Stock Prices

Company : ITC LTD. ( 500875 ) Period ( Year 2007 to Year 2012 )

Year
2007 2008 2009 2010 2011 2012

Open Price
177.90 212.00 172.50 251.00 175.80 203.00

High Price
212.05 239.40 271.30 313.30 216.10 213.50

Low Price
140.15 132.05 155.75 151.50 150.00 197.00

Close Price
210.30 171.45 250.85 174.50 201.30 206.70

No. of Shares
31,19,60,663 26,08,38,500 16,83,21,063 13,06,81,064 15,79,75,423 2,35,35,885

No. of Trades
14,14,363 14,96,675 11,68,117 8,42,584 8,67,167 1,39,100

Total Turnover (Rs.)

52,75,63,72,567 50,70,28,79,479 35,11,25,36,045 28,54,80,21,397 29,65,15,82,770 4,83,88,39,026

* Spread(Rs.) H-L
71.90 107.35 115.55 161.80 66.10 16.50

C-O
32.40 -40.55 78.35 -76.50 25.50 3.70

Company : HINDUSTAN UNILEVER LTD. ( 500696 ) Period ( Year 2007 to Year 2012 )
Year Open Price High Price Low Price Close Price No. of Shares No. of Trades Total Turnover (Rs.) * Spread(Rs.) H-L
64.40

C-O
-4.10

2007

218.00

230.40

166.00

213.90

16,86,07,841

8,63,172

34,33,90,64,687

2008

214.20

267.00

170.00

250.25

13,48,81,302

8,39,030

31,48,63,05,109

97.00

36.05

2009

251.20

306.00

210.70

264.75

10,56,57,202

8,39,364

27,01,34,86,589

95.30

13.55

2010

265.95

320.70

218.10

312.30

7,37,34,539

6,42,252

19,35,65,19,459

102.60

46.35

2011

313.85

420.00

264.50

407.80

6,20,95,209

7,57,142

20,53,12,48,732

155.50

93.95

2012

408.00

411.20

375.10

382.55

1,24,25,771

1,51,296

4,84,51,56,134

36.10

-25.45

Company : NESTLE INDIA LTD. ( 500790 ) Period ( Year 2007 to Year 2012 )
Year Open Price
1,136.00

High Price
1,662.75

Low Price
876.00

Close Price
1,499.90

No. of Shares
1,18,34,240

No. of Trades
1,03,032

Total Turnover (Rs.)

14,16,54,38,659

* Spread(Rs.) H-L
786.75

C-O
363.90

2007

2008

1,510.00

1,880.00

1,200.05

1,452.75

86,26,722

93,887

13,25,38,04,781

679.95

-57.25

2009

1,441.00

2,739.00

1,377.05

2,547.95

86,40,551

1,42,105

17,07,37,82,648

1,361.95

1,106.95

2010

2,536.00

4,199.40

2,455.50

3,795.20

37,97,369

1,51,732

10,97,59,81,147

1,743.90

1,259.20

2011

3,825.10

4,549.00

3,160.00

4,172.70

18,00,457

1,22,498

7,08,27,16,936

1,389.00

347.60

2012

4,139.90

4,515.00

3,930.00

4,410.40

3,65,298

18,294

1,49,80,41,332

585.00

270.50

Company : COLGATE-PALMOLIVE (INDIA) LTD. ( 500830 ) Period ( Year 2007 to Year 2012 )
Year Open Price
388.00

High Price
455.00

Low Price
291.00

Close Price
407.45

No. of Shares
2,22,91,884

No. of Trades
3,15,510

Total Turnover (Rs.)

8,50,05,87,791

* Spread(Rs.) H-L
164.00

C-O
19.45

2007

2008

409.00

521.00

341.00

408.10

1,19,54,412

2,36,224

4,85,84,00,893

180.00

-0.90

2009

408.00

735.00

380.00

659.00

1,20,52,966

2,85,118

6,69,28,02,167

355.00

251.00

2010

665.00

996.00

651.05

867.80

82,58,697

2,44,859

6,50,03,03,923

344.95

202.80

2011

875.90

1,084.30

783.20

991.80

44,11,793

2,12,156

4,09,22,28,303

301.10

115.90

2012

995.00

1,081.00

932.00

1,038.95

9,60,732

43,469

95,33,12,363

149.00

43.95

Company : DABUR INDIA LTD. ( 500096 ) Period ( Year 2007 to Year 2012 )
Year Open Price
146.90

High Price
176.30

Low Price
83.40

Close Price
114.20

No. of Shares
8,45,94,430

No. of Trades
4,59,179

Total Turnover (Rs.)

