CONCLUSION

Today BSE India has the maximum number of stocks listed in it comparatively to any
other exchange in the world. BSE Index also known as sensex is the most popular exchange
or stock in India. BSE Index consist of 30 stocks which involves 12 major sector .BSE India
provides a great platform for trading in equity, derivative and debt instruments. BSE India
live has become the major part of Indian Capital Market. BSE index provide BSE live prices
of stocks from morning 9.00AM to 3.30 PM. Today with the modernization of electronic
media like television, computers, internet BSE India has reached to a new high. People find
trading in BSE India live is more easy and fast with the help of these media. Through BSE
Live tracking an investor can track the current price of the market and can make strategies
accordingly. Through BSE India Live a trader can make certain strategies on how to invest,
when to invest, in which scrip to invest and what is going to be the future of the market.
The Bombay Stock Exchange (BSE) regularly reviews and modifies its composition
to be sure it reflects current market conditions. The index is calculated based on a free float
capitalization method—a variation of the market capitalisation method. Instead of using a
company's outstanding shares it uses its float, or shares that are readily available for trading.
The free-float method, therefore, does not include restricted stocks, such as those held by
promoters, government and strategic investors. Initially, the index was calculated based on
the ‘full market capitalization’ method. However this was shifted to the free float method
with effect from September 1, 2003. Globally, the free float market capitalization is regarded
as the industry best practice. As per free float capitalization 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
multiplied by a free float factor to determine the free float market capitalization. Free float
factor is also referred as adjustment factor. Free float factor represents the percentage of
shares that are readily available for trading. It is also the fifth largest exchange in the world,
with market capitalization of $466 billion.
The working of stock exchanges in India started in 1875. BSE is the oldest stock
market in India. The history of Indian stock trading starts with 318 persons taking
membership in Native Share and Stock Brokers Association, which we now know by the
name Bombay Stock Exchange or BSE in short. In 1965, BSE got permanent recognition
from the Government of India. National Stock Exchange comes second to BSE in terms of
popularity. The 30 stock sensitive index or Sensex was first compiled in 1986. The Sensex is
compiled based on the performance of the stocks of 30 financially sound benchmark
companies. In 1990 the BSE crossed the 1000 mark for the first time. It crossed 2000, 3000
and 4000 figures in 1992. The reason for such huge surge in the stock market was the liberal
financial policies announced by the then financial minister Dr. Man Mohan Singh.
The up-beat mood of the market was suddenly lost with Harshad Mehta scam. It came
to public knowledge that Mr. Mehta, also known as the big-bull of Indian stock market
diverted huge funds from banks through fraudulent means. He played with 270 million shares
of about 90 companies. Millions of small-scale investors became victims to the fraud as the
Sensex fell flat shedding 570 points.
To prevent such frauds, the Government formed The Securities and Exchange Board
of India, through an Act in 1992. SEBI is the statutory body that controls and regulates the
functioning of stock exchanges, brokers, sub-brokers, portfolio managers' investment
advisors etc. SEBI oblige several rigid measures to protect the interest of investors. Now with
the inception of online trading and daily settlements the chances for a fraud is nil, says top
officials of SEBI.
Sensex crossed the 5000 mark in 1999 and the 6000 mark in 2000. The 7000 mark was
crossed in June and the 8000 mark on September 8 in 2005. Many foreign institutional
investors (FII) are investing in Indian stock markets on a very large scale. The liberal
economic policies pursued by successive Governments attracted foreign institutional
investors to a large scale. Experts now believe the sensex can soar past 14000 mark before
2010.
The unpredictable behavior of the market gave it a tag – ‘a volatile market.’ The
factors that affected the market in the past were good monsoon, Bharatiya Janatha Party’s rise
to power etc. The result of a cricket match between India and Pakistan also affected the
movements in Indian stock market. The National Democratic Alliance led by BJP, during
2004 public elections unsuccessfully tried to ride on the market sentiments to power. NDA
was voted out of power and the sensex recorded the biggest fall in a day amidst fears that the
Congress-Communist coalition would stall economic reforms. Prime minister Man Mohan
Singh’s assurance of ‘reforms with a human face’ cast off the fears and market reacted
sharply to touch the highest ever mark of 8500.
India, after United States hosts the largest number of listed companies. Global investors now
ardently seek India as their preferred location for investment. Once viewed with skepticism,
stock market now appeals to middle class Indians also. Many Indians working in foreign
countries now divert their savings to stocks. This recent phenomenon is the result of opening
up of online trading and diminished interest rates from banks. The stockbrokers based in
India are opening offices in different countries mainly to cater the needs of Non Resident
Indians. The time factor also works for the NRIs. They can buy or sell stock online after
returning from their work places.
