Introduction

A stock market is a public market for the trading of company stock

and derivatives at an agreed price; these are securities listed on a
stock exchange as well as those only traded privately. A stock
market typically refers to a financial market that handles the buying
and selling of company stocks, derivatives and other securities. Stock
markets trade company securities that are listed in the stock
exchange Investors and security issuers both participate in stock
markets. Different sized entities participate in stock market activities,
ranging from small investors to the governments, corporations, large hedge fund traders, and
banks. Corporations, governments, and companies issue securities on the stock market to
collect funds. The stock market acts as a platform for companies to raise money for their
business and investors to invest in securities.
The stocks are listed and traded on stock exchanges which are entities of a corporation or
mutual organization specialized in the business of bringing buyers and sellers of the
organizations to a listing of stocks and securities together. The stock market in the United
States is NYSE while in Canada; it is the Toronto Stock Exchange. Major European
examples of stock exchanges include the London Stock Exchange, Paris Bourse, and the
Deutsche Börse. Asian examples include the Tokyo Stock Exchange, the Hong Kong Stock
Exchange, and the Bombay Stock Exchange. In Latin America, there are such exchanges as
the BM&F Bovespa and the BMV.

History of stock market

The stock market has a long history. According to French historian Fernand Braudel, in 11th
century Cairo, Islamic and Jewish traders had already established every form of trade
association.

They were knowledgeable about credit and payment methods. Braudel's suggestions negate
the opinion that the Italians contrived these methods later.
In 12th Century France, the courratiers de change dealt with managing and regulating the
debts of agricultural communities on behalf of the banks. They can be referred to as the first
brokers, because they only dealt with debts. The people of Flanders and the neighboring
counties also implemented this idea, and Beurzen was soon introduced in Ghent and
Amsterdam.

In late 13th Century, commodity traders in Bruges gathered inside the house of a man named
Van Der Beurse. In 1309, they were named the "Brugse Beurse," and institutionalized their
unofficial meetings.

The Bankers of Venice started trading in government securities in the middle of the 13th
century. In 1351, the Government of Venice prohibited the spread of rumors done with the
intention of decreasing government fund prices. During the 14th century, the Bankers of
Pisa, Verona, Genoa, and Florence also started trading in government securities. This was
possible because these independent city-states were governed by a group of influential
citizens, and not by a duke.

Later, joint stock companies were started in the Netherlands. This provided shareholders
the opportunities to invest in business ventures and get a contribution of their profits or
losses. In 1602, the Dutch East India Company issued their first shares through the
Amsterdam Stock Exchange, and it was the first company to issue stocks and bonds. A
stock exchange in London started trading stocks in 1688. The Amsterdam Stock Exchange
(or Amsterdam Beurs) was the first stock exchange to introduce continuous trading in the
earlier part of the 17th Century. According to Murray Sayle, the Dutch were the originators
of short selling, option trading, debt-equity swaps, merchant banking, unit trusts, and other
speculative instruments. Stock markets are currently present in every developed and most
developing countries, but the biggest stock markets are present in the United States,
Canada, China (Hong Kong), India, UK, Germany, France, and Japan.

SENSEX

SENSEX is the short term for the words "Sensitive Index" and is associated with the
Bombay (Mumbai) Stock Exchange (BSE).

What is it?
The SENSEX was first formed on 1-1-1986 and used the market capitalization of the 30
most traded stocks of BSE. The base was 1979 and taken as 100. The 30 scrips of 1986 and
no more the same - some have been removed while some have been added. At irregular
intervals, the Bombay Stock Exchange (BSE) authorities review and modify its
composition to make sure it reflects current market conditions.