9,38,95,00,781

* Spread(Rs.) H-L
92.90

C-O
-32.70

2007

2008

115.00

127.00

60.00

84.00

6,37,38,341

2,96,087

6,11,21,86,745

67.00

-31.00

2009

83.20

171.90

83.05

158.95

4,49,57,857

3,04,591

5,61,71,43,326

88.85

75.75

2010

158.10

218.95

90.80

100.25

4,30,99,245

3,61,136

6,49,85,31,979

128.15

-57.85

2011

100.40

122.00

86.70

99.75

3,77,15,246

3,12,433

3,90,57,49,019

35.30

-0.65

2012

100.15

106.90

92.05

104.90

1,58,57,784

59,375

1,56,74,27,296

14.85

4.75

Indices
Indices :FMCG Period : ( Year 2007 to Year 2012 )
Year
2007

Open
1,946.56

High
2,327.41

Low
1,598.70

Close
2,319.92

2008

2,323.24

2,569.72

1,549.27

1,987.38

2009

1,987.03

2,940.25

1,781.73

2,791.55

2010

2,802.17

3,799.69

2,646.32

3,684.12

2011

3,701.64

4,274.17

3,171.61

4,035.31

2012

4,054.28

4,240.31

3,971.77

4,130.35

INDUSTRY PROFILE
INDIAN SECURITIES MARKET
The Indian capital market is more than a century old. Its history goes back to 1875, when 22 brokers formed the Bombay Stock Exchange (BSE). Over the period, the Indian securities market has evolved continuously to become one o the most dynamic, modern, and efficient securities markets in Asia. Today, Indian market confirms to best international practices and standards both in terms of structure and in terms of operating efficiency .Indian securities markets are mainly governed by a) The Companys Act1956, b) The Securities Contracts (Regulation) Act 1956 (SCRA Act), and c) The Securities and Exchange Board of India (SEBI) Act, 1992.

A brief background of these above regulations are given below:

The Companies Act 1956 deals with issue, allotment and transfer of securities and various aspects relating to company management. It provides norms for disclosures in the public issues, regulations for underwriting, and the issues pertaining to use of premium and discount on various issues. SCRA provides regulations for direct and indirect control of stock exchanges with an aim to prevent undesirable transactions in securities. It provides regulatory jurisdiction to Central Government over stock exchanges, contracts in securities and listing of securities on stock exchanges. SEBI is a body created by the Government of India registered under The SEBI Act 1992 which acts as a regulatory authority of security market with its head office at Mumbai.

Preamble:

The Preamble of the Securities and Exchange Board of India describes the basic Functions of the Securities and Exchange Board of India as To protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto The SEBI Act empowers SEBI to protect the interest of investors in the securities market, to promote the development of securities market and to regulate the security market. The Indian securities market consists of primary (new issues) as well as secondary (stock) market in both equity and debt. The primary market provides the channel for sale of new securities, while the secondary market deals in trading of securities previously issued. The issuers of securities issue (create and sell) new securities in the primary market to raise funds for investment. They do so either through public issues or private placement. There are two major types of issuers who issue securities. The corporate entities issue mainly debt and equity instruments (shares, debentures, etc.), while the governments (central and state governments) issue debt securities (dated securities, treasury bills). The secondary market enables participants who hold securities to adjust their holdings in response to changes in their assessment of risk and return. A variant of secondary market is the forward market, where securities are traded for future delivery and payment in the form of futures and options. The futures and options can be on individual stocks or basket of stocks like index. Two exchanges, namely National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE), Mumbai provide trading of derivatives in single stock futures, index futures, single stock options and index options. Derivatives trading commenced in India in June 2000.

Function of Securities market

A securities market is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares, bonds, debentures etc.

It performs an important role of enabling corporate, entrepreneurs to raise resources for their companies and business ventures through public issues (IPO). Transfer of resources from those having idle resources (investors) to others who have a need for them (corporate) is most efficiently achieved through the securities market. Securities markets provide channels for reallocation of savings to investments and entrepreneurship. Savings are linked to investments by a variety of intermediaries, through a range of financial products, called Securities.

The securities market essentially has three categories of participants, namely:

Issuers of securities, Investors in securities Intermediaries, such as merchant bankers, brokers etc.

