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fundamental_analysis

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SHAREKHAN PVT. LTD
SES- GOI -Faculty Of Management Academic Year 2010-12 1
CHAPTER 1
INDUSTRY PROFILE
1.1 Indian Stock Exchanges -an umbrella growth
The Second World War breaks out in 1939. It gave a sharp boom, which was
followed by slump. But, in 1943, the situation changed radically, when India was fully
mobilized as a supply base.
On the account of the restrictive controls on cotton, bullion, seeds and other
commodities, those dealing in them found in the stock market as the only outlet for their
activities. They were anxious to join the trade and numerous others swelled their number.
Many new associations were constituted for the purpose and stock exchange in all parts of the
country was floated.
The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited
(1940) and Hyderabad Stock Exchange Limited (1944) were incorporated. In Delhi two stock
exchanges Delhi Stock and Share Brokers association limited and the Delhi stocks and share
Exchange Limited were floated and later in June 1947, amalgamated into the Delhi Stock
Exchange Association Limited.
1.2 Trading pattern of Indian stock market
Trading in Indian stock exchange is limited to listed securities of public limited
companies. They are broadly divided into two categories, namely, specified securities
(forward list) and non specified securities (cash list). Equity shares of dividend paying,
growth oriented companies with a paid up capital of at least Rs 50 million and a market
normally, put in the specified group and the balance in non-specified group.

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SHAREKHAN PVT. LTD
SES- GOI -Faculty Of Management Academic Year 2010-12 2
1.3Two types of transactions can be carried out on the Indian stock exchanges:
A. Spot delivery transactions “for delivery and payment within the time or on the date
stipulated when entering into the contract which shall not be more than 14 days following the
date of the contract”
B. Forward transitions “delivery and payment can be extended by further period of 14 days
each so that the overall period does not exceed 90 days from the date of the contract. The
latter is permitted only in the case of specified shares. The brokers who carry over the
outstanding pay carry over charges (can-tango or backwardation) which are usually
determined by the rates of interest prevailing.
1.4 Trading Terminology
MemberClient Agreement form: -This form is an agreement entered into between client
and broker in the presence of witnesses wherein the client agrees (is desirous) to trade/invest
in the securities listed on the concerned Exchange through the broker after being satisfied of
broker’s capabilities to deal in the same.
Stock Exchange: - It is a place where the buyer and seller meet to trade in shares in an
organized manner. There are at present 25 recognized stock exchanges in the country that are
governed by the Securities Contact (Regulation) Act, 1956.
Market order: - There are several types of orders that you can dictate to a broker. The most
common type, which is a regular buy or sell order, is called a market order.
Limit order: - Where in you ask the broker to trade only if the price reaches a specific level.
Stop loss order: - You tell the broker to sell your shares if the price drops to a certain level to
prevent significant loss because if it drops to that level it is likely to drop further and your
losses are likely to increase

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CHAPTER 1 INDUSTRY PROFILE 1.1 Indian Stock Exchanges -an umbrella growth The Second World War breaks out in 1939. It gave a sharp boom, which was followed by slump. But, in 1943, the situation changed radically, when India was fully mobilized as a supply base. On the account of the restrictive controls on cotton, bullion, seeds and other commodities, those dealing in them found in the stock market as the only outlet for their activities. They were anxious to join the trade and numerous others swelled their number. Many new associations were constituted for the purpose and stock exchange in all parts of the country was floated. The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited (1940) and Hyderabad Stock Exchange Limited (1944) were incorporated. In Delhi two stock exchanges Delhi Stock and Share Brokers association limited and the Delhi stocks and share Exchange Limited were floated and later in June 1947, amalgamated into the Delhi Stock Exchange Association Limited. 1.2 Trading pattern of Indian stock market Trading in Indian stock exchange is limited to listed securities of public limited companies. They are broadly divided into two categories, namely, specified securities (forward list) and non – specified securities (cash list). Equity shares of dividend paying, growth oriented companies with a paid up capital of at least Rs 50 million and a market normally, put in the specified group and the balance in non ...
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