Slide 1:

History of stock exchange

• The history of stock exchanges can be traced to 12th century France – unofficial
• The Amsterdam Stock Exchange, created in 1602, became the first official stock
exchange when it began trading shares of the Dutch East India Company. These
were the first company shares ever issued.

Major stock exchange in the world

• USA
o NYSE - It is the largest stock exchange in the world by dollar volume.
nicknamed the "Big Board,"

o DOW Jones - created in nineteenth century by Wall Street Journal editor

and Dow Jones & Company co-founder Charles Dow. Dow compiled the
index as a way to gauge the performance of the industrial component of
America's stock markets.

o NASDAQ – (National Association of Securities Dealers Automated

Quotations) is an American stock exchange. It is the largest electronic
screen-based equity securities trading market in the United States. It was
founded in 1971 by the National Association of Securities Dealers
(NASD),

o S&P 500 - The S&P 500 is an index containing the stocks of 500 Large-
Cap corporations, most of which are American. The index is the most
notable of the many indices owned and maintained by Standard & Poor's,
a division of McGraw-Hill
• Europe
o FTSE 100 - FTSE is an abbreviation of 'Financial Times Stock Exchange'.
The index is maintained by the FTSE Group, a now independent company
which originated as a joint venture between the Financial Times and the
London Stock Exchange. It is a share index of the 100 most highly
capitalised companies listed on the London Stock Exchange

o DAX - (Deutsche Aktien IndeX 30 , formerly Deutscher Aktien-Index 30

(German stock index) is a Blue Chip stock market index consisting of the
30 major German companies trading on the Frankfurt Stock Exchange.

o CAC 40 - is a benchmark French stock market index. The index

represents a capitalization-weighted measure of the 40 most significant
values among the 100 highest market caps on the Paris Bourse
• Asia
o Nikkei 225 - the Tokyo Stock Exchange (TSE). The Nikkei average is the
most watched index of Asian stocks.
 o Hang Seng - The Hang Seng Index is a freefloat-adjusted market
capitalization-weighted stock market index in Hong Kong.
o NSE
o BSE

Slide 2:
Introduction to Indian Stock Exchange - BSE
• Established in 1875. Oldest stock exchange in Asia. Established as “The Native
Share & Stock Brokers Association”
• 1st Stock exchange in the country to have obtained permanent recognition in 1956
from GOI under Securities contract (regulation) Act 1956.s
• There are 23 recognized stock exchanges in India
• More than 6000 companies are listed on BSE.
• Earlier an Association of Persons (AOP), the Exchange is now a demutualised
and corporatised entity incorporated under the provisions of the Companies Act,
1956, pursuant to the BSE(Corporatisation and Demutualisation) Scheme, 2005.
• The major indices on BSE are:
Sector Based
o BANKEX Index – HDFC, ICICI, IDBI etc.
o BSE Metal Index – Hindalco, Jindal Steel, SAIL etc.
o BSE Oil & Gas Index – Essar Oil, ONGC, IOC etc.
Capitalization Based
o BSE – Large Cap – Market Cap over 10,000 crores – Blue Chip Stocks
o BSE – Mid Cap – Market Cap between 2000-10000 crores
o BSE – Small Cap – Market Cap less than 2000 crores

Slide 3:
Instrument traded on BSE:
http://en.wikipedia.org/wiki/Financial_instruments

Options - Options are financial instruments that convey the right, but not the obligation,
to engage in a future transaction on some underlying security.

Futures & Forwards – While futures and forward contracts are both a contract to deliver
a commodity on a future date at a prearranged price, they are different in several respects:
a) Forwards transact only when purchased and on the settlement date. Futures, on the
other hand, are rebalanced, or "marked to market," every day to the daily spot price of a
forward with the same agreed-upon delivery price and underlying asset.
b) Futures are always traded on an exchange, whereas forwards always trade over-the-
counter
c) Futures are highly standardised, whereas some forwards are unique

Commercial paper -is a money-market security issued by large banks and corporations
 Interest rate swap - is a derivative in which one party exchanges a stream of interest
payments for another party's stream of cash flows

Slide 4:
Index Calculation:
Useful Link - http://209.85.175.104/search?
q=cache:LTsVs1Tp_DYJ:www.blonnet.com/iw/2007/08/26/stories/2007082650801300.h
tm+free+float+factor+of+RIL&hl=en&ct=clnk&cd=2&gl=in

Slide 5:
Sensitivity of Exchange

• Government Policy and Political Stability

• FII’s Participation
• Global Cues (Signals)
• Major IPO’s
• Interest Rates – Global & India
• Rumors – Tips (From Undisclosed source)

Slide 6:
Terminology used:

• Circuit
• Stop Loss
• Margins
•

Slide 7:
Do’s and don’ts for the Investors:

Pikashoo

The main criteria for selecting the 30

stocks is as follows:

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.

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.

Having understood all this, you now know how the

Sensex is calculated.