describe history of stock exchanges in india?

Answer 1

History of Stock Exchanges In India:
In 1860, the exchange flourished with 60 brokers. In fact the 'Share Mania' in India began with the American Civil War broke and the cotton supply from the US to Europe stopped. Further the brokers increased to 250.

At the end of the war in 1874, the market found a place in a street (now called Dalal Street). In 1887, "Native Share and Stock Brokers' Association" was established. In 1895, the exchange acquired a premise in the street which was inaugurated in 1899.


you will get more info at
http://www.surfindia.com/finance/stock-exchanges-india.html
myicwai.com/knowledgebank/fm40.pdf
http://www.indian-shares.com/

Answer 2

The National Stock Exchange of India (NSE), is one of the largest and most advanced stock markets in the World. The NSE is the world's third largest stock exchange in terms of transactions. It is located in Mumbai, the financial capital of India. The NSE VSAT terminals, 2799 in total (31st December 2005), cover 320 cities in India [1].

Origins

The 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


Stock Exchanges are an organised marketplace, either corporation or mutual organisation, where members of the organisation gather to trade company stocks and other securities. The members may act either as agents for their customers, or as principals for their own accounts.

Stock exchanges also facilitates for the issue and redemption of securities and other financial instruments including the payment of income and dividends. The record keeping is central but trade is linked to such physical place because modern markets are computerised. The trade on an exchange is only by members and stock broker do have a seat on the exchange.

List of Stock Exchanges In India

* Bombay Stock Exchange
* National Stock Exchange
* Regional Stock Exchanges
o Ahmedabad Stock Exchange
o Bangalore Stock Exchange
o Bhubaneshwar Stock Exchange
o Calcutta Stock Exchange
o Cochin Stock Exchange
o Coimbatore Stock Exchange
o Delhi Stock Exchange
o Guwahati Stock Exchange
o Hyderabad Stock Exchange
o Jaipur Stock Exchange
o Ludhiana Stock Exchange
o Madhya Pradesh Stock Exchange
o Madras Stock Exchange
o Magadh Stock Exchange
o Mangalore Stock Exchange
o Meerut Stock Exchange
o OTC Exchange Of India
o Pune Stock Exchange
o Saurashtra Kutch Stock Exchange
o Uttar Pradesh Stock Exchange
o Vadodara Stock Exchange

History of Stock Exchanges In India:
In 1860, the exchange flourished with 60 brokers. In fact the 'Share Mania' in India began with the American Civil War broke and the cotton supply from the US to Europe stopped. Further the brokers increased to 250.

At the end of the war in 1874, the market found a place in a street (now called Dalal Street). In 1887, "Native Share and Stock Brokers' Association" was established. In 1895, the exchange acquired a premise in the street which was inaugurated in 1899.


[edit] Innovations

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 novation 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 three days after the BSE.
* Being the first exchange to trade ETFs (exchange traded funds) in India.

[edit] Markets

Currently, NSE has the following major segments of the capital market:

