Technical Session 1

Technical Session 1Indian Stock Market-Recent TrendsBy MVSK Ruthvik

What is the Stock MarketThe 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.

IMPORTANT FUNCTION OF STOCK EXCHANGE

Provide central and convenient meeting places for sellers and buyer of securitiesIncrease the marketability and liquidity of securitiesContribute to stability of prices of securitiesEqualization of price of securitiesHelp the investors to know the worth of their holdings Help companies and government to raise funds from the investors

BULL AND BEAR

Market Trend Analysis of a Company

Fundamental Analysis: Fundamental analysis is the examination of the underlying forces that affect the interests of the economy, industry, and company. It tries to forecast the future movement of the capital market using signals from the economy, industry, and company. Fundamental analysis can be done by studying three prospects of capital marketa.Economic Analysisb.Industry Analysisc.Company Analysis

Technical Analysis: A study of past share price behavior to predict the future trend is termed as technical analysis. Technical analysis is frequently used as a suitable Tools for technical analysis are listed here below:a.Charts [Line, Bar, Candlestick, Point and figure chart]b.Dow Theoryc.Elliot Wave Theoryd.Flow of Fundse.Market Structuref.Market Indicators

Overview of Capital Markets in India

Capital market is the market for long-term funds, just as the money market is the market for short-term funds. It refers to all facilities and the institutional arrangements for borrowing and lending term funds (medium-term and long-term funds).The supply of funds for the capital market comes largely from individual savers, corporate savings, banks, insurance companies, specialized financing agencies and the government.

Stock Exchanges in India

Security and Exchange Board of India

It is a board (autonomous body) created by the government of India in 1988 and given statutory form in 1992 with SEBI acts 1992. Its head office is in Mumbai, and other offices in Chennai, Kolkata and Delhi. The basic objectives of the board were defined as:To protect the interests of investors in securities;To promote the development of securities market;To regulate the securities market and;

Bombay Stock Exchange

The BSE is the oldest stock exchange in Asia with rich heritage. It is the first stock exchange in country to obtain permanent recognition in 1956 from the government of India under the securities contracts (regulation) act, 1956.

Development of Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide.

Bombay Stock Exchange market capitalization crosses Rs.100 Trillion for the first time in the history of Indian Stock Market ( as on 28th Nov,2014).It currently ranks 12 at worlds Largest Stock Exchanges by their Market Capitalization behind SIX Swiss Exchange.

Trend of SENSEX from 2008-2014YearOpenHighLow200820,325.2721,206.777,697.3920099,720.5517,530.948,047.17201017,473.4521,108.6415,651.99201120,621.6120,664.8015,135.86201215,534.6719,612.1815,358.02201319,513.4521,483.7417,448.71201421,222.1928,822.3719,963.12

Over the Counter Exchange of India (OCTEI)OTCEI was incorporated in October 1990 as a section 25 company under the companies Act 1956 and is recognized as a stock exchange under section 4 of the securities contracts regulation act, 1956.The object of the OCTEI is To provide an alternate market for the securities of smaller companies, public-sector companies, closely-held companies desirous listing etc

The National Stock Exchange of India Limited

NSE is a Mumbai-based stock exchange Which is largest stock exchange in India in terms of daily turnover and number of trades, both for equities and derivatives trading. NSE has a market capitalization of US $1.48 Trillion as on Sept 2014. Ranks 13 at worlds Largest Stock Exchanges by their Market Capitalization behind BSE.It has nearly 1700 Listed Company.

NSE has the following major segments of the capital market:EquityFutures and OptionsRetail Debt MarketWholesale Debt Market

Equities: NSE started trading in the equities segment on November 3, 1994 .Within a short span of 1 year became the largest exchange in India in terms of volumes transacted.

Futures and Options: Derivatives trading on NSE commenced on June 12, 2000 with futures trading on S&P CNX Nifty index.the product base has been increased to include trading in futures and options on S&P CNX Nifty index, CNX IT index, Bank Nifty index and single securities.

Retail Debt Market:View to encourage wider participation of all classes of investors across the country (including retail investors) in government securites, the government, RBI and SEBI have introduced trading in government securities for retail investors.

Wholesale Debt Market: The wholesale market segment deals in fixed income securities .The wholesale debt market (WDM) segment of the exchange commenced operations on June 30, 1994.

