize savings for economic
development;
protect interest of investors by
ensuring full disclosures
Rules for listing of securities
Documents to be attached
• Copies of Memorandum and Articles of
association, prospectus, Directors
reports, Balance Sheet, and agreement
with underwriters…
• Specimen copies of share and debenture
certificates, letters of allotment…
• Particulars regarding its capital structure.
• A statement showing distribution of
shares
• Particulars of cash bonus during the last
ten years
• A brief history of company's activities
since its incorporation.
Member’s Information
Transactions in any stock Exchange are
executed by member brokers who deal with
investor
A member of a stock exchange is an
individual or a corporate body who holds the
right to trade in the stocks listed on the
exchange
An investor can buy or sell securities only
through one of the members of the
exchange
Trading members of Bombay Stock
Exchange Ltd are individuals and corporate
who holds the right to trade in the stocks
Contd..
The Exchange has 951 trading
members to whom the clearing
number is allotted by the Exchange.
THANK
YOU
THANK YOU