* Equity
* Futures and Options
* Retail Debt Market
* Wholesale Debt Market

http://www.surfindia.com/finance/stock-exchanges-india.html

Answer 3

The stock market appears in the news every day. You hear about it any time it reaches a new high or a new low, and you also hear about it daily in statements like "The Dow Jones Industrial Average rose 2 percent today, with advances leading declines by a margin of..." Obviously, stocks and the stock market are important, but you may find that you know very little about them. What is a stock? What is a stock market? Why do we need a stock market? Where does the stock come from to begin with, and why do people want to buy and sell it? If you have questions like these, then this article will open your eyes to a whole new world!
Determining Value
Let's say that you want to start a business, and you decide to open a restaurant. You go out and buy a building, buy all the kitchen equipment, tables and chairs that you need, buy your supplies and hire your cooks, servers, etc. You advertise and open your doors. Let's say that:
•You spend $500,000 buying the building and the equipment.
•In the first year, you spend $250,000 on supplies, food and the payroll for your employees.
•At the end of your first year, you add up all of the money you have received from customers and find that your total income is $300,000.
Since you have made $300,000 and paid out the $250,000 for expenses, your net profit is:
$300,000 (income) - $250,000 (expense) = $50,000 (profit)
At the end of the second year, you bring in $325,000 and your expenses remain the same, for a net profit of $75,000. At this point, you decide that you want to sell the business. What is it worth? One way to look at it is to say that the business is "worth" $500,000. If you close the restaurant, you can sell the building, the equipment and everything else and get $500,000. This is a simplification, of course -- the building probably went up in value, and the equipment went down because it is now used. Let's just say that things balance out to $500,000. This is the asset value, or book value, of the business -- the value of all of the business's assets if you sold them outright today.
Selling Shares If you keep the restaurant going, it will probably make at least $75,000 this year -- you know that from your history with the business. Therefore, you can think of the restaurant as an investment that will pay out something like $75,000 in interest every year. Looking at it that way, someone might be willing to pay $750,000 for the restaurant, as a $75,000 return per year on a $750,000 investment represents a 10-percent rate of return. Someone might even be willing to pay $1,500,000, which represents a 5-percent rate of return, or more if he or she thought that the restaurant's income would grow and increase earnings over time at a rate faster than the rate of inflation. The restaurant's owner, therefore, will set the price accordingly. You might price the restaurant at $1,500,000. What if 10 people come to you and say, "Wow, I would like to buy your restaurant but I don't have $1,500,000." You might want to somehow divide your restaurant into 10 equal pieces and sell each piece for $150,000. In other words, you might sell shares in the restaurant. Then, each person who bought a share would receive one-tenth of the profits at the end of the year, and each person would have one out of 10 votes in any business decisions. Or, you might divide ownership up into 1,500 shares and sell each share for $1,000 to make the price something that more people could afford. Or, you might divide ownership up into 3,000 shares, keep 1,500 for yourself, and sell the remaining shares for $500 each. That way, you retain a majority of the shares (and therefore the votes) and remain in control of the restaurant while sharing the profit with other people. In the meantime, you get to put $750,000 in the bank when you sell the 1,500 shares to other people. Stock, at its core, is really that simple. It represents ownership of a company's assets and profits. A dividend on a share of stock represents that share's portion of the company's profits, generally dispersed yearly. If the restaurant has 10 owners, each owning one share of stock, and the restaurant makes $75,000 in profit during the year, then each owner gets a dividend of $7,500. A large company like IBM has millions of shares of stock outstanding -- about 1.7 billion in February 2004 (see Quicken: International Business Machines for details). In this case, the total profits of the company are divided by 1.7 billion and sent to the shareholders as dividends. One measure of the value of a company, at least as far as investors are concerned, is the product of the number of outstanding shares multiplied by the share price. This value is called the capitalization of the company.
Shareholders and Stock Prices From this description, you can see that a corporation has a group of owners -- the shareholders. The owners elect a board of directors to make the company's major decisions. The owners of a corporation become owners by buying shares of stock in the corporation. The board of directors decides how many total shares there will be. For example, a company might have one million shares of stock. The company can either be privately held or publicly held. In a privately held company, the shares of stock are owned by a small number of people who probably all know one another. They buy and sell their shares amongst themselves. A publicly held company is owned by thousands of people who trade their shares on a public stock exchange. One of the big reasons why corporations exist is to create a structure for collecting lots of investment dollars in a business. Let's say that you would like to start your own airline. Most people cannot do this, because an airplane costs millions of dollars. An airline needs a whole fleet of planes and other equipment, plus it has to hire a lot of employees. A person who wants to start an airline will therefore form a corporation and sell stock in order to collect the money needed to get started. A corporation is an easy way to gather large quantities of investment capital -- money from investors. When a corporation first sells stock to the public, it does so in an IPO (Initial Public Offering). The company might sell one million shares of stock at $20 a share to raise $20 million very quickly (that is a simplification -- the brokerage house in charge of the IPO will extract its fee from the $20 million, but let's ignore that here). The company then invests the $20 million in equipment and employees. The investors (the shareholders who bought the $20 million in stock) hope that with the equipment and employees, the company will make a profit and pay a dividend. Another reason that corporations exist is to limit the liability of the owners to some extent. If the corporation gets sued, it is the corporation that pays the settlement. The corporation may go out of business, but that is the worst that can happen. If you are a sole proprietor who owns a restaurant and the restaurant gets sued, you are the one who is being sued. "You" and "the restaurant" are the same thing. If you lose the suit then you, personally, can lose everything you own in the process.
Stock Prices Let's say that a new corporation is created and in its IPO it raises $20 million by selling one million shares for $20 a share. The corporation buys its equipment and hires its employees with that money. In the first year, when all the income and expenses are added up, the company makes a profit of $1 million. The board of directors of the company can decide to do a number of things with that $1 million: It could put it in the bank and save it for a rainy day. It could decide to give all of the profits to its shareholders, so it would declare a dividend of $1 per share. It could use the money to buy more equipment and hire more employees to expand the company. It could pick some combination of these three options. If a company traditionally pays out most its profits to its shareholders, it is generally called an income stock. The shareholders get income from the company's profits. If the company puts most of the money back into the business, it is called a growth stock. The company is trying to grow larger by increasing the amount of equipment and the number of people who run it.