While the corporate and government raise resources from the securities market to meet their obligations, it is households that invest their savings in the securities market.

STOCK EXCHANGE:
A stock exchange is a platform to buy and sell stocks. The stock quotes in the market are decided by demand and supply. Stock markets used to be market place where a group of buyers and sellers used to gather together and express the willingness to buy/sell a stock at a willing price. Whenever the two match a deal took place. But, with the advent of IT, now the stock markets have become almost paperless. In order to trade, one has to open a trading account with a broker, transfer the requisite amount and trading in stocks.

The stock exchanges in India are under the overall supervision of the regulatory authority i.e the Securities and Exchange Board of India (SEBI)

Provide a trading platform, where buyers and sellers can meet to transact in securities.

The trading platform provided by NSE is an electronic one and there is no need for buyers and sellers to meet at a physical location to trade.

They can trade through the computerized trading screens

Major Stock Exchanges in India

Bombay Stock Exchange (BSE)

National Stock Exchange (NSE)

There are two major indicators of Indian capital market- SENSEX & NIFTY:

2.2 WHAT ARE THE SENSEX & THE NIFTY?

The Sensex is an "Index". What is an Index? An Index is basically an indicator. It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down. The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator of all the major companies of the NSE. If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down. Just like the Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE. Just in case people are confused, the BSE is the Bombay Stock Exchange and the NSE is the National Stock Exchange. The BSE is situated at Bombay and the NSE is situated at Delhi.

These are the major stock exchanges in the country. There are other stock exchanges like the Calcutta Stock Exchange etc. but they are not as popular as the BSE and the NSE. Most of the stock trading in the country is done though the BSE & the NSE. Besides Sensex and the Nifty there are many other indexes. There is an Index that gives you an idea about whether the mid-cap stocks go up and down. This is called the BSE Mid-cap Index. There are many other types of Index. Unless stock markets provide professionalized service, small investors and foreign investors will not be interested in capital market operations. And capital market being one of the major sources of long-term finance for industrial projects, India cannot afford to damage the capital market path. In this regard NSE gains vital importance in the Indian capital market but if we see the Sensex & Nifty graph there is a great variation.

2.3 NSE & BSE

National Stock Exchange (NSE)
With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others. Trading at NSE can be classified under two broad categories: (a) Wholesale debt market and (b) Capital market.

Wholesale debt market operations are similar to money market operations - institutions and corporate bodies enter into high value transactions in financial instruments such as

government securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc. There are two kinds of players in NSE: (a) Trading members and (b) Participants. Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. Participants include trading members and large players like banks who take direct settlement responsibility. Trading at NSE takes place through a fully automated screen-based trading mechanism which adopts the principle of an order-driven market. Trading members can stay at their offices and execute the trading, since they are linked through a communication network. The prices at which the buyer and seller are willing to transact will appear on the screen. When the prices match the transaction will be completed and a confirmation slip will be printed at the office of the trading member. NSE has several Advantages over the traditional trading exchanges. They are as follows:

NSE brings an integrated stock market trading network across the nation. Investors can trade at the same price from anywhere in the country since inter-market operations are streamlined coupled with the countrywide access to the securities.

Delays in communication, late payments and the malpractices prevailing in the traditional trading mechanism can be done away with greater operational efficiency and informational transparency in the stock market operations, with the support of total computerized network.

Unless stock markets provide professionalized service, small investors and foreign investors will not be interested in capital market operations. And capital market being one of the major

source of long-term finance for industrial projects, India cannot afford to damage the capital market path. In this regard NSE gains vital importance in the Indian capital market system

Bombay Stock Exchange (BSE):

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now spanning three centuries in its 133 years of existence. What is now popularly known as 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's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. It migrated from the open outcry system to an online screen-based order driven trading system in 1995. Earlier an Association Of Persons (AOP), BSE is now a corporatised and demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualisation, BSE has two of world's best exchanges, Deutsche Brse and Singapore Exchange, as its strategic partners. Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by providing it with an efficient access to resources. There is perhaps no major corporate in India which has not sourced BSE's services in raising resources from the capital market. Today, BSE is the world's number 1 exchange in terms of the number of listed companies and the world's 5th in transaction numbers. The market capitalization as on December 31, 2007 stood at USD 1.79 trillion . An investor can choose from more than 4,700 listed companies, which for easy reference, are classified into A, B, S, T and Z groups. The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature , and is tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX is constructed on a 'free-float' methodology, and is sensitive to market sentiments and market realities. Apart from the SENSEX, BSE offers 21 indices, including 12 sectoral indices. BSE has entered into an index cooperation agreement with Deutsche Brse. This agreement has made SENSEX and other BSE indices available to investors in Europe and America. Moreover,