Today the Sensex constitutes of the following companies:

Company Name (Industry)
1. ACC (Cement - Major)
2. Bharti Airtel (Telecommunications - Service)
3. BHEL (Engineering - Heavy)
4. DLF (Construction & Contracting - Real Estate)
5. Grasim (Diversified)
6. HDFC Bank (Banks - Private Sector)
7. HDFC (Finance - Housing)
8. Hindalco (Aluminium)
9. HUL (Personal Care)
10. ICICI Bank (Banks - Private Sector)
11. Infosys (Computers - Software)
12. ITC (Cigarettes)
13. Jaiprakash Associates (Construction & Contracting - Civil)
14. Larsen & Toubro (Diversified)
15. Mahindra and Mahindra (Auto - Cars & Jeeps)
16. Maruti Suzuki (Auto - Cars & Jeeps)
17. NTPC (Power - Generation/Distribution)
18. ONGC (Oil Drilling And Exploration)
19. Ranbaxy Labs (Pharmaceuticals)
20. Reliance Communications (Telecommunications - Service)
21. Reliance Industries Limited (Diversified)
22. Reliance Infrastructure (Power - Generation/Distribution)
23. State Bank of India (Banks - Public Sector)
24. Sterlite Industries (Metals - Non Ferrous)
25. Sun Pharma (Pharmaceuticals)
26. Tata Motors (Auto - LCVs/HCVs)
27. Tata Power (Power - Generation/Distribution)
28. Tata Steel (Steel - Large)
29. TCS (Computers - Software)
30. Wipro (Computers - Software)

How is the Sensex calculated?

Sensex is calculated using the "Free-float Market Capitalization" methodology. As per this
methodology, the level of index at any point of time reflects the Free-float market value of 30
component stocks relative to a base period.
The market capitalization of a company is determined by multiplying the price of its stock by
the number of shares issued by the company. This market capitalization is further multiplied
by the free-float factor to determine the free-float market capitalization.

The base period of Sensex is 1978-79 and the base value is 100 index points. This is often
indicated by the notation 1978-79=100. The calculation of Sensex involves dividing the Free-
float market capitalization of 30 companies in the Index by a number called the Index
Divisor.

The Divisor is the only link to the original base period value of the Sensex. It keeps the Index
comparable over time and is the adjustment point for all Index adjustments arising out of
corporate actions, replacement of scrips etc.

What is Free-Float Market Capitalization?

Many different types of investors hold the shares of a company! The Govt. may hold some of
the shares. Some of the shares may be held by the “founders” or “directors” of the company.
Some of the shares may be held by the FDI’s, etc.

Now, only the “open market” shares that are free for trading by anyone. These are called the
“free-float” shares. When we are calculating the Sensex, we are interested in these “free-
float” shares!

A particular company, may have certain shares in the open market and certain shares that are
not available for trading in the open market. According the BSE, any shares that DO NOT
fall under the following criteria, can be considered to be open market 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.

Sensex Calculation

a) Find out the “free-float market cap” of all the 30 companies that make up the Sensex!
b) Add all the “free-float market cap’s” of all the 30 companies!
c) Make all this relative to the Sensex base. The value you get is the Sensex value!

To explain this further:

• Suppose that the Sensex was made up of two companies, A and B.
• Company A, had 100 (free-float) shares in the market in 1979 and the price of Rs.
10. Market cap = Rs. 1000
• Company B, had 200 (free-float) shares in the market in 1979 and the price of Rs.
15. Market cap = Rs. 3000
• So the Sensex had a total market cap of Rs. 4000 in 1979 and this is taken as index
value = 100
• Today company A has 1000 (free-float) shares and the current price is Rs. 150,
while company B has 5000 (free-float) shares at Rs. 120. Hence market cap = Rs.
150,000 + Rs. 600,000 = Rs. 750,000.
• So the equation is:
Market Cap of 4000 = Sensex value 100
Then, Market cap of 750,000 = ?
Ans: today's Sensex value will be 18750.

NSE- National Stock Exchange

 The National Stock Exchange is one the most advanced and largest stock markets in the
world. The NSE is the world’s third largest stock exchange in terms of transactions and
dealings. It is located in Mumbai, which is considered to be the financial capital of India. It
opened for trading in the year of 1994 and the instruments traded are treasury bills,
government securities and bonds issued by public sector companies.