The recent incidents that led to growing interest among Indian middle class are the
initial public offers announced by Tata Consultancy Services, Maruti Udyog Limited, ONGC
and big names like that. Good monsoons always raise the market sentiments. A good
monsoon means improved agricultural produce and more spending capacity among rural folk.
The bullish run of the stock market can be associated with a steady growth of around
6% in GDP, the growth of Indian companies to MNCs, large potential of growth in the fields
of telecommunication, mass media, education, tourism and IT sectors backed by economic
reforms ensure that Indian stock market continues its bull run.
The vision of the Bombay Stock Exchange is "Emerge as the premier Indian stock
exchange by establishing global benchmarks." That means the exchange is thinking big in
terms of customer service and trading activity. The market has not only experienced
explosive growth in terms of trading volume, but also in terms of overall return to investors.
After compensating for inflation, the BSE has averaged a 15.8% annual return when
measured by Sensex, the most popular stock index in India, over the last 20 years. Other
important indices originating from the Bombay exchange include the BSE 100, BSE 500,
BSEPSU, BSEMIDCAP, BSESMLCAP, and BSEBANKEX.
The Bombay Stock Exchange uses the BSE Sensex, an index of 30 large, developed
BSE stocks. This index gives a measure of the overall performance of the Bombay Stock
Exchange, and is closely followed around the world. Based on the Sensex, the BSE equity
market has grown significantly since 1990.
The BSE SENSEX that is also called the "BSE 30” is made of thirty scripts. The
index is followed extensively in Indian capital market and it is regarded as the index of the
Indian capital market. The Bombay Stock Exchange is the eminent stock exchange in India
and the SENSEX of this exchange is recognized and followed all over the world. The
exchange has played a pivotal role in shaping the capital market in India. The companies that
are listed in the BSE index have been changed only a few times and they account for about
one-fifth of the total market capitalization of the Bombay Stock Exchange. Though the
SENSEX is the primary and the most widely accept index of BSE there are few indices as
well, including BSE 500, BSE 100, BSE 200, BSE PSU, BSE MIDCAP, BSE SMLCAP,
BSE BANKEX, BSE Tech, BSE Auto, BSE Pharma, BSE FMCG, BSE Consumer Durables
and BSE Metal.
In addition to individual stocks, the BSE also has a market in derivatives, which was
the first to be established in India. Listed derivatives on the exchange include stock futures
and options, index futures and options, and weekly options.
The Bombay Stock Exchange is also actively involved with the development of the
retail debt market. The debt market in India is considered extremely important, as the country
continues to develop and depends on this type of investment for growth. Until recently, the
debt market in India was limited to a wholesale market, with banks and financial institutions
as the only participants. The Bombay Stock Exchange believes that a retail market will bring
great opportunities to individual investors through better diversification.
Besides the individual stocks, Bombay Stock Market deals in derivatives, stock
futures and options, index futures and options, and weekly options as well. The debt market is
an additional feature of BSE, which offers investment solutions for growth and development.
BSE speculates that the retail market will fetch great prospects to individual investors, by
way of better diversification. Its nation-wide reach makes this market present across 417
cities and towns of the country.
 It is the oldest and the largest stock exchange in Asia.
 It is the fifth largest stock market in the world.
 Approximately 6,000 Indian companies are listed with Bombay Stock Exchange.
 It is the first stock exchange that introduced Equity derivatives in India.
 Free Float Index, US$ version of BSE Sensex and Internet Trading Platform were
launched initially by Bombay Stock Exchange in India.
 It is the first amongst all stock exchanges in the country to collect ISO certification
for Surveillance, Clearing & Settlement.
 It is the earliest to have the special facility for financial training.
 BSE Online Trading System (BOLT) used by BSE is one of the few stock trading
systems in the world that manages hybrid/mixed mode of trading.
The Indian capital market entered the twenty-first century with the Ketan Parekh
scam. As a result of this scam, badla was discontinued from July 2001 and rolling
settlement was introduced in all scrips. Trading of futures commenced from June
2000, and Internet trading was permitted in February 2000. On July 2, 2001, the Unit
 Trust of India announced suspension of the sale and repurchase of its flagship US-64
scheme due to heavy redemption leading to panic on the bourses. The government's
decision to privatize oil PSUs in 2003 fuelled stock prices. One big divestment of
international telephony major VSNL took place in early February 2002. Foreign
institutional investors have emerged as major players on the Indian bourses. NSE has
an upper hand over its rival BSE in terms of volumes not only in the equity markets
but also in the derivatives market.