Barclays Global Investors (BGI), the global leader in ETFs through its iShares brand, has created the 'iShares BSE SENSEX India Tracker' which tracks the SENSEX. The ETF enables investors in Hong Kong to take an exposure to the Indian equity market. The first Exchange Traded Fund (ETF) on SENSEX, called "SPIcE" is listed on BSE. It brings to the investors a trading tool that can be easily used for the purposes of investment, trading, hedging and arbitrage. SPIcE allows small investors to take a long-term view of the market. BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives. 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. The systems and processes are designed to safeguard market integrity and enhance transparency in operations. 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). BSE continues to innovate. In recent times, it has become the first national level stock exchange to launch its website in Gujarati and Hindi to reach out to a larger number of investors. It has successfully launched a reporting platform for corporate bonds in India christened the ICDM or Indian Corporate Debt Market and a unique ticker-cum-screen aptly named 'BSE Broadcast' which enables information dissemination to the common man on the street. 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. While the Directors Database provides a single-point access to information on the boards of directors of listed companies, the ICERS facilitates the corporates in sharing with BSE their corporate announcements.

Market Timings:

Market Timings for NSE and BSE are: 9.00 A.M. to 3.30 P.M.(excluding Saturday, Sunday and National holidays) Post Closing Session Timing Post Session Time for BSE: 3:40 p.m. - 4:00 p.m. Post Session Time for NSE: 3:50 p.m. - 4:00 p.m.

Note: Client can place orders only in NSE post closing.

Bull Market/ Bear Market

Bull market:

A bull market is a financial market where prices of instruments (e.g., stocks) are, on average, trending higher.

The bull market tends to be associated with rising investor confidence and expectations of further capital gains.

A market in which prices are rising. A market participant who believes prices will move higher is called a "bull".

A news item is considered bullish if it is expected to result in higher prices. Bull markets are generally characterized by high trading volume.

Bull markets are movements in the stock market in which prices are rising and the consensus is that prices will continue moving upward. During this time, economic production is high, jobs are plentiful and inflation is low.

Bear Market:

Bear Market Prolonged period of falling share prices,

It dominates selling pressure in the market place, brought about by BEARS, or adverse economic or political factors, e.g. a change in the industrial policy of the government, imposition of price control, drought or flood, free imports, etc., or a change in the government, income tax raids, etc.

Bear markets are the stock prices are falling, and the view is that they will continue falling. The economy will slow down, coupled with a rise in unemployment and inflation

What is a Share?
Share is a total equity capital of a company which is divided into equal units of small Denominations, each called a share. Share or Stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company or can be purchased from the stock market. For example, in a company the total equity capital of Rs 2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is called a Share. Thus, the company then is said to have 20, 00,000 equity shares of Rs 10 each.
TYPES OF SHARES:

Equity Shares :

1. An equity share, commonly referred to as ordinary share, represents the form of fractional ownership in a business venture. 2. Equity securities are not entitled to any payment (interest Payable). 3. Equity Share has voting rights at all general meetings of company 4. Equity holders are entitled to the "upside" of the business and to control the business 5. Share the profits of the company in the form of dividend and bonus shares

Rights Issue/ Rights Shares :

The issue of new securities to existing shareholders at a ratio to those already held, at a price. For e.g. a 2:3 rights issue at Rs. 125, would entitle a shareholder to receive 2 shares for every 3 shares held at a price of Rs. 125 per share.

Bonus Shares:

Shares issued by the companies to their shareholders free of cost based on the number of shares the shareholder owns.

Why do companies need to issue shares to the public?

Most companies are usually started privately by their promoter(s). However, the promoters capital and the borrowings from banks and financial institutions may not be sufficient for setting up or running the business over a long term. Companies invite the public to contribute towards the equity and issue shares to individual investors. The way to invite share capital from the public is through a Public Issue. Simply stated, a public issue is an offer to the public to subscribe to the share capital of a company. Once this is done, the company allots shares to the applicants as per the prescribed rules and regulations laid down by SEBI.

