Role and Functions of Stock Exchange in India

A PRESENTATION REPORT ON mathematical function AND FUNCTIONS OF STOCK switch INTRODUCTION A short letter veeris a form of replacewhich provides serve for sway brokersand spatersto trade businesss,bonds, and some othersecurities. wrinkle supersedes also provide facilities for issue and redemption of securities and other fiscal factors, and upper-case letter events including the payment of income anddividends. Securities traded on a commonplace convert includesh arsissued by companies, social unit trusts,derivatives, pooled enthronement products andbonds.To be able to trade a security on a certain stock sub, it essential be enumerateed there. Usuall(a)y, there is a central location at least for record keeping, precisely trade is increasingly less linked to such a physical place, as modern merchandiseplaces arelectronic networks, which gives them advantages of increased speed and reduced cost of trans defendions. Trade on an transfigure is by members further. The in itial fling of stocks and bonds toinvestorsis by definition done in theprimary foodstuffand subsequent craft is done in thesecondary market.A stock exchange is often the most important component of astock market. ply and demand in stock markets are driven by sundry(a) factors that, as in allfree people markets, affect the price of stocks (seestock valuation). There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is give tongue to to beoff exchangeorover-the-counter. This is the usual way thatderivativesandbondsare traded. Increasingly, stock exchanges are partially of a global market for securitiesSTOCK EXCHANGE DEFINITION According to Husband and Dockerary declination exchanges are in camera organized markets which are used to facilitate trading in securities. * According to securities contract ( regulation ) act of 1956 An association, organization or body of individuals, whether in unifiedd or not, established for the purpose of assisting, regulating and controlling trade in buying, selling and dealing in securities. Features of extraction telephone exchange 1. Market for securities buy in exchange is a market, where securities of corporate bodies, disposal and semi-government bodies are bought and sold. . Deals in second hand securities It deals with shares, debentures bonds and such securities al put up 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 infallible 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 dirty dognot be traded in the stock exchange. 5. Transactions do only by means of members All the transactions in securities at the stock exchange are effected only with its authorized 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 organisation Stock exchange is an organised market. It requires recognition from the Central establishment. 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 asSEBI 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 incompatible 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. pecuniary Barometers Stock exchanges are the pecuniary barometers and evelopment indicators of national economy of the coun separate out. Industrial growth and stability is reflected in the top executive of stock exchange. EXISTING STRUTURE OF STOCK EXCHANGE IN INDIA STOCK EXCHANGE OTHERS NSE BSE BOMBAY STOCK EXCHANGE The Bombay Stock permutation is the oldest exchange in Asia. It traces its history to the 1850s, when four Gujarati and one Parsi s tockbroker would gather under banian tree trees in front of Mumbais Town Hall. The location of these meetings changed many times, as the number of brokers constantly increased.The group ultimately moved to Dalal Street in 1874 and in 1875 became an official organization cognize as The Native divide & ampere Stock Brokers Association. In 1956, the BSE became the first stock exchange to be recognized by theIndian Governmentunder the Securities Contracts Regulation Act. The Bombay Stock Exchange developed theBSE SENSEXin 1986, give the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this powerfulness to open its derivatives market, trading SENSEX futures contracts.The development of SENSEX options along with equity derivatives followed in 2001 and 2002, expanding the BSEs trading platform. Historically an open blackguard floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fi fty days to make this transition. This automated, screen-based trading platform called BSE On-line trading (BOLT) currently has a capacity of 8 million orders per day. The BSE has also introduced the earths first centralized exchange-based internet trading system, BSEWEBx. o. in to enable investors anywhere in the world to trade on the BSE platform. The BSE is currently sufferd inPhiroze Jeejeebhoy TowersatDalal Street,Fort area. NATIONAL STOCK EXCHANGE TheNational Stock Exchange(NSE) isstock exchangelocated atMumbai,India. It is in the top 20 largest stock exchangesin the world bymarket jacketizationand largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization of aroundUS$1trillionand over 1,652 listings as of July 2012.Though a number of other exchanges exist, NSE and theBombay Stock Exchangeare the two most signifi goatt stock exchanges in India, and between them are responsible for the vast majority of s hare transactions. The NSEs key index is theS&P CNX Nifty, known as the NSENIFTY(National Stock Exchange Fifty), an index of fifty major stocks weighted by market capitalization. NSE is mutually owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and commission operate as separate entities.There are at least 2 foreign investorsNYSE Euro nextandGoldman Sachswho have taken a stake in the NSE. As of 2006, the NSEVSATterminals, 2799 in total, cover more than 1500 cities across India. In 2011, NSE was the third largest stock exchange in the world in terms of the number of contracts (1221 million) traded in equity derivatives. It is the second fastest growingstock exchangein the world with a recorded growth of 16. 6%. ROLE OF STOCK EXCHANGE * sound Mobilisation Of Savings Stock exchanges provide organised market for an individual as well as institutional investors.They regulate the trading transacti ons with proper rules and regulations in order to ensure investors protection. This helps to consolidate the self-reliance of investors and small savers. Thus, stock exchanges attract small savings especially of large number of investors in the capital market. * Promoting Capital formation The funds mobilised through capital market are provided to the industries engaged in the ware of various goods and services useful for the society. This leads to capital formation and development of national assets. The savings mobilised are channelised into usurp avenues of coronation. Wider Avenues of investment Stock exchanges provide a wider avenue for the investment to the people and organisations with investible surplus. Companies from diverse industries like discipline Technology, Steel, Chemicals, Fuels and Petroleum, Cement, Fertilizers, etc. offer various kinds of equity and debt securities to the investors. Online trading facility has brought the stock exchange at the doorsteps of investors through computer network. Diverse type of securities is made available in the stock exchanges to suit the varying objectives and notions of different classes