11. Mrs. Chitra Ramkrishna

Deputy Managing Director
National Stock Exchange of India Ltd.

NSE GROUP:
The NSE Group is as Follows:
1. India Index Services & Products Ltd. (IISL)

IISL
2. National Securities Clearing Corporation Ltd. (NSCCL)

NSCCL
3. NSE.IT Ltd.

NSE.IT
4. National Securities Depository Ltd. (NSDL)

NSDL
5. DotEx International Limited

DotEx Intl. Ltd.

National Stock Exchange of India was promoted by leading financial institutions at the behest
of the Government of India, and was incorporated in November 1992 as a tax-paying
company. In April 1993, it was recognized as a stock exchange under the Securities Contracts
(Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment of the NSE commenced
operations in November 1994, while operations in the Derivatives segment commenced in
June 2000.
NSE has remained in the forefront of modernization of India's capital and financial markets,
and its pioneering efforts include:
• Being the first national, anonymous, electronic limit order book (LOB) exchange to
trade securities in India. Since the success of the NSE, existent market and new
market structures have followed the "NSE" model.
• Setting up the first clearing corporation "National Securities Clearing Corporation
Ltd." in India. NSCCL was a landmark in providing innovation on all spot equity
market (and later, derivatives market) trades in India.
• Co-promoting and setting up of National Securities Depository Limited, first
depository in India[2].
• Setting up of S&P CNX Nifty.
• NSE pioneered commencement of Internet Trading in February 2000, which led to the
wide popularization of the NSE in the broker community.
• Being the first exchange that, in 1996, proposed exchange traded derivatives,
particularly on an equity index, in India. After four years of policy and regulatory
debate and formulation, the NSE was permitted to start trading equity derivatives
• Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in
India.
• NSE has also launched the NSE-CNBC-TV18 media centre in association with
CNBC-TV18.

Companies listed on NSE

SI NO Company

1. Kakuzi Ord.

2. Rea Vipingo Plantations Ltd

3. Sasini Ltd

4. Unilever Tea Kenya Ltd

5. AccessKenya Group Ltd Ord.

6. Car & General (K) Ltd

7. CMC Holdings Ltd

8. Hutchings Biemer Ltd

9. Kenya Airways Ltd

1
Marshalls (E.A.) Ltd
0.

1
Nation Media Group
1.

1
Safaricom limited
2.

1
Scangroup Ltd
3.

1
Standard Group Ltd
4.

1
TPS Eastern Africa (Serena) Ltd
5.

1
Uchumi Supermarket Ltd
6.

1
Barclays Bank Ltd
7.

1
C.F.C Stanbic Holdings Limited
8.

1
Centum Investment Company Ltd
9.

2
Diamond Trust Bank Kenya Ltd
0.
Procedure and Conditions for Listing
1. All Listing are subject to compliance with Byelaws, Rules and other requirements framed by the Exchange
from time to time in addition to the SEBI and other statutory requirements.

2. The Issuer of security proposed for listing has to forward an application in the format prescribed in Annexure
I of this booklet.

3. Every issuer, depending on the category and type of security has to submit alongwith application, such
supporting documents/information as specified in Annexure I of this booklet and as prescribed by the
Exchange from time to time.

4. On getting an in-principle consent of the exchange the issuer has to enter into a listing agreement in the
prescribed format under its common seal.

5. Upon listing, the Issuer has to comply with all requirements of law, any guidelines/directions of Central
Government, other Statutory or local authority.

6. The Issuer shall also comply with the post listing compliance as laid out in the listing agreement and shall
also comply with the rules, bye-laws, regulations and any other guidelines of the Exchange as amended from
time to time.

7. Listing on WDM segment does not imply a listing on CM segment also or vice versa.

8. If the equity shares of an issuer are listed on other stock exchanges but not listed on Capital Market segment
of the Exchange, though eligible, then the debt securities of the said issuer will not be permitted to be listed
on the WDM segment.

9. The Exchange reserves the right to change any of the requirements indicated in this booklet / document
without prior notice.