The trading on stock exchanges in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient. This imposed limits on trading volumes and efficiency. In order to provide efficiency, liquidity and transparency, NSE introduced a nationwide, on-line, fully automated screen based trading system (SBTS) where a member can punch into the computer the quantities of a security and the price at which he would like to transact, and the transaction is executed as soon as a matching sale or buy order from a counter party is found.
- NSE- National Stock Exchange of India Ltd.
- SEBI – Securities Exchange Board of India NCFM – NSE’s Certification in Financial Markets
- NSDL – National Securities Depository Limited
- CSDL – Central Securities Depository Limited
- NCDEX – National Commodity and Derivatives Exchange Ltd.
- NSCCL – National Securities Clearing Corporation Ltd.
- FMC – Forward Markets Commission
- NYSE- New York Stock Exchange
- AMEX – American Stock Exchange
- OTC- Over-the-Counter Market
- LM – Lead Manager
- IPO- Initial Public Offer
- DP – Depository Participant
- DRF – Demat Request Form
- RRF – Remat Request Form
- NAV – Net Asset Value
- EPS – Earnings Per Share
- DSCR – Debt Service Coverage Ratio
- S&P – Standard & Poor
- IISL – India Index Services & Products Ltd
- CRISIL- Credit Rating Information Services of India Limited
- CARE – Credit Analysis & Research Limited
- ICRA – Investment Information and Credit Rating Agency of India
- IGC – Investor Grievance Cell
- IPF – Investor Protection Fund
- SCRA – Securities Contract (Regulation) Act
- SCRR – Securities Contract (Regulation) Rules
These funds invest in Central and State Government securities. Since they are Government backed bonds they give a secured return and also ensure safety of the principal amount. They are best suited for the medium to long-term investors who are averse to risk.
Broadly there are two factors: (1) stock specific and (2) market specific. The stock-specific factor is related to people’s expectations about the company, its future earnings capacity, financial health and management, level of technology and marketing skills.
The market specific factor is influenced by the investor’s sentiment towards the stock market as a whole. This factor depends on the environment rather than the performance of any particular company. Events favorable to an economy, political or regulatory environment like high economic growth, friendly budget, stable government etc. can fuel euphoria in the investors, resulting in a boom in the market. On the other hand, unfavorable events like war, economic crisis, communal riots, minority government etc. depress the market irrespective of certain companies performing well. However, the effect of market-specific factor is generally short-term. Despite ups and downs, price of a stock in the long run gets stabilized based on the stockspecific factors. Therefore, a prudent advice to all investors is to analyses and invest and not speculate in shares.
A Clearing Corporation is a part of an exchange or a separate entity and performs three functions, namely, it clears and settles all transactions, i.e. completes the process of receiving and delivering shares/funds to the buyers and sellers in the market, it provides financial guarantee for all transactions executed on the exchange and provides risk management functions. National Securities Clearing Corporation (NSCCL), a 100% subsidiary of NSE, performs the role of a Clearing Corporation for transactions executed on the NSE.
Any company making a public issue or a listed company making a rights issue of value of more than Rs 50 lakh is required to file a draft offer document with SEBI for its observations. The company can proceed further on the issue only after getting observations from SEBI. The validity period of SEBI’s observation letter is three months only i.e. the company has to open its issue within three months period.
You must look for the following to make the right analysis:
- Industry Analysis: Companies producing similar products are subset (form a part) of an Industry/Sector. For example, National Hydroelectric Power Company (NHPC) Ltd., National Thermal Power Company (NTPC) Ltd., Tata Power Company (TPC) Ltd. etc. belong to the Power Sector/Industry of India. It is very important to see how the industry to which the company belongs is faring. Specifics like effect of Government policy, future demand of its products etc. need to be checked. At times prospects of an industry may change drastically by any alterations in business environment. For instance,devaluation of rupee may brighten prospects of all export oriented companies. Investment analysts call this as Industry Analysis.
- Corporate Analysis: How has the company been faring over the past few years? Seek information on its current operations managerial capabilities, growth plans, its past performance vis-à-vi its competitors etc. This is known as Corporate Analysis.
- Financial Analysis: If performance of an industry as well as of the company seems good, then check if at the current price, the share is a good buy. For this look at the financial performance of the company and certain key financial parameters like Earnings Per Share (EPS), P/E ratio, current size of equity etc. for arriving at the estimated future price. This is termed as Financial Analysis. For that you need to understand financial statements of a company i.e. Balance Sheet and Profit and Loss Account contained in the Annual Report of a company.