NSE became the first stock exchange to get approval for interest rate futures as recommended by SEBI-RBI committee, on 31st August 2009. a future contract based on 7% 10 year GOI bond (NOTIONAL) was launched with quarterly maturities.

IndicesAn Index is used to give information about the price movements of products in the financial, commodities or any other markets.

Major Indices of NSES&P CNX NIFTYCNX NIFTY JUNIORCNX 100 (S&P CNX NIFTY +CNX NIFTY JUNIOR)CNX ITBANK NIFTYS&P CNX DEFTYCNX MIDCAPNIFTY MIDCAP 50

S&P CNX NIFTYIt is a well diversified50stock index accounting for 23 sectors of the economyIt is used for a variety of purposes such as benchmarking fund portfolios, index based derivativesandindex funds.

CNX NIFTY JUNIORThe next rung of liquid securities afterS&P CNX Niftyis the CNX Nifty Junior. It may be useful to think of the S&P CNX Nifty and the CNX Nifty Junior as making up the 100 most liquid stocks in India.

S&P CNX 500

S&P CNX 500 is Indias first broad based benchmark of the Indian capital market.It represents about 90% of the Free Float Market Capitalization and about 87% of the total turnover on the NSE as on Sept 30, 2010.

Definition of 'Free-Float Methodology'A method by which the market capitalization of an index's underlying companies is calculated. Free-float methodology market capitalization is calculated by taking the equity's price and multiplying it by the number of shares readily available in the market. Instead of using all of the shares outstanding like the full-market capitalization method, the free-float method excludes locked-in shares such as those held by promoters and Government. Formula:-Free Float=Share price*(Share Outstanding Locked Shares)

NIFTY MIDCAP 50

The primary objective of the Nifty Midcap 50 Index is to capture the movement of the midcap segment of the market. It can also be used for index-based derivatives trading.

Market Trend and AnalysisBusiness Growth in Capital Market SegmentMonth/ YearNo. of Co. ListedNo. of trading daysNo. of Securities tradedNo. of trades (lakhs)Turnover (crores)Average Daily Turnover (crores)Market Capitalisation (crores)2009-101,4702441,96816,8164,138,02416,9596,009,1732008-091,4322431,32713,6512,752,02311,3252,896,1942007-081,3812511,26411,7273,551,03814,1484,858,1222006-071,2282491,1917,8461,945,2857,8123,367,350

Analysis of the Above ChartCompanies Listed: As compared to previous years, there is significant growth in number of companies listed in the capital market segment of NSE.No. of Securities Traded: With the increase, in companies listed, despite other factors influencing the market transactions, number of securities traded in also have increased with the time.No. of Trades: From the financial year 2006-2007 to that of 2009-2010 number of trades have increased the double in amount signaling a positive growth.Total Turnover: Total turnover have increased four times from FY 2006-07 to FY 2009-10.Market Capitalization: The amount of market capitalization has doubled in FY 2009-10 as compared to that of FY 2006-2007.

Business Growth in Derivatives SegmentMonth/YearIndex Futures Turnover (crores)Stock Futures Turnover (crores)Index Options Turnover (crores)Stock Options Turnover (crores)Total Turnover (crores)Average Daily Turnover (crores)2010-20113554400.034731045.5014272415.14883165.6823441026.32110570.882009-20103934388.675195246.648027964.20506065.1817663664.5772392.072008-20093570111.403479642.123731501.84229226.8111010482.2045310.632007-20083820667.277548563.231362110.88359136.5513090477.7552153.302006-200725395743830967791906193795735624229543

Analysis

Index Future Turnover: The amount in crores on the Index Future Options of Derivative segment of NSE has shown significant growth of 1.39 times from FY 2006-07 to that of FY 2010-11.Stock Futures Turnover: Whereas, the Stock Future Turnover has shown growth of 1.23 times from FY 2006-07 to that of FY 2010-11.Index Options Turnover: The Index Options Turnover has shown 17.89 times growth from FY 2006-07 to FY 2010-11.Stock Options Turnover: Whereas, Stock Options Turnover has shown growth of 4.56 times from FY 2006-07 to FY 2010-11.Total Turnover: The growth rate when evaluated from FY 2006-07 to FY 2010-11 shows a positive growth of 3.18 times.Average Daily Turnover: The Average Daily Turnover on Derivative Segment of NSE has shown growth of 3.75 times from FY 2006-07 to 2010-11.