The securities market has two interdependent segments:

Primary market Secondary market

2.4 PRIMARY MARKET

The primary market provides the channel for sale of new securities.Primary market provides opportunity to the issuers of securities such as Government as well as corporate, to raise resources to meet their requirements of investment and/or discharge some obligation.
Primarily, issues can be classified as:

1. Initial public offer 2. Follow on public offer 3. Rights issue The classification of issues is illustrated below:

1. Initial Public Offering (IPO):

An Initial Public Offer (IPO) is the selling of securities to the public by an unlisted company in the primary market.

IPO is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves a way for listing and trading of the issuers securities.

There are two types of issues,

Fixed Price issues

One, where company and Lead Merchant Banker fix a price (called fixed price)

Book Building Issue

Other, where the company and the Lead Manager (LM) stipulate a floor price or a price band and leave it to market forces to determine the final price (price discovery through book building process).

Fixed Price issues:

An issuer company is allowed to freely price the issue. The basis of issue price is disclosed in the offer document where the issuer discloses in detail about the qualitative and quantitative factors justifying the issue price. The Issuer company can mention a price band of 20% (cap in the price band should not be more than 20% of the floor price) in the Draft offer documents filed with SEBI and actual price can be determined at a later date before filing of the final offer document with SEBI/ROCs.
Book Building Issue:

Book Building is basically a process used in IPOs for efficient price discovery. It is a mechanism where, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date.

Under Book Building, investors bid for shares at the floor price or above and after the closure of the book building process the price is determined for allotment of shares.

In case of Book Building, the demand can be known everyday as the book is being built. Book building process should remain open for public for a minimum of 3 days.

Price Band:

The prospectus may contain either the floor price for the securities or a price band within which the investors can bid. The spread between the floor and the cap of the price band shall not be more than 20%.

Price band can have a revision and such a revision in the price band shall be widely disseminated by informing the stock exchanges, by issuing a press release and also indicating the change on the relevant website and the terminals of the trading members participating in the book building process.

In case the price band is revised, the bidding period shall be extended for a further period of three days, subject to the total bidding period not exceeding ten days.

They may issue the securities at face value, or at a discount/premium and these securities may take a variety of forms such as equity, debt etc.They may issue the securities in domestic market and/or international market.

Floor price:

Floor price is the minimum price at which bids can be made

Cut-off price:

In Book building issue, the issuer is required to indicate either the price band or a floor price in the red herring prospectus. The actual discovered issue price can be any price in the price band or any price above the floor price. This issue price is called Cut off price. This is decided by the issuer and LM after considering the book and investors appetite for the stock. SEBI (DIP) guidelines permit only retail individual investors to have an option of applying at cut off price.
Face Value of a share/debenture:

The nominal or stated amount (in Rs.) assigned to a security by the issuer.

For shares, it is the original cost of the stock shown on the certificate; For bonds, it is the amount paid to the holder at maturity.

For a debt security, face value is the amount repaid to the investor when the bond matures (usually, Government securities and corporate bonds have a face value of Rs. 100). The price at which the security trades depends on the fluctuations in the interest rates in the economy.

PREMIUM AND DISCOUNT IN A SECURITY MARKET:

Securities are generally issued in denominations of 5, 10 or 100. This is known as the Face Value or Par Value of the security

When a security is sold above its face value, it is said to be issued at a Premium When a security is sold at less than its face value, then it is said to be issued at a Discount.

Minimum number of days for which an IPO subscription list has to remain open In the case of fixed price issues, subscription list for public issues has to remain open for at least 3 working days and not more than 10 working days. In case of book building issues, the minimum and maximum period for which bidding has to remain open is 3 7 working days extendable by 3 days in case of a revision in the price band.
Allotment of an IPO

Allotment As per SEBI guidelines, the Basis of Allotment should be completed with 15 days from the issue close date.

On The basis of allotment within 2 working days the details of credit to demat account / allotment advice and dispatch of refund order needs to be completed.

Listing of share

Once the allotment process is completed next would be listing of share in the exchange. It would take around 3 weeks after the closure of the book built issue.

A Registrar to an issue

The Registrar finalizes the list of eligible allot-tees after deleting the invalid applications It ensures that the corporate action for crediting of shares to the Demat accounts of the applicants is done

It ensures that dispatch of refund orders to those applicable is sent. The Lead Manager coordinates with the Registrar to ensure that the flow of applications from Collecting bank branches, processing of the applications and other matters in relation to applications are followed till the allotment is finalized.