 It has been a long journey for the Indian capital market. Now the capital market is
organized, fairly integrated, mature, more global and modernized. The Indian equity
market is one of the best in the world in terms of technology. Advances in computer
and communications technology, coming together on Internet are shattering
geographic boundaries and enlarging the investor class. Internet trading has become a
global phenomenon. The Indian stock markets are now getting integrated with global
markets.
As of January 2011, there are roughly 5,040 listed Indian companies that trade on the
Bombay Stock Exchange. As a result of this figure, the market possesses a significant trading
volume.
The BSE SENSEX is the premiere index in India and Asia; similar to the Dow Jones
Industrial Average the index is comprised of 30 component stocks which represent individual
companies that hold a dominating market presence in various sectors.
Dissimilar to the New York Stock Exchange or NASDAQ, the Bombay Stock
Exchange possesses a stringent time schedule that incorporates various sessions.
One more reason that can be attributed for the lag between a global benchmark like
BSE can be the fact that, in our country, listing of foreign companies are still not allowed on
the lines of ADRs or GDRs. This can be due to lack of depth and breadth of the market.
Again, as this study points out, the listing criteria differ in terms of size as well as their
disclosure norms. This implies that the depth of the market judged by the total capitalization
is less for the Indian markets compared to its counterparts. Moreover, the disclosure norms
affect the governance aspect as also the information availability.
BSE acquired a stake in United Stock Exchange (USE) to drive the development and
growth of the currency derivatives segment. USE commenced operations in September 2010
and created a world record for the largest number of contracts (9.88 million) traded by any
exchange on the first day of trading.
 A reporting platform for corporate bonds was launched which was christened as
ICDM or Indian Corporate Debt Market.
BSE STAR MF – a Mutual fund trading platform was launched in December 2009.
BSE is doing exceptionally well in terms of market share (80%) and order flows coming in
through this platform.
To bring down the cost of transactions, a new transaction fee structure for cash equity
segment has been introduced.
To fill the huge go-to-market knowledge gap which exists in several PSUs, BSE
launched www.bsepsu.com, a website which provides a single, updated platform to Public
Sector Units (PSUs) of India with all information relating to disinvestments and public
offerings
Additionally, BSE significantly enhanced its website, which attracts 1 million unique
visitors everyday and also launched its website in regional languages in Hindi, Marathi and
Gujarati versions to reach out to a larger audience in India.
BSE is the first Indian Exchange to launch mobile-based trading in India in Sept
2010.
After receiving the green signal from Securities & Exchange Board of India (SEBI),
BSE introduced Smart Order Routing (SOR) for its members in Oct 2010.
BSE reduced membership deposit by 90% for new members with an aim to build an
expanded pan national membership base to promote financial inclusion.
BSE is the first Securities Market Infrastructure member of SWIFT in India and shall
provide Corporate Actions to Custodians in ISO 15022 format.
The Stock Exchange, Mumbai (BSE) came out with a stock index in 1986, which is
known as BSE Sensex. The base year of BSE Sensex is 1978- 79 and the base value is 100.
The exchange is the largest (in terms of market capitalization) in South Asia. In terms of the
number of companies traded on the exchange (approximately 4700), it is the largest in the
world. The main index which tracks the performance of the exchange is the BSE Sensex.
The powers of the stock exchange are to be exercised as per provisions in its bye-law.
As per SCRA Act any recognised stock exchange may, subject to the previous approval of
the[Securities and Exchange Board of India make bye-laws for the regulation and control of
contracts. The bye-laws can provide for the exercise of following powers by the stock
exchange
 The opening and closing of markets and the regulation of the hours of trade;
 Set up a clearing house for the periodical settlement of contracts and differences
thereunder, the delivery of and payment for securities, the passing on of delivery
orders and the regulation and maintenance of such clearing house;
 The regulation or prohibition of blank transfers;
 The regulation, or prohibition of badlas or carry-over facilities;
 The fixing, altering or postponing of days for settlements;
 The determination and declaration of market rates, including the opening, closing,
highest and lowest rates for securities;
 The terms, conditions and incidents of contracts, including the prescription of margin
requirements, if any, and conditions relating thereto, and the forms of contracts in
writing;
 The regulation of the entering into, making, performance, rescission and termination,
of contracts, including contracts between members or between a member and his
constituent or between a member and a person who is not a member, and the
consequences of default or insolvency on the part of a seller or buyer or intermediary,
the consequences of a breach or omission by a seller or buyer, and the responsibility
of members who are not parties to such contracts;
 The regulation of taravani business including the placing of limitations thereon;
 The listing of securities on the stock exchange, the inclusion of any security for the
purpose of dealings and the suspension or withdrawal of any such securities, and the
suspension or prohibition of trading in any specified securities;
 The method and procedure for the settlement of claims or disputes, including
settlement by arbitration;
 The levy and recovery of fees, fines and penalties
 The regulation of the course of business between parties to contracts in any capacity;
 The exercise of powers in emergencies in trade(which may arise, whether as a result
of pool or syndicated operations or cornering or otherwise) including the power to fix
maximum and minimum prices for securities;
 The regulation of dealings by members for their own account;
 The separation of the functions of jobbers and brokers;
 The limitations on the volume of trade done by any individual member in exceptional
circumstances;
 Fixing the obligation of members to supply such information or explanation and to
produce such documents relating to the business as the governing body may requir.