NSE MILESTONES

January, 2011NSE receives "Financial Inclusion" Award.July, 2011Commencement of trading in 91 Day GOI Treasury Bill - FuturesAugust 2011Launch of derivatives on Global IndicesSeptember 2011Launch of derivatives on CNX PSE and CNX Infrastructure IndicesDecember 2011NSCCL Rated CCR AAA for fourth consecutive year - 28th Dec 2011March 14, 2012NSE launches EMERGE - SME PlatformMarch 22, 2012NSE and India Post start Unique Financial Inclusion Initiative "Jagruti"May 03, 2012Futures and Options contracts on FTSE 100June 27, 2012NSE launches financial literacy initiative ' Jagruti' in Mohali, in partnership with India PostSeptemebr 18, 2012NSE launches SME operationsJanuary 03, 2013NSCCL Rated CCR AAA for fifth consecutive yearJanuary 10, 2013Agreement on Launch of S&P CNX Nifty Futures in JapanMay 13, 2013NSE launches the first dedicated Debt Platform on the ExchangeJanuary 21, 2014NSE Launches NSE Bond Futures IIFeb 26, 2014NSE Launches NVIX Futures Futures on India VIX index.March 24, 2014Commencement of trading of CNX Nifty Futures on OSE.

BSE Milestones

DateBSE Milestones11th Feb 2014 Launch of Institutional Trading Platform on BSE SME 28th Jan 2014 Launch of Interest Rate Futures (BSE IRF) 28th Nov 2013 Launch of Currency Derivatives (BSE CDX)19th Feb 2013 BSE enters into Strategic Partnership with S&P Dow Jones Indices30th Mar 2012BSE launched trading in BRICSMART indices derivatives13th Mar 2012Launch of BSE - SME Exchange Platform22nd Feb 2012Launch of S&P BSE-GREENEX to promote investments in Green India15th Jan 2011Co-location facility at BSE - tie up with Netmagic7th Jan 2011BSE Training Institute Ltd. with IGNOU launched India's first 2 year full time MBA program specializing in Financial Market17th Nov 2011Maharashtra and United Kingdom Environment Ministers launched Concept Note for S&P BSE Carbon Index

SENSEX HIGHLIGHTS

SENSEX 21,0005 November 2010 The SENSEX on 8 January 2008 crossed the 21,000 mark for the first time, reaching an intra-day peak of 21,078 points, before closing at 20,873. However, it was not until 5 November 2010 that the SENSEX closed at 21,004.96, for its first close above 21,000 points. This record would stand for nearly three years, until 30 October 2013, when the SENSEX closed at 21,033.97 points.19 February 2013 SENSEX becomes S&P SENSEX as BSE ties up with Standard and Poor's to use the S&P brand for SENSEX and other indices.13 March 2014 - The SENSEX closes higher than the Hang Seng Index, to become the major Asian stock market index with the highest value, for the first time ever.

SENSEX 22,00024 March 2014 The SENSEX on 10 March 2014 crossed the 22,000 mark for the first time during intra-day trading. However, it was on 24 March 2014 that the index finally closed above the milestone at 22,095.30SENSEX 23,0009 May 2014 - The SENSEX crossed record 23,000 level for the first time, but close just short of the milestone level, on 9 May 2014. The index would close well above the 23,000 mark during the following session.12 May 2014 - The SENSEX closed at its record all time high of 23,551,a rise of 2.42%(+556.77 points) intraday due to continued fund inflows on hopes of a stable government.

SENSEX 25,000, 16 May 2014 - The SENSEX crossed record 25,000 level for the first time, on 16 May 2014 and reached its peak of 25,364.71 due to winning of the BJP led NDA government by a staggering record marginal difference of all times. However, it closed well below the 25,000 mark. Still, the index closed at its all time high of 24,121.74, for its first close above 24,000 points.The SENSEX closed at 25,019.51, for its first close above the 25,000 milestone on 5 June 2014SENSEX 26,000, 7 July 2014- The SENSEX crossed record 26,000 level for the first time on 7 July 2014 and reached its peak of 26,123.55, before closing slightly lower at 26,100.08, in anticipation of strong reformatory budget by the new government.SENSEX 27,000, 2 September 2014 - The SENSEX closed at 27,019.39, for its first close above the 27,000 level, on 2 September 2014.This is the sixth 1000-point milestone the index has crossed in 2014, tying a record set in 2007.

