BSE initial public offering in the market on 23 January at Rs 805- 806

BSE Initial public offering (IPO) is set to enter the market on 23 January. The bidding will be open until 25 January. The analysts are expecting a huge demand for the issue of the oldest stock exchange in asia.

The issue price for the Bombay stock exchange initial public offering will be Rs 805 – 806 per share. The minimum order quantity will be 18 shares.

Here are the details about the BSE Initial public offering:

Issue Open: Jan 23, 2017 – Jan 25, 2017

Issue Price: Rs. 805 – Rs. 806 Per Equity Share
Minimum Order Quantity: 18 Shares
Market Lot: 18 Shares

Face Value: Rs 2 Per Equity Share

Issue Type: Book Built Issue IPO
Issue Size: 15,427,197 Equity Shares of Rs 2 aggregating up to Rs 1,243.43 Cr

Know more here.

TCS CEO Chandrasekaran appointed the Chairman of Tata Sons

Yesterday, Tata sons announced the appointment of N Chandrasekaran, 53, as the Chairman of the Tata Sons. The holding company of $116 billion group. He is currently the chief executive officer of the largest software company of India, TCS. He will take his post as Chairman from 21st Feb.

TCS also appointed Rajesh Gopinathan as the CEO of the Tata consultancy services. Prior to Thursday’s appointment, Gopinathan served as Chief Financial Officer(CFO) of the company since February 2013.

On Thursday, the Tata Sons board met at their Bombay house (the headquarter of the TATA sons) and chose N Chandrasekaran unanimously. The panel for selection of the chairman is headed by veteran interim chairman Mr Ratan Tata. Other members are TVS Chairman Venu Srinivasan, Bain Capital’s Amit Chandra, former diplomat Ronen Sen and Kumar Bhattacharyya of Warwick University.

N Chandrasekaran

The software engineer who joined TCS in 1987 and became the CEO in 2009. During his years at TCS, the TCS has jumped three fold from Rs 30,ooo crore in 2010 to Rs 1.09 Lakh crore in FY16. Profits also jumpe more than three times (from Rs 7,094 crore to Rs 24,375 crore). TCS now accounts 60% of the Tata group’s combined market cap of $116 billion.

“Chandrasekaran has demonstrated exemplary leadership as the chief executive officer and managing director of TCS. We believe he will now inspire the entire Tata Group to realise its potential, acting as leaders in their respective businesses, always in keeping with our value system and ethics and adhering with the practices of the Tata Group which have stood it in good stead,” Tata Sons said in a statement.

“I will grow into the role over a period of time. It is a responsibility which requires binding the group together. I want to show my gratitude to the board and RNT,” exclaimed Chandrasekaran after the accouterment.

N Chandrasekaran was sure winner, claims some sources as he was an insider who is familiar with TATA culture, experience and working of the group We congratulate N Chandrasekaran for the crown post and will be looking forward for the Chandra’s global experience as the chairman.

What is Bull and Bear market? Stock Market Basics

What is Bull and Bear market?

Bull Market:

A bull market is a market financial situation which is characterized by the investor’s confidence, optimism and positive expectations that good results will continue.

The bull market is generally related to the stock market but it applies to all financial markets like currencies, bonds, commodities etc. During a bull market, everything in the economy is amazing like growing GDP, increased job, rising stock prices etc.

Bull markets often lead to the overvaluation of the stocks as the investors are highly optimistic and believe that the stock will always go up.

Bear Market:

The opposite of a bull market is a bear market, which is typically characterized by a bad economy, fewer jobs, recession, and falling share prices. The investor’s behavior during a bearish market is highly pessimistic as they fear that the stocks will go down and down.

Bear markets make it tough for investors to pick profitable stocks for the short term.

NOTE: The ‘bull’ and ‘bear’ words that are used in the market is derived from the way these animals attack their opponents. bull thrusts its horns up into the air upwards, while a bear swipes its paws downward. These actions are metaphors for the movement of a market. If the trend is upwards, it’s a bull market. And, if the trend is downwards, it’s a bear market.

