WHY DO PEOPLE REQUIRE FINANCE

FOR THEIR BUSINESS ?

Business is concerned with the production and distribution of goods and services for the
satisfaction of needs of society. For carrying out various activities, business requires money.
Finance, therefore, is called the life blood of any business. The requirements of funds by business
to carry out its various activities is called business finance.
The requirement for fixed and working capital
increases with the growth an expansion of business.
At times additional funds are required for
upgrading the technology employed so that the cost
of production or operations can be reduced.
It is, therefore, important to evaluate the different
sources from where funds can be raised.
 WHAT ARE STOCKS/SHARES?
The total capital of
company is estimated,
registered and divided into
units of equal value. This
units are known as
Shares/stocks and
collectively they are known
as Share/ Stock Capital.
Share Capital Shares
 WHY DO COMPANIES ISSUE STOCK?
At some point every company needs to
raise money. Companies can either
borrow it from somebody or raise it by
selling part of the company.
By issuing stock, the company does not
have to pay back the money or make
interest payments.
There are two kinds of stock certificate
issued by a company- one is the
common stocks and the other is
preferred stocks.
 INDIA`S COMPANIES ACT 1956
A company form of
organization is a business entity
which is established undr
provision of India`s Companies
Act 1956, through promotion,
incorporation and floatation.
 STOCK/SHARE MARKET
The amount is invested or
contributed by the investors and
then they are collectively sold
and purchased by new or
existing investors through various
means such as brokers of stock
market/companies etc. , thus
directly or indirectly giving birth
or using the STOCK/SHARE
MARKET.
 IMPORTANCE OF STOCK
MARKET
The stock market is one of the most
important sources for companies to raise
money. This allows businesses to be publicly
traded, or raise additional capital for
expansion by selling shares of ownership of
the company in a public market.
History has shown that the price of shares
and other assets is an important part of the
dynamics of economic activity, and can
influence or be an indicator of social mood.
 IMPORTANCE OF STOCK
MARKET
An economy where the stock market is on the
rise is considered to be an up-and-coming
economy.
Share prices also affect the wealth of
households and their consumption.
Exchanges also act as the clearinghouse for
each transaction, meaning that they collect and
deliver the shares, and guarantee payment to the
seller of a security.
WHAT IS STOCK EXCHANGE?
Definition of Stock Exchange : The securities regulation act of 1956
defined stock exchange as “an association , organization , or a individual
which is established for the purpose of assisting , regulating , and controlling
business in buying ,selling and dealing in securities.”
 FEATURES OF STOCK EXCHANGE
 It is an organized market
 It is a secure market
 It is an important constituent of capital market i.e., market for long-
term finance
 It is a voluntary association of persons desirous of dealing in
securities
 Stock exchange is a voluntary association, its membership is not open
to everybody
 In a stock exchange, only the members can deal in i.e., buy & sell
securities
 The members of a stock exchange can buy and sell securities either
as brokers for & on behalf of their clients
 The dealings in a stock exchange are under certain accepted code of
conduct i.e., rules and regulations
 IMPORTANT FUNCTIONS OF STOCK
EXCHANGE
 Provide central and convenient meeting places for sellers and buyer of securities
 Increase the marketability and liquidity of securities
 Contribute to stability of prices of securities
 Equalization of price of securities
 Smoothen price movement
 Help the investors to know the worth of their holdings
 Promote the habit of saving and investment
 Help capital formation
 Help companies and government to raise funds from the investors
 Provide forecasting service
 SOME IMPORTANT TERMS
RELATING TO ‘STOCK MARKET ’
BROKER: He is one acts as a
intermediary on behalf of others. A broker in
a stock exchange ,is a commission agent who
transacts business in securities on behalf of
non members.
JOBBER: He is not allowed to deal with
the public directly .He deals with brokers who
are engaged with the investors . Thus, the
securities is bought by the jobber from
members and sells to members who are
operating on the stock exchange as broker.
 SPECULATION AND SPECULATOR
SPECULATION : It is the transaction of members to buy or sell securities on
stock exchange with a view to make profits to anticipated raise or fall in price of
securities.
SPECULATOR : The dealer in stock exchange who indulge in speculation are
called speculator . They do not take delivery of securities purchased or sold by
them , but only pay or rescue the difference between the purchase price and sale
price . The different types of speculators are
BULL
BEAR
STAG
LAME DUCK
BULL {TEJIWALA}
He is speculator who expects the
future raise in price of securities he
buys the securities to sell them at
future date at the higher price.
He is called as bull because his
activities resembles as a bull , as the
bull tends to throw its victims up in
the air through its horns. In simple
the bull speculator tries to raise the
price of securities by placing a big
purchase orders.
BEAR {MANDIWALA}
He is speculator who expects future
fall in prices , he does an
agreement to sell securities at future
date at the present market rate .
He is called as bear because his
altitude resembles with bear , as the
bear tends to stamp its victims down
to earth through its paws . In simple
the bear speculator forces of prices
of securities to fall through his
activities.
STAG {DEER}
He operates in new issue of
market . He is just like a bull
speculator . He applies large
number of shares in the issue
market only by paying ,
application money , allotment
money. He is not a genuine
investor because , he sells the
allotted securities at the premium
and makes profit. In simple he is
cautious in his dealings . He
creates an artificial rise in prices
of new shares and makes profits.
LAME DUCK
He is speculator when the bear
operator finds it difficult to
deliver the securities to the
consumer on a particular day as
agreed upon , he struggles as a
lame duck in fulfilling his
commitment . This happens
when the prices do not fall as
expected by the bear and the
other party is not willing to
postpone the settlement to the
next period.
 IMPORTANT TERMS
IPO- It stands for Initial Public Offering. It’s the first time the stock is
available to the public to purchase.
Market capitalization- It is the measure of corporate size of a country. It
shows the current stock price multiplied by the number of outstanding
shares. It is commonly referred to as Market cap.
Dividend- It is money that a company pays to its stockholders from the
profits it makes.
Debentures- They are an important instrument for raising long term debt
capital. A company can raise funds through issue of debentures, which
bear a fixed rate of interest.
 LARGEST STOCK EXCHANGES
IN THE WORLD IN INDIA
LONDON STOCK EXCHANGE NATIONAL STOCK EXCHANGE
NEW YORK STOCK EXCHANGE
BOMBAY STOCK EXCHANGE
SHANHAI STOCK EXCHANGE
CALCUTTA STOCK EXCHANGE
AUSTRALIA STOCK EXCHANGE
COCHIN STOCK EXCHANGE
TOKYO STOCK EXCHANGE
HONG KONG STOCK EXCHANGE MULTI COMMODITY EXCHANGE
TORONTO STOCK EXCHANGE DERIVATIVES EXCHANGE
DEUTSCHE BORSE OTC EXCHANGE
BM&F BOVESPA PUNE STOCK EXCHANGE
NASDAQ OMX STOCK EXCHANGE INTERCONNECTS EXCHANGE
 NATIONAL STOCK EXCHANGE OF INDIA (NSE)
The National Stock Exchange (NSE) (Rashtriya Share
Bazaar) is stock exchange located at Mumbai,
Maharashtra, India. It is in the top 20 largest stock
exchanges in the world by market capitalisation and
largest in India by daily turnover and number of trades,
for both equities and derivative trading. NSE has a
market capitalization of around US$1 trillion and over
1,652 listings as of July 2012.
BOMBAY STOCK EXCHANGE
Bombay Stock Exchange, commonly
referred to as the BSE, (Bombay Share
Bazaar) is a stock exchange located on
Dalal Street, Mumbai, Maharashtra,
India.
It is oldest and first stock exchange
of India established in the year 1875.
First it was started under baniyan tree
opposite to town hall of Bombay over
22 stock brokers. The top gainer in
BSE is 100 companies in that GMR
infra is first.
OVER-THE-COUNTER EXCHANGE OF
INDIA(OTCEI)
The OTCEI is a national, ringless and computerized stock exchange. It was established in
october,1990.It started its operation in september,1992.
Features of OTCEI
1. It is a nation-wide stock exchange. Its operational areas cover entire India.
2. It is a ringless stock exchange. The trading ring(i.e., trading place)commonly found in a
3. traditional stock exchange is not found in the OTCEI.
4. It is a computerized stock exchange
Advantages of OTCEI
1. It helps the investors to have easy and direct access to the stock exchange
2. It helps investors to get fair prices for their securities
3. It provide safety to the investors
4. To provide computerized trading system
5. To provide investors a convenient,effcient and transparent mode of investment
 SECURITIES AND EXCHANGE BOARD OF
INDIA(SEBI)
The SEBI was constituted on 12th April,1988 under a resolution of the Government of India.
On 31st january,1992,it was made a statutory body by the Securities and Exchange board
of India Act,1992.
The Companies (Amendment) Act,2000 has given certain powers to SEBI as regards the
issues and transfer of securities and non-payment of dividend.