of investor.Necessary information from stock exchanges available from different sources guides the investors in the effective management of their investment portfolios. * Liquidity of investment Stock exchanges provide liquidity of investment to the investors. Investors can sell out any of their investments in securities at any time during trading days and trading hours on stock exchanges. Thus, stock exchanges provide liquidity of investment. The on-line trading and online settlement of demat securities facilitates the investors to sellout their investments and realise the proceeds within a day or two.Even investors can switch over their investment from one security to another according to the changing scenario of capital market. * investiture priorities Stock exchanges facilitate the investors to decide his invest ment priorities by providing him the basket of different kinds of securities of different industries and companies. He can sell stock of one company and buy a stock of another company through stock exchange whenever he wants. He can manage his investment portfolio to maximise his wealth. * Investment safetyStock exchanges through their by-laws, Securities and Exchange Board of India (SEBI) guidelines, transparent procedures try to provide safety to the investment in industrial securities. Government has established the National Stock Exchange (NSE) and Over The Counter Exchange of India (OTCEI) for investors safety. Exchange authorities try to curb speculative practices and minimise the risk for common investor to preserve his confidence. * Financial resources for public and private sectors Stock Exchanges make available the financial resources available to the industries in public and private sector through various kinds of securities.Due to the assurance of liquidity, marketing su pport, investment safety assured through stock exchanges, the public issues of securities by these industries line up strong public response (resulting in oversubscription of issue). * Funds for victimisation Purpose Stock exchanges enable the government to mobilise the funds for public utilities and public undertakings which take up the developmental activities like power projects, shipping, railways, telecommunication, dams & roads constructions, etc.Stock exchanges provide liquidity, marketability, price continuity and constant paygrade of government securities. * Indicator of Industrial Development Stock exchanges are the symbolic indicators of industrial development of a nation. Productivity, efficiency, economic-status, prospects of each diligence and every unit in an industry is reflected through the price fluctuation of industrial securities on stock exchanges. Stock exchange sensex and price fluctuations of securities of various companies tell the entire story of cha nges in industrial sector. Barometer of National Economy Stock exchange is taken as a Barometer of the economy of a country. Each economy is economically symbolized (indicators) by its most significant stock exchange. New York Stock Exchange, London Stock Exchange, Tokyo Stock Exchange and Bombay Stock Exchange are considered as barometers of U. S. A, United Kingdom, Japan and India respectively. At both national and global level these stock exchanges represent the progress and conditions of their economies. Functions FUNCTIONS OF STOCKEXCHANGE * Continuous and ready market for securitiesStock exchange provides a ready and continuous market for purchase and sale of securities. It provides ready outlet for buying and selling of securities. Stock exchange also acts as an outlet/counter for the sale of listed securities . * Facilitates evaluation of securities Stock exchange is useful for the evaluation of industrial securities. This enables investors to know the true worth of their h oldings at any time. Comparison of companies in the same industry is possible through stock exchange quotations (i. e price list). * Encourages capital formationStock exchange accelerates the process of capital formation. It creates the habit of saving, investing and risk taking among the investing class and converts their savings into profitable investment. It acts as an instrument of capital formation. In addition, it also acts as a channel for right (safe and profitable) investment. * Provides safety and security in dealings Stock exchange provides safety, security and equity (justice) in dealings as transactions are conducted as per well defined rules and regulations. The managing body of the exchange keeps control on the members.Fraudulent practices are also check into effectively. Due to various rules and regulations, stock exchange functions as the custodian of funds of genuine investors. * Regulates company management Listed companies have to comply with rules and regulatio ns of concerned stock exchange and work under the vigilance (i. e supervision) of stock exchange authorities. * Facilitates public borrowing Stock exchange serves as a platform for marketing Government securities. It enables government to raise public debt easily and quickly. * Provides clarification house facilityStock exchange provides a clearing house facility to members. It settles the transactions among the members quickly and with ease. The members have to pay or receive only the net dues (balance amounts) because of the clearing house facility. * Facilitates healthy speculation Healthy speculation, keeps the exchange active. Normal speculation is not dangerous but provides more business to the exchange. However, excessive speculation is undesirable as it is dangerous to investors & the growth of corporate sector. * Serves as Economic BarometerStock exchange indicates the state of health of companies and the national economy. It acts as a barometer of the economic situati on / conditions. * Facilitates Bank Lending Banks easily know the prices of quoted securities. They offer loans to customers against corporate securities. This gives convenience to the owners of securities. List of Stock Exchanges In India Bombay Stock Exchange National Stock Exchange Regional Stock Exchanges Ahmedabad Bangalore Bhubaneshwar Calcutta Cochin Coimbatore Delhi Guwahati Hyderabad Jaipur Ludhiana Madhya Pradesh Madras Magadh Mangalore Meerut OTC Exchange Of India Pune Saurashtra Kutch UttarPradesh Vadodara CONCLUSION Stock exchange is indispensible for the smooth and orderly functioning of corporate sector in a free market economy. A stock exchange need not be set as a place for speculation or a gambling den. It should act as a place for safe and profitable investable. , for this effective control on the working of stock exchange is necessary. This willing avoid misuse of this platform for excessive speculation, scams and other undesirable and ant i social activities.Thus, stock exchange serves the nation in several ways through its diversified economic services which include impartation liquidity to investments, providing marketability, enabling evaluation and ensuring price continuity of securities. Thus we can say that Stock exchange is the mirror of economy REFERENCES * Financial Management I. M Pandey * Financial Management Prasanna Chandra * strain studies B. S Raman * Business studies P. K Lasar * http//moneycontrol. com * http//investopedia. com * http//wikipedia. com * http//kalyan-city. blogspot. in