Characteristics or features of stock exchange are:-
1. Market for securities : Stock exchange is a market, where securities of corporate
bodies, government and semi-government bodies are bought and sold.
2. Deals in second hand securities : It deals with shares, debentures bonds and such
securities already issued by the companies. In short it deals with existing or second
hand securities and hence it is called secondary market.
3. Regulates trade in securities : Stock exchange does not buy or sell any securities on
its own account. It merely provides the necessary infrastructure and facilities for trade
in securities to its members and brokers who trade in securities. It regulates the trade
activities so as to ensure free and fair trade
4. Allows dealings only in listed securities : In fact, stock exchanges maintain an
official list of securities that could be purchased and sold on its floor. Securities which
do not figure in the official list of stock exchange are called unlisted securities. Such
unlisted securities cannot be traded in the stock exchange.
5. Transactions effected only through members : All the transactions in securities at
the stock exchange are effected only through its authorised brokers and members.
Outsiders or direct investors are not allowed to enter in the trading circles of the stock
exchange. Investors have to buy or sell the securities at the stock exchange through
the authorised brokers only.
6. Association of persons : A stock exchange is an association of persons or body of
individuals which may be registered or unregistered.
7. Recognition from Central Government : Stock exchange is an organised market. It
requires recognition from the Central Government.
8. Working as per rules : Buying and selling transactions in securities at the stock
exchange are governed by the rules and regulations of stock exchange as well as
SEBI Guidelines. No deviation from the rules and guidelines is allowed in any case.
9. Specific location : Stock exchange is a particular market place where authorised
brokers come together daily (i.e. on working days) on the floor of market called
trading circles and conduct trading activities. The prices of different securities traded
are shown on electronic boards. After the working hours market is closed. All the
working of stock exchanges is conducted and controlled through computers and
electronic system.
10. Financial Barometers : Stock exchanges are the financial barometers and
development indicators of national economy of the country. Industrial growth and
stability is reflected in the index of stock exchange.
Although there is a significant level of growth in IPOs since 1990s, the share of debt
issues accounts for a major share in the total resources mobilised by the corporate sector.
From the trends on private placements, the issuance of public equity/debt was negligible. Our
analysis also indicates a negative impact of financial crisis on the mobilisation of financial
resources. A steady marginal increase in the effective tax rate of the corporate sector during
the last phase could be related to the reduction in the depreciation rate pegged at a maximum
of 15 per cent as announced by the Union budget, 2005-06. Revenue forgone through tax
concessions is still found to be a major source of corporate growth as observed by Reed
(2004). From our analysis on the financing pattern of corporate growth, we observed that
relatively large share of resources was mobilised through external sources. Analysing the
patterns in the Indian manufacturing sector, we do find an increasing trend in the internal
financing since the year 2000 and retained profit did contribute a major share during the
corresponding period. The study observed that manufacturing sector and the selected
industries are mainly relying on borrowings whenever more finance is required. Resources
raised by the manufacturing sector from the capital market have declined significantly since
mid-1990s although there is a reverse trend in the last phase (2006-09). More than 50 per cent
of the resources have been used for the purpose of building fixed assets. Similar trend is
observed when we looked at the pattern of the sources of financing in the selected industries
and the acquiring firms within them. Although the acquiring firms have been quite successful
in raising resources internally, they were depending largely on external sources. Borrowings
were the major source although they were more successful in raising resources through the
Indian capital market as compared to the Indian manufacturing sector as a whole. This
relative success in the capital market could be arriving to the rise in investor confidence
following acquisition moves. These firms have also made use of foreign borrowings and
issues of bonds in order to acquire large-sized firms abroad. The effective tax rate paid by
these acquiring firms has significantly declined during 1990-2009 while these firms were
excelling in terms of profitability. Further, we can conclude that although stock market
development was expected to lower the cost of capital for Indian corporate sector, it has not
played a major role as far as the actual resource mobilisation of the Indian manufacturing
sector is concerned. The study further observes that pecking order theorem does not seem to
be applicable in the case of the Indian corporate sector, manufacturing sector, selected
industries and the acquiring firms we have studied.