Stock Prices: Income vs. Growth
The price of an income stock tends to stay fairly flat. That is, from year to year, the price of the stock tends to remain about the same unless profits (and therefore dividends) go up. People are getting their money each year and the business is not growing. This would be the case for stock in a single restaurant that distributes all of its profits to the shareholders each year.

Let's say that the single restaurant decides, for several years, to save its profits, and eventually it opens a second restaurant. That is the behavior of a growth company. The value of the stock rises because, when the second restaurant opens, there is twice as much equipment and twice as much profit being earned by the company. In a growth stock, the shareholders do not get a yearly dividend, but they own a company whose value is increasing. Therefore, the shareholders can get more money when they sell their shares -- someone buying the stock would see the increasing book value of the company (the value of the buildings, equipment, etc.) and the increasing profit that the company is earning and, based on these factors, pay a higher price for the stock.

In a publicly traded company, all of the financial information about the company is public. The Securities and Exchange Commission (SEC) is in charge of collecting this information and making it available to investors. Shareholders also use a number of other indicators to determine how much a stock is worth. One simple indicator is the price/earnings ratio. This is the price of the stock divided by the earnings per share. There are all sorts of indicators like these, as well as a great deal of other financial information available on any stock. You can look up all of it on the Web in thousands of different places -- see the links at the end of this article for details.

Stock Market
Stock exchange markets are establishments where government and industry can raise long-term capital and investors can buy and sell securities. Globalization has led to integration of capital markets through out the world resulting in large volumes of foreign equity trading.
Stocks are regarded as having high risk to investors because of uncertainty in income flows. The value of a stock is determined using the time value of money concept. Stockholder will rank last in earnings distribution but also in sharing proceeds from liquidation.

Importance of Stock Markets
Firms have access to finance at low cost
Assist in allocation of capital within the economy
Flexibility and speedy in transfer of stocks
Enhance public profile of the firm
Mergers can be facilitated better by a quotation
Improves corporate behavior
Valuation of Stocks



Classification of Stocks
(a) Common stocks - holders are the owners of the firm and have voting rights and other privileges but they are subordinate to preference stock holders in ranking for dividend and liquidation proceeds.
(b) Preference stocks - holders are entitled a fixed return ahead of common stockholders but have no voting rights.
(c) Founders stocks - stocks with voting rights held by the promoters of the firm but will be entitled to dividend after common stocks.
Legal Rights of Common Stocks
(a) PROXY
A document giving one person the authority to act for another, typically the power to vote shares of common stocks. The common stock holders have rights to appoint proxies on represent them over firm’s matters.
(b) PRE-EMPTIVE RIGHTS
A provision in the corporate charter that gives common holders right to purchase on a pro-rata basis new issue of common stocks. In most cases the price paid will be slightly lower than active market value and is undertaken to avoid dilution of holder’s control.
(c) Firms with supernormal growth
A firm’s life cycle duration whereby its growth rate exceed the average economy growth rate.
The firm should calculate the expected dividend for each year of supernormal profit.
The price of stock is the PV of dividends from time to infinity
The market value of stocks will be present value of dividend during supernormal growth period plus the PV of stocks value at the end of supernormal period.
Security Market Line
The set of risk – return combinations available by combining the market portfolio with risk free borrowing and lending shows the relationship between risk and return from stocks.

Efficient Market Hypothesis (EMH)
EMH is concerned with information processing efficiency in stock markets.
An efficient market is one in which
Information is widely available to all investors at low cost
All the available relevant information is reflected in short prices

Forms of EMH
Weak form - stock price reflects all past information on price movements
Semi –strong - stock price reflects all other publicly available information
Strong - strong price reflects all pertinent information publicly available or privately held.