Dispatch security certificates and refund orders completed and securities listed.

NSE provides facility for IPO

NSEs electronic trading network spans across the country providing access to investors in remote areas. NSE decided to offer this infrastructure for conducting online IPOs through the Book Building process.

NSE operates a fully automated screen based bidding system called NEAT IPO that enables trading members to enter bids directly from their offices through a sophisticated telecommunication network.

Book Building through the NSE system offers several advantages:

The NSE system offers a nationwide bidding facility in securities It provides a fair, efficient & transparent method for collecting bids using the latest electronic trading systems

Costs involved in the issue are far less than those in a normal IPO The system reduces the time taken for completion of the issue process. The IPO market timings are from 10.00 a.m. to 3.00 p.m. On the last day of the IPO, the

session timings can be further extended on specific request by the Book Running Lead Manager.
Follow on public offering (Further Issue)

FPO is when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document.
Rights Issue

Rights Issue is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date.

The rights are normally offered in a particular ratio to the number of securities held prior to the issue. This route is best suited for companies who would like to raise capital without diluting

stake of its existing shareholders.

2.5 SECONDARY MARKET

Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the stock exchange

Majority of the trading is done in the secondary market Secondary market comprises of equity markets and the debt markets

Role of the Secondary Market

For the general investor, the secondary market provides an efficient platform for trading of his securities.

For the management of the company, Secondary equity markets serve as a monitoring and control conduitby facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions

Settlements

Rolling T+2 settlements or Cash All trades that take place on a given date will be settled in the next 2 working days (The seller must deliver and the purchaser must pay for that which has been bought)

Square up within a settlement or Intraday Netting of all the transactions done on T day (trading day) basis. Squaring off the obligation the same day Auctions In case of a pay-in default, securities are auctioned in the auction market Pay- in and Pay-out of funds and securities: - Delivery generation T+1 - Settlement T+2

Clearing Corporation:

It is an organization which works with the exchanges to handle confirmation, delivery and settlement of transactions. Such corporations play a key role in ensuring that executed trades are

settled within a specified period of time and in an efficient manner also called clearing firm or clearing house. There are 2 main clearing corporation in India:

NSCCL - The National Securities Clearing Corporation Ltd. BOI Shareholding Ltd Bank of India Shareholding Ltd.

National Securities Clearing Corporation Limited (NSCCL)

National Securities Clearing Corporation Limited (NSCCL) is a wholly owned subsidiary of NSE

Incorporated in August 1995 NSCCL carries out the clearing and settlement of the trades executed in the equities and derivatives segments of the NSE

The first clearing corporation to be established in the country The first clearing corporation to introduce settlement guarantee

BOI Shareholding Ltd.

BOI Shareholding a joint venture between Bank of India and BSE Manages the clearing and settlement activities of Bombay Stock exchange BOISL is also business partner of both NSDL and CDSL and provides depository services to both clearing members and investors.

Depositary:

A "Depository" is a facility for holding securities, which enables securities transactions to be processed by book entry.

To achieve this purpose, the depository may immobilize the securities or dematerialize them (so that they exist only as electronic records).

India has chosen the dematerialization route. In India, a depository is an organization, which holds the beneficial owner's securities in electronic form, through a registered Depository Participant (DP). A depository functions somewhat similar to a commercial bank. To avail of the services offered by a depository, the investor has to open an account with a registered DP

A "Depository Participant" (DP) is an agent of the depository who is authorized to offer depository services to investors. Financial institutions, banks, custodians and stock brokers complying with the requirements prescribed by SEBI/ Depositories can be registered as DP.

Beneficial Owner" is a person in whose name a Demat account is opened with the depository for the purpose of holding securities in the electronic form.

"Dematerialization" is a process by which physical certificates are converted into electronic form

As discussed above, all the transactions in the shares takes place through a depository account.

All securities traded in the secondary market have an identification number known as ISIN. "ISIN (International Securities Identification Number) is the unique identification number given to a security of an issuer at the time of admitting such security in the depositary system.

"Issuer" means any entity making an issue of securities

There are two depositaries in India:

National Securities Depositary Limited (NSDL) Central Depositary Services Limited (CDSL)

National Securities Depositary Limited (NSDL)

The enactment of Depositories Act in August 1996 paved the way for establishment of NSDL, the first and the largest depository in India.