The Act recognizes stock exchanges with different legal structure. Presently the stock
exchanges which are recognised under the Securities Contracts (Regulation) Act in India,
could be segregated into two broad groups – 20 stock exchanges which were set up as
companies, either limited by guarantees or by shares, and the 3 stock exchanges which are
functioning as associations of persons (AOP) viz. BSE, Ahmadabad Stock Exchange and
Indore Stock Exchange. The 20 stock exchanges which are companies are: the stock
exchanges of Bangalore, Bhubaneswar, Calcutta, Cochin, Coimbatore, Delhi, Gauhati,
Hyderabad, Interconnected SE, Jaipur, Ludhiana, Madras, Magadh, Managalore, NSE, Pune,
OTCEI, Saurashtra-Kutch, Uttar Pradesh, and Vadodara. Of these, the stock exchanges of
Ahmedabad, Bangalore, BSE, Calcutta, Delhi, Hyderabad, Madhya Pradesh, Madras and
Gauhati were given permanent recognition by the Central Government at the time of setting
up of these stock exchanges. Apart from NSE, all stock exchanges whether established as
corporate bodies or Association of Persons (AOPs), are non-profit making organizations.
Market Participants in the Indian Securities Market
Market Participants FY 2010 Fy 2011 As on Sep. 30,
2011
Securities Appellate Tribunal (SAT) 1 1 1
Regulators 4 4 4`
Depositories 2 2 2
Stock Exchange
With Equities Trading 19 19 19
With Debit Market Segment 2 2 2
With Derivative Trading 2 2 2
With Currency Derivatives 4 4 4
Brokers (Cash Segment) 9,772 10,203 10,248
Corporate Brokers (Cash Segment 4,197 4,774 4,833
Brokers (Equity Derivatives) 1,705 2,111 2,240
Brokers (Currency Derivatives) 1,459 2,008 2,083
Sub-brokers 75,378 83,808 79,797
Flls 1,713 1,722 1,745
Portfolio Managers 243 267 248
Custodians 17 17 19
Registrars to an issue & Share 74 73 73
Transfer Agents
Primary Dealers 20 21 21
Merchant Bankers 164 192 192
Bankers to an Issue 48 55 56
Debenture Trustees 30 29 30
Underwriters 5 3 3
Venture Capital Funds 158 184 197
Foreign Venture Capital Investors 143 153 164
Source : Source: SEBI, RBI

Source : S&P Global Stock Market Factbook, 2011 and World Development Indicators, World Bank.

Financial literacy is an adjunct to financial inclusion. Financial products are complex

in nature and very few people really understand them and how they work. The challenge
therefore remains to include the financially excluded and educate the masses about available
products, services. From an Exchange perspective, we are applied technology businesses. To
succeed as an Exchange we need to have technology tools to quickly respond to customer
demands. And like I said earlier, if one wants capital markets to grow, technology has to play
its role. Technological developments have greatly influenced the global markets over a period
of time. At BSE, we have taken many initiatives focusing on technology enhancement, but
we still have a lot to do, when compared to global standards. Exchange we need to have
technology tools to quickly respond to customer demands. At BSE, we have taken many
initiatives focusing on technology enhancement, but we still l have a lot to do, when
compared to global standards.
BSE launched SENSEX Realized Volatility Index in Nov 2010 - the first of its kind in
India Netmagic Solutions Pvt. Ltd., one of India’s leading Managed IT Service Providers &
Thomson Reuters launched their co-location facility at BSE premises in Nov 2010 Investor
Awareness Programs are being regularly conducted by BSE at various places in the country
to educate the investors on the capital market; more than 200 programs have been conducted
during this year. In Oct 2010, BSE launched futures & options on BSE SENSEX Index on
Eurex, one of the world’s largest derivative exchanges In present major challenges facing the
broking industry at this juncture Going forward, technology will play a key role and the
domestic broking houses have to upgrade it. Depth of multiple products is also a challenge
for the domestic houses.