If you want to read further in details, I will highly recommend to read the book- Bulls, Bears and Other Beasts: A Story of the Indian Stock Market by Santosh Nair, one of the best book on Indian Stock Market.


Bull and Bear market example for India:

India’s Bombay Stock Exchange Index, was in a bull market trend for about five years from April 2003 to January 2008 as it increased from 2,900 points to 21,000 points.

Examples of Bear Market in India are – the stock market crashes of 1992 and 1994 and the dotcom crash of 2000.

Further, the Great Depression of the 1930s is a famous example of a bear market in the US.

Like all other markets bull market or the bear market does not last endlessly as no market can last forever. Further, It is difficult to predict the changing trends in the market as it is much influenced by the psychological effects and speculations of investors.

New to stocks and confused where to start? Here’s an amazing online course for the newbie investors: INVESTING IN STOCKS- THE COMPLETE COURSE FOR BEGINNERS. Enroll now and start your stock market journey today!

PM Modi Inaugurates the India International Exchange (INX) at GIFT city.

For an auspicious day for the India’s financial sector, Prime minister Narendra Modi inaugurated the India International Exchange (INX) located at the International Financial Services Centre (IFSC), Gujrat International Finance tech –city (GIFT City), Gandhinagar on Monday, Jan 9, 2017.

The INX is a owned subsidiary of Bombay Stock Exchange (BSE) Ltd and is expected to start trading from 15th January 2017. The new exchange will greatly improve the service and quality of transactions across the world.

Here are 5 important updates about India International Exchange (INX):

1) INX at will be open for trading for 22 hours every day. The trading will open daily at 4 am (when exchanges in Japan opens), and close at 2 am (when exchanges in the US closes).
2) World’s fastest international exchange: India INX will be the fastest international exchange in the world with a median trade speed of four microseconds, in terms of order response time,. This is way better than the second ranked Singapore International exchange (60 microseconds) and domestic BSE’s exchange at Mumbai (6 microseconds).

3) The India INX can trade securities and products other than Indian rupees. The securities and products that could be traded on the India INX are: equity shares of companies incorporated outside India, debt securities, depository receipts, index based derivatives, currency and interest rate derivatives, commodity derivatives and similar other securities.

4) A highly robust risk management system is in place to prevent money laundering and market manipulation.

5) A huge investment of Rs 500 Crore will be invested by the Bombay stock exchange in the upcoming three years. Further, INX will begin operations with 100 employees, most of whom have relocated from Mumbai, apart from local and foreign personnel.

Demonetization effect on Banking, FMCG and Real Estate sectors 2016-17.

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The demonetization of 500 and 1000 rupee notes have dipped market very badly as lots of investors started withdrawing money out of the market. Some sectors like real estate where most of the black money is involved has effected very poorly.

Here is the sector wise analysis of the stock-market due to the effect of demonetization.

Banking and Finance:

At first when the demonetization news was announced, investors thought that from then onwards each and every transaction in the market will happen through banks (which is true) so for the first 4 days the almost all the major banking companies SBI (10%), BOB (11.21%), ICICI (3.4%), PNB (13%), BOI (14.4%), Union Bank of India (11.4%) soared. After that cash was being accumulated into banks and there is no outflow of cash from the banks so investors thought companies has to pay the minimum 4% interest to the depositors and hence companies income through loans are low compared to depositors; so investors started losing confidence in banks from then onwards till Jan 1st almost all biggies SBI (13%), BOB (7.3%), ICICI (13%) , PNB (27.7%), BOI (14.2%) and Union bank of India (15.5%) share prices fell down.