Functions Of SEBI
Regulating the business in stock exchange and any other securities markets.
Promoting and regulating self-regulatory organization.
Registering and regulating the work of collective investment scheme, including mutual funds.
Prohibiting fraudulent and unfair trade practices relating to securities market.
Promoting education, and training of intermediaries of securities market
 STOCK MARKET INDEX
All India All Industries Share Price Index
combined and published by the Economic
Times on daily basis.
S&P CNX Nifty combined and
published by NSE India on daily basis.
BSE Sensex combined and published by
BSE on daily basis.
HOW DO NSE AND BSE EXCHANGE INDEX
APPEAR?
WHY DO THE PRICES OF SHARE INCREASE
OR DECREASE IN THE MARKET?
There is one major factor that causes the movement of the
market and this is BUYER/BUYERS.
The more buyers for a given security, the higher the price
of that security will go, if there are no buyers, the price of
the security will drop.
Companies can have the greatest product/service in the
world but if no one wants to buy, the price of the stock
will go nowhere and if it does move it will move down.
HOW TO DEAL AND INVEST IN STOCK
EXCHANGES?
In order to deal with a securities one as to have an account called Demat
a/c. It is just like a bank account. Same procedure of opening the bank
account is followed to open the a/c. But all the banks does not give this
facility of opening the account , only few banks provide this facility. After
demat a/c opened then the securities is bought and sold. The banks which
gives facility of demat a/c in India is
ICICI Bank
Citi Bank
Bank of Baroda
 DON’T WORRY Chase the vision
ABOUT PEOPLE not money ,the
STEALING YOUR
DESIGN WORK. money will end up
WORRY ABOUT THE chasing you-Sir
DAY THEY STOP- Tony Hsieh.
DR. JEFFRY
ZELDMAN.
************