BOMBAY STOCK

EXCHANGE
Presented By:
GAYATHRI N
I M.COM
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:

1) It assist the economic development by providing a

body of interested investors.
2) it uploads the position of superior enterprises and
assist them in raising further funds.
3) It encourages capital formation
4) Government can undertake projects of national
importance and social value raising funds through
the sale of its securities on the stock exchange.
5) 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)Dollex 30 2)Dollex 100 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 Products
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

% Free Free Float % Free Free Float

Float Factor Float Factor
>0-5% .05 >40-45% .45
>5-10% .10 >45-50% .50
>10-15% .15 >50-55% .55
>15-20% .20 >55-60% .60
>20-25% .25 >60-65% .65
>25-30% .30 >65-70% .70
>30-35% .35 >70-75% .75
>35-40% .40 >75-80% .80
12 August 2019 SAMPATH KUMAR KUMARASWAMY
FREE FLOAT SHARES

 Holdings by founders/directors/ acquirers which has

control element,
 Holdings by persons/ bodies with "controlling interest",
Government holding as promoter/acquirer,
 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.
MARKET CAPITALIZATION

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

 Based on this market capitalization values only

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

 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

 Small Caps (small market Capitalization less lie

in between $300 million - $2billion),

 Large Caps (large Capitalization in between

$10billion - $200billion),

 Mid 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

As on 10 Aug Value (Rs in crore ) percentage

2009

BSE Mkt Cap 4,988,604.48 100

2,292,819.55 45.96
Index Full Mkt.
Cap

1,102,228.07 ----
Index Free Float
Mkt. Cap
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 points at 16,323.

SENSEX milestones & falls since 2007

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 points.
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 heavyweights Larsen and Toubro, Reliance
Industries, ICICI Bank, HDFC Bank and SBI among others.
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 generated on the Reserve Bank of India hiking
CRR by 50 bps.
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 the previous day having seen an intraday fall of as large as
1063 points. Thus, this week turned out to be the week with largest
percentage fall in the Sensex.
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
Documents of securities
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.
• Particulars of shares/debentures for which
permission to deal is applied for.
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 listed on the
Exchange
Contd..

 TheExchange has 951 trading

members to whom the clearing
number is allotted by the
Exchange.
THANK YOU
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