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OBJECTIVE OF THE STUDY
TRADINGS IN INDIAN STOCK MARKET
Stock market refers to a market place where investors can buy and sell stocks. The price at which each buying and selling transactions takes place is determined by market force. The Indian secondary capital market or the stock market mainly consists of the stock exchanges. Over the counter exchange of India and stock holding corporation of India. Indian stock market can be quoted as one of oldest stock market in Asia which is almost 200 years old.
Stock holding corporation of India Limited was incorporated in 1986 as a public limited company. It has been jointly promoted and owned by the all Indian banks and financial Institution viz IDBI Bank Ltd, ICICI Bank, AXIS Bank, IFCI Ltd, LIC, GIC, NIA and TOICL, who are all leaders in their fields of business. SHCIL has been established as a one stop provider of all financial service. It began its operations by offering custodian and post trading service and later added depository and other service to its business portfolio.
Stock exchange represents an organized market in trading of securities. The organized stock exchange in India are of recent origin when compared with other financial markets. The first stock market was set up in India under name of Native share and stock Brokers Association of Bombay ( Now Bombay stock exchange) in 1875. At the end of march 2009 there was 22 stock exchange registered with SEBI (Securities Exchange Board Of India) having total of above 10,000 registered broker and above 70,000 registered sub-broker having on them.
3. SCOPE OF STUDY
The stock exchange need to be recognised under the securities contracts (Regulation) act 1956. As of now SEBI has approved and notified corporation and Demutualisation scheme of 22 stock exchange.
The followings are 22 stock exchanges……………
1. Bombay stock exchange (BSE)
2. National stock exchange (NSE)
3. Calcutta stock exchange (CSE)
4. Bengaluru stock exchange (BGSE)
5. Vadodara stock exchange (BGSE)
6. Madras stock exchange (MSE)
7. Union stock exchange (USE)
8. Over the counter exchange of India (OTCEI)
9. Inter-connected stock exchange of India (ISE)
10. Bhubaneswar stock exchange (BHSE)
11. Coimbatore stock exchange (CSX)
12. Cochin stock exchange (CSE)
13. Hyderabad stock exchange (HSE)
14. Delhi stock exchange (DSE)
15. Banga stock exchange (BGSE)
16. Madhya Pradesh stock exchange (INDORE)
17. Jaipur stock exchange (JSE)
18. Magadha stock exchange (PATNA)
19. UP stock exchange
20. Multi commodity Exchange of India Limited (MCX)
21. National commodity and derivative exchange Limited (NCDEX)
22. Indian national multi-commodity exchange
The trading platform of a stock exchange is accessible only to trading members. The broker would give buy sell order either own their own account of for their client.
The exchange can admit a broker as its member only on the basis of terms specified by Securities contract (Regulation) act 1956, the SEBI act 1992 and other rules and regulations of concerned exchange also certificate of registration from SEBI is compulsory for trading in securities.
Listing of securities India is governed by the provision in the followings are
1. Companies act-2013
2. Securities-contract regulation act 1956
3. Securities contract regulation rule 1957
4. Guidelines issued by Central government and SEBI
4. METHODLOGY OF THE STUDY
DIFFERENT TYPES OF TRADING’S
Followings are different types of trading’s
a) Margin trading’s
b) Trading at BSE
c) Trading at NSE
d) Future trading
e) Option trading
f) Capital market segment
g) Wholesale market segment
a) Margin trading:-
Margin trading was introduced by SEBI to curb speculative dealing in shares leading to volatility in this price of securities.
• Initial margin
Initial margin in this context means the “minimum amount” calculated as a percentage of the transaction value to be placed by the client with broker, before the actual purchase. The broker may advance the balance amount to meet full settlement obligations.
• Maintenance margin
Maintenance margin means the minimum amount calculated as a percentage of market value of the securities calculated with respect to last trading days closing price to be maintained by client with Broker.
b) Trading at BSE:-
The scrip’s traded on BSE have been classified into various groups.
BSE has for the guidance and benefit of the investors classified the scrip’s in the equity segment into ‘A’,’B’,’T’ and ‘Z’ groups on certain qualitative and quantitative parameter.
The ‘F’ Groups represents Fixed Income Securities
The ‘T’ Group represents Trade to Trade basis as a surveillance measure.
Trading’s in Government securities by the retail investors is done order ‘G’ Group.
The Z group was introduced by BSE in July 1999 and includes companies which have failed to comply with its listing requirements and/or have failed to resolve investors complaints and/or have made the required arrangements with both the Depository viz Central Depository Service lid (CDSL) and National Depository Securities ltd (NSDL) for dematerialization of their securities.
c) Trading’s at NSE:-
NSE introduced for first time in India, fully automated screen based trading. It uses a modern, fully computerised trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest. The NSE trading system called “National Exchange For Automated Trading (NEAT)” is a fully automated screen based trading system, which adopts the principal of an order driven market.
d) Future trading:-
A future contract is an arrangement by which a buyer/seller agree to take/give delivery of the securities on a specified future date at a fixed price and make payment on the delivery date. Such contracts are zero-sum games where the gain equals loss. The clearing house is the counter party in such contracts. A buyer is called the ‘long’ and seller is called ‘short’.
e) Option trading:-
An option trading is a contract between two parties in which the maker of the option (option writer) agrees to buy or sell a specified number of shares at later date for an agreed price (strike price) to the holder of the option (option buyer) on a due date (answer date), when and if the later so desires in consideration of a sum of money (premium).
f) Capital market segment:-
The capital market segment of NSEIL provides a fully automated screen based trading system for trading of equity and preference shares, debentures, warrants and coupons. The trading system, known as the National Exchange For Automated Trading (NEAT) system, is an anonymous order-driven system and operates on a strict price/time priority. It enables members from across the country to trade simultaneously with enormous ease and efficiency. It provides tremendous flexibility to the users in terms of kind of order that can be placed on the system.
g) Wholesale Debt Market Segments:-
The WDM segment provides the only formal trading platform for trading of a wide range of debt securities. Initially, government securities, treasury bills and bonds issued by public sector undertakings (PSUS) were made available for trading’s. This range has been widened to include non-traditional instrument like floating rate bonds, zero coupon bonds, index bonds, commercial bonds, certificate of deposit, corporate debenture, state government loans, SLR and Non-SLR bonds issued by financial institution, limit of mutual funds and securities debt.
5. LIMITATION OF THE STUDY
The Government of India prescribed the FDI limit and different ceilings have been prescribed for different sectors. Over a period of time the Government has been progressively increasing the ceilings. FDI ceilings mostly fall in the range of 26-100%.
By default, the maximum limit for portfolio investment in a particular listed firm. Is decided by the FDI limit prescribed the sector to which the firm belongs. However there are two additional restrictions on portfolio investment. First, the aggregate limit of investment by all FIIs, inclusive of their sub-accounts In any particular firm, has been fixed at 24% on the paid up capital. However, the same can be raised up to sector cap, with the approval of the company’s board and shareholders.