Later Narendra Modi announced benefits on home loans of up to 9 lakhs; the poorest and the most underprivileged will get a 4% interest benefit. For home loans of up to 12 lakhs, they will get a 3% interest benefit and all the biggies announced lending rate cuts ranging from 40 to 90 basis points with this various companies will take loan from banks for development purpose, no of people buying homes will increase so in the upcoming few quarters banking sector has huge potential to grow up to 9.5%.

FMCG:

Due to demonetization customers dint have money to purchase daily consumable goods, so market value of FMCG went down due to less sales but after Dec 30 cash started flowing in the market so people started purchasing goods from the shops due to this market value of FMCG started increasing, Even though the share prices of these companies went down they will recover and bullish within 2 to 3 months.

Real estate:

We can see the real estate sector in two forms 1. Luxury homes sector and 2.Residential homes

  1. Luxury homes: – The luxury and high-end segments of residential real estate have seen a major impact, since the legal banking/financing channels have accounted for only a small part of all transactions in this space, which has seen many payments done in cash, which resulted in luxury properties dipping by 25%-30%. Prices of so many companies Delta crop (50%), DLF (27%), HDIL (27%) fell down drastically.
  1. Residential homes: – In this sector almost all the transactions happen through banking/ financial channels so even if the share prices of these companies fell down due to demonetization news such company share prices will correct within a few months. Some of the companies that is happening like this are KNR construction, Hindustan construction.

What is Nifty? Nifty Meaning Explained for Beginners.

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What is Nifty? Nifty Meaning Explained– The NIFTY 50 index is National Stock Exchange of India’s benchmark stock market index for Indian equity market. Nifty is owned and managed by India Index Services and Products (IISL).

  • The base year is taken as 1995 and the base value is set to 1000.
  • Nifty is calculated on 50 stocks actively traded in the NSE
  • 50 top stocks are selected from 24 sectors.

Nifty Meaning: Just as the Sensex which was introduced by the Bombay stock exchange(BSE), Nifty is a major stock index in India introduced by the National stock exchange(NSE).

Also Read: What is Sensex?

NIFTY 50 Index is computed using free float market capitalization method. NIFTY 50 can be used for a variety of purposes such as benchmarking fund portfolios, launching of index funds, ETFs, and structured products.