SENSEX 24,000, 13 May 2014 - The SENSEX crossed record 24,000 level for the first time, on 13 May 2014 and reached its peak of 24,067.11 due to sustained capital inflows by foreign funds at the domestic bourses and widespread buying by retail investors after exit polls showing the BJP-led NDA forming the government lifted the key indices to new highs. However it closed at a little low at 23,905 points.

BIGGEST LOSERS IN THE STOCK MARKET

FUTURE PREDICTIONS OF INDIAN BOURSES

The Nifty index could touch the 1,25,000 mark in the next 15 years, says billionaire investor Rakesh Jhunjhunwala. He also believes that India could witness economic growth at a rate faster than China in three four years. The savvy investor expects inflation which has been a cause for concern for Reserve Bank of India governors in recent years to fall to four percent in the next few years, as global oil prices remain sluggish.I see no reason why the Nifty cannot grow more than what it has in the past ten years. It could grow at least 10-12 times and be at 1,25,000 in 2030. If earnings grow at 18 percent, in 15 years they would grow 15 times.

Example as to How Stock Market can enhance the Returns Infosys came out with IPO at Rs.95 per share.If you have invested Rs.10000 you would have allotted 105 shares. The company's Bonus history and development of share is as follows:-1986:- 1:1 means one share has become 2 shares , also it split(in 2000) its face value from Rs.10 to Rs.5, so 2 shares has become 4 shares. 1989 :- Bonus :-1 : 1 4 has become 8 shares1991 :-1: 1 8 has become 16 shares1992 :-1:1 16 has become 32 shares1994 :-1:1 32 has become 64 shares

Continued.1997 1:1 64 has become 128 shares1999 1:1 128 has become 256 shares2005 3:1 256 has become 768 shares2007 1:1 768 has become1536 " of Rs. 5 Face value whose market price today is Rs.3889.1 share of Infosys has become 1536 shares and your Rs. 10000 bought 105 shares became today 105 X 1536 sharesTotal value of Rs.10000 invested= 1536 X 105 X 3889 = Rs. 62,72,17,920 i.e 62 crores 72 lakhs 17 thousand 920 rupees only.

Market Analysis from Last 5 yrsMarkets seem to have done almost nothing in last 5 years (2008-2013).We analysed Niftys data for last 22+years (1990-2013). We checked this data for two things:Returns during last 5 years (for everyday since 1995)Returns during next 5 years (for everyday till 2008)

Security Markets- Growth of IPOs In INDIA

The Initial Public Offering (IPO) market in India has been small compared to NYSE and NASDAQ, raising US$300 million in 2013 and US$1.4 billion in 2012.Before 2013, Indian companies were not allowed to list their securities internationally without first completing an IPO in India. In 2013, these security laws were reformed and Indian companies can now choose where they want to list first - overseas, domestically, or concurrently. Further, security laws have been revised to ease overseas listings of already listed companies, to increase liquidity for private equity and international investors in Indian companies

P/E Ratio of Indian Markets in July 2014 - Is It Telling Us Something?

Nifty 50s P/E multiple crossed 21 after almost 3 years. Surprisingly, last it stood past 21 was also on July 7th (2011). Thats exactly 3 years back!

Long term analysis (starting end of 1998) of Niftys P/E ratio tells the following story...

Last 3yrs Means from 2011-2014Last 5 Yrs means from 2009-2014

We all know its common sense to buy low (Low PEs) and sell high (High PEs). And we also know that its difficult to do it. So if you go out and buy the index as whole when P/E multiples are less than 12 (quite low), then on an average, your probable 3 year and 5 year returns will be 39.5% and 29% respectively.Similarly for index-buying during P/E multiples being in between 12 and 16, the 3 and 5 year returns are 28% and 25% respectively.But we are currently in the band of 20-24. And this is not a cheap market at all. As per past data, your 3 year returns and 5 years returns look bleak at 4% and 7%.

Nifty in 2012 Versus Other Country Indexes

Indias Nifty still counts for slightly better performance than the S&P 500 (US) for 2012, with a 12.2% return versus the S&Ps 11.3%.

ConclusionIndian Markets has been booming in the recent times since the new govt has taken power. The FIIs have Pumped Nearly 96000 Cr (on a 6 months Avg) into the Indian Stock Market. Opportunity Still exists for many to still invest and enjoy the upcoming returns. The Current trend seems to be a Little Unstable and an Correction is expected in the Market very soon and once the Market Stabilizes do expect a Bullish Run.