Dividend Policy
The determination of the proportion of profits paid to the stockholder periodically. Optimal dividend policy should strike a balance between current dividend and the future growth that will maximize the firms’ stocks price.
A Company’s directors will have a policy for
What portion of profits to pay out as dividends and what proportion of profits to retain for reinvestments
What rate of dividend growth to aim for, with the help of reinvestment retained profits?
Their choice of policy might affect their firm’s stock price
A high dividend payout gives stock holders more current income (on which individual stock holders pay income tax)
A high retention ratio should provide for future earnings and dividend growth, which ought to improve the current stock price and so give the stock holder a capital gain (which will be subjected to capital gains tax upon sale of stocks)

Theories on Dividend Policy
Irrelevancy proportion theory:
Value of the firms stocks depends on the availability of projects with positive net present value and the pattern of dividend payment makes no difference to firm’s stock prices.
Assumptions:
No bankruptcy cost
No taxes
No transaction costs
All investors have access to free information
Dividend as residual value
Dividend is distributed to stockholders only after cash has been utilized on the best projects with positive NPV due to cost of finance.
The firm’s primary objective is regarded as maximizing shareholders funds and all cash in the firms after funding projects should be returned o the owners i.e. stockholders.
Other policies
Birds in hand
Stock holders requirement for current consumption
Tax preference theory.

Stock repurchases
A transaction, in which the firm buys back share of its own stocks, thereby decreases its stockholding.

Methods of stock purchase
Tender – A formal offer to all stockholders wishing to place the stocks for sale to the company.
The firm in an open market as any investor acquires optional market – Stocks and the firm will incur brokerage costs.

Advantages of repurchase scheme
Viewed as a positive signal by the investors.
There is choice to the stockholders to sell or not sell stocks.
Repurchase can remove large block of stocks overhanging in the market
Used as a means of utilizing surplus cash flow.
Can assist in setting the dividend payment policy.
Reduce large-scale changes in capital structure.

Disadvantages
Stock holders indifference as to hold or sell stocks
Holders may not be presented with enough information on the present and future prospects of the firm.
Prices may be too high.
Managerial considerations in determining a dividend pay out ratio



Need for funds- Current financial commitments the firm has apart from dividend payment.
Liquidity – how comfortable with the present cash balance the firm has to pay the proposed dividend.
Ability to borrow – If the firm has lesser sources of finance the dividend will be the optimal source of finance.
Assessment of the industrial trend in dividend payout ratios.

Nature of stockholders – In a closely held firm management may be able to know the preference of its stock holders thereby able to design a policy that will suit the needs of stockholders.
Indenture in bond – Restrictions to make further borrowings by bond indenture will force the company to rely on retained profit as the only means for funding thereby resulting in low dividend payout ratio.

Want to find out about the Stock market?
Are you thinking about the future? This is a crucial question to consider, regardless of your age. When it comes to retirement, none of us want to be left with hardly anything to get by on. The fact of the matter is we all want to live comfortably and not have to worry about how we're buying groceries for this week. This is why you need to plan ahead of time. In what way do you intend to set aside extra money? Will your job take care of you after you've put in those twenty years? But what about the termination issue? Maybe that large company will dump you after an eighteen year run. This could throw your entire retirement plan out the window. Then you're basically left with nothing. How will you survive if this occurs? Maybe it's time you started thinking outside of the box. Have you ever considered Stock market Investing? A great number of people do this and are able to produce enough capital for their retirement.
What do you know about Stock market Investing? Do you see random infomercials regarding this issue? It seems like most ads make the stock market appear glamorous and wonderful. All you will ever do is earn, earn, and earn more cash. Soon you will be a billionaire with a house in the Hampton and a private helicopter. Does this sound ideal? Well sure it does. However, Stock market Investing is not always as simple and easy as it looks. There is some imperative knowledge involved. First of all you should keep a close eye on what you're investing. Things can change at the drop of a dime. Sometimes your stock will plummet and on other occasions it will climb forever. This is part of the intrigue and excitement that goes along with Stock market Investing. Secondly, you don't want to invest what you can't afford to lose. This will certainly bite you in the butt when you least expect it. All of a sudden you will have lost your home from being careless. Therefore it's prudent to only invest what you can deal with losing.
Want to get started in Stock market Investing? This is not a problem to say the least. Hop online and pop open that trusty Google search engine. Punch in the keywords "Stock market Investing". You will get flooded with websites regarding investing. Browse through infinite tips and pointers that will aid you in getting started right.