This depository promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handles most of the securities held and settled in dematerialized form in the Indian capital market.

NSDL DP-ID of Indiabulls - IN302236.

Central Depositary Services Limited (CDSL)

CDSL is Central Depositary Services Limited. CDSL received the certificate of commencement of business from SEBI in February, 1999.

CDSL was promoted by Bombay Stock Exchange Limited (BSE) jointly with leading banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India and Centurion Bank.

CDSL DP-ID of Indiabulls 29900.

2.6 DEFINITION OF FREE-FLOAT

Shareholding of investors that would not, in the normal course come into the open market for trading are treated as 'Controlling/ Strategic Holdings' and hence not included in free-float. Specifically, the following categories of holding are generally excluded from the definition of Free-float: Shares held by founders/directors/ acquirers which has control element Shares held by persons/ bodies with "Controlling Interest" Shares held by Government 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.

ADVANTAGES OF FREE-FLOAT METHODOLOGY

A Free-float index reflects the market trends more rationally as it takes into consideration only those shares that are available for trading in the market. Free-float Methodology makes the index more broad-based by reducing the concentration of top few companies in Index.

A Free-float index aids both active and passive investing styles. It aids active managers by enabling them to benchmark their fund returns vis- -vis an investible index. This enables an apple-to-apple comparison thereby facilitating better evaluation of performance of active managers. Being a perfectly replicable portfolio of stocks, a Freefloat adjusted index is best suited for the passive managers as it enables them to track the index with the least tracking error.

Free-float Methodology improves index flexibility in terms of including any stock from the universe of listed stocks. This improves market coverage and sector coverage of the index. For example, under a Full-market capitalization methodology, companies with large market capitalization and low free-float cannot generally be included in the Index because they tend to distort the index by having an undue influence on the index movement. However, under the Free-float Methodology, since only the free-float market capitalization of each company is considered for index calculation, it becomes possible to include such closely-held companies in the index while at the same time preventing their undue influence on the index movement.

Globally, the Free-float Methodology of index construction is considered to be an industry best practice and all major index providers like MSCI, FTSE, S&P and STOXX have adopted the same. MSCI, a leading global index provider, shifted all its indices to the Free-float Methodology in 2002. The MSCI India Standard Index, which is followed by Foreign Institutional Investors (FIIs) to track Indian equities, is also based on the Freefloat Methodology. NASDAQ-100, the underlying index to the famous Exchange Traded Fund (ETF) - QQQ is based on the Free-float Methodology.

OVER THE COUNTER EXCHANGE OF INDIA (OTCEI):

The traditional trading mechanism prevailed in the Indian stock markets gave way to many functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly long settlement periods and benami transactions, which affected the small investors to a great extent. To provide improved services to investors, the country's first ringless, scripless, electronic stock exchange - OTCEI - was created in 1992 by country's premier financial institutions - Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of

India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services. Trading at OTCEI is done over the centres spread across the country. Securities traded on the OTCEI are classified into:

Listed Securities- The shares and debentures of the companies listed on the OTC can be bought or sold at any OTC counter all over the country and they should not be listed anywhere else

Permitted Securities- Certain shares and debentures listed on other exchanges and units of mutual funds are allowed to be traded Initiated debentures- Any equity holding atleast one lakh debentures of particular scrip can offer them for trading on the OTC.

OTC has a unique feature of trading compared to other traditional exchanges. That is, certificates of listed securities and initiated debentures are not traded at OTC. The original certificate will be safely with the custodian. But, a counter receipt is generated out at the counter which substitutes the share certificate and is used for all transactions. In the case of permitted securities, the system is similar to a traditional stock exchange. The difference is that the delivery and payment procedure will be completed within 14 days.

Compared to the traditional Exchanges, OTC Exchange network has the following advantages:

OTCEI has widely dispersed trading mechanism across the country which provides greater liquidity and lesser risk of intermediary charges. Greater transparency and accuracy of prices is obtained due to the screen-based scripless trading. Since the exact price of the transaction is shown on the computer screen, the investor gets to know the exact price at which s/he is trading. Faster settlement and transfer process compared to other exchanges.

In the case of an OTC issue (new issue), the allotment procedure is completed in a month and trading commences after a month of the issue closure, whereas it takes a longer period for the same with respect to other exchanges.

Thus, with the superior trading mechanism coupled with information transparency investors are gradually becoming aware of the manifold advantages of the OTCEI.