Are markets in which shares are issued and traded either through exchanges or over-the-counter markets. Also known as the Stock or share market, it is one of the most vital areas of a market economy as it provides companies with access to capital and investors with a slice of ownership in the company and the potential of gains based on the company's future performance.
Stock ?
Plain and simple, stock is a share in the ownership of a company. Stock represents a claim on the
Company’s assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing. The importance of being a shareholder is that you are entitled to a portion of the company’s profits and have a claim on assets. Profits are sometimes paid out in the form of dividends. The more shares you own, the larger the portion of the profits you get.
The securities market has two interdependent segments: the primary (new issues) market and the
Secondary market. Primary market is where new issues are first offered, with any subsequent trading
going on in the secondary market. The primary market provides the channel for sale of new securities.
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.
2. ORIGIN & EXCHANGES
Share market in Indian started functioning in 1875. The name of the first share trading association in India was Native Share and Stock Broker's Association, which later came to be known as Bombay Stock Exchange (BSE). This association kicked of with 318 members. Indian Share Market mainly consists of two stock exchanges namely Bombay Stock Exchange (BSE) & National Stock Exchange (NSE)
Index calculation methodology:[/b]
SENSEX, first compiled in 1986 was calculated on a "Market Capitalization-Weighted" methodology of 30 component stocks representing a sample of large, well established and financially sound companies. The base year of SENSEX is 1978-79. From September 2003, the SENSEX is calculated on a free-float market capitalization methodology. The "free-float Market Capitalization-Weighted" methodology is a widely. Followed index construction methodology on which majority of global equity benchmarks are based.
Online Trading Mechanism:[/b]
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Bombay Stock Exchange's trading system is usually known as BOLT. The BSE has deployed an On Line Trading system (BOLT) on March 14, 1995. BOLT has a two-tier architecture. The trader workstations are connected directly to the backend server, which acts as a communication server and a Central Trading Engine (CTE). Other services like information dissemination, index computation, and position monitoring are also provided by the system. Access to market related information through the trader workstations is essential for the market participants to act on real-time basis and take immediate decisions. BOLT has been interfaced with various information vendors like Bloomberg, Bridge, and Reuters. Market information is fed to news agencies in real time. It makes the trade efficient, transparent and time saving.
NSE provides its customers with a fully automated screen based trading system known as NEAT system, in which a member can punch into the computer quantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds a matching sale or buy order from a counter party. It electronically matches orders on a price/time priority and hence cuts down on time, cost and risk of error, as well as on fraud, resulting in improved operational efficiency. It allows faster incorporation of price sensitive information into prevailing prices, thus increasing the informational efficiency of markets. The stocks are hold in a demutualised format helping in fast, transparent and efficient.
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