S. No Company Name Industry Symbol
1 ACC Ltd. CEMENT & CEMENT PRODUCTS ACC
2 Adani Ports and Special Economic Zone Ltd. SERVICES ADANIPORTS
3 Ambuja Cements Ltd. CEMENT & CEMENT PRODUCTS AMBUJACEM
4 Asian Paints Ltd. CONSUMER GOODS ASIANPAINT
5 Aurobindo Pharma Ltd. PHARMA AUROPHARMA
6 Axis Bank Ltd. FINANCIAL SERVICES AXISBANK
7 Bajaj Auto Ltd. AUTOMOBILE BAJAJ-AUTO
8 Bank of Baroda FINANCIAL SERVICES BANKBARODA
9 Bharat Heavy Electricals Ltd. INDUSTRIAL MANUFACTURING BHEL
10 Bharat Petroleum Corporation Ltd. ENERGY BPCL
11 Bharti Airtel Ltd. TELECOM BHARTIARTL
12 Bharti Infratel Ltd. TELECOM INFRATEL
13 Bosch Ltd. AUTOMOBILE BOSCHLTD
14 Cipla Ltd. PHARMA CIPLA
15 Coal India Ltd. METALS COALINDIA
16 Dr. Reddy’s Laboratories Ltd. PHARMA DRREDDY
17 Eicher Motors Ltd. AUTOMOBILE EICHERMOT
18 GAIL (India) Ltd. ENERGY GAIL
19 Grasim Industries Ltd. CEMENT & CEMENT PRODUCTS GRASIM
20 HCL Technologies Ltd. IT HCLTECH
21 HDFC Bank Ltd. FINANCIAL SERVICES HDFCBANK
22 Hero MotoCorp Ltd. AUTOMOBILE HEROMOTOCO
23 Hindalco Industries Ltd. METALS HINDALCO
24 Hindustan Unilever Ltd. CONSUMER GOODS HINDUNILVR
25 Housing Development Finance Corporation Ltd. FINANCIAL SERVICES HDFC
26 I T C Ltd. CONSUMER GOODS ITC
27 ICICI Bank Ltd. FINANCIAL SERVICES ICICIBANK
28 Idea Cellular Ltd. TELECOM IDEA
29 IndusInd Bank Ltd. FINANCIAL SERVICES INDUSINDBK
30 Infosys Ltd. IT INFY
31 Kotak Mahindra Bank Ltd. FINANCIAL SERVICES KOTAKBANK
32 Larsen & Toubro Ltd. CONSTRUCTION LT
33 Lupin Ltd. PHARMA LUPIN
34 Mahindra & Mahindra Ltd. AUTOMOBILE M&M
35 Maruti Suzuki India Ltd. AUTOMOBILE MARUTI
36 NTPC Ltd. ENERGY NTPC
37 Oil & Natural Gas Corporation Ltd. ENERGY ONGC
38 Power Grid Corporation of India Ltd. ENERGY POWERGRID
39 Reliance Industries Ltd. ENERGY RELIANCE
40 State Bank of India FINANCIAL SERVICES SBIN
41 Sun Pharmaceutical Industries Ltd. PHARMA SUNPHARMA
42 Tata Consultancy Services Ltd. IT TCS
43 Tata Motors Ltd DVR AUTOMOBILE TATAMTRDVR
44 Tata Motors Ltd. AUTOMOBILE TATAMOTORS
45 Tata Power Co. Ltd. ENERGY TATAPOWER
46 Tata Steel Ltd. METALS TATASTEEL
47 Tech Mahindra Ltd. IT TECHM
48 UltraTech Cement Ltd. CEMENT & CEMENT PRODUCTS ULTRACEMCO
49 Wipro Ltd. IT WIPRO
50 Yes Bank Ltd. FINANCIAL SERVICES YESBANK
51 Zee Entertainment Enterprises Ltd. MEDIA & ENTERTAINMENT ZEEL

*And the 51st stock is: The Tata Motors DVR. This is a differential voting rights share of Tata Motors. Which is already in the Nifty! Reference: https://www.nseindia.com/content/indices/Method_Nifty_50.pdf https://www.nseindia.com/content/indices/ind_nifty50list.csv https://www.nseindia.com/content/indices/ind_nifty50.pdf

If you want to read further, here is a great book about Indian Stock Market: Bulls, Bears and Other Beasts: A Story of the Indian Stock Market by Santosh Nair

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How is Sensex calculated?

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How is Sensex calculated? Sensex, also called BSE 30, is the market index consisting of 30 well-established and financially sound companies listed on Bombay Stock Exchange (BSE).

The methodology used for calculating SENSEX is quite interesting. It is calculated using the ‘Free-float Market Capitalization’ method.

Free-float Market Capitalization:

It is defined as that proportion of the total shares issued by the company that is readily available for trading in the market. It excludes promoter’s holding.

 For example, suppose a company has 1000 shares in total. Out of this, 300 shares are held for the promoters. Hence, only 700 shares are available to the general public for trading. These 700 shares are called the ‘free-floating shares’

Suppose the price of each share is Rs 200.

Then, total market capitalization = 1000 Shares * Rs 200 = Rs 2,00,000

Free float market capitalization = 700 shares * Rs 200 = Rs 1,40,000

Now, for calculating the index, suppose the index consists of two stocks. Stock A and Stock B.

Details Company A Company B
Total Shares 1000 2000
Public holding 700 1000
Promoter’s holding 300 1000
Current Market price 200 300
Total market capitalization 2,00,000 6,00,000
Free float market capitalization 1,40,000 3,00,000
  • As of today, total free float market capitalization (of A & B) = 1,40,000 + 3,00,000 = 4,40,000
  • The year 1978-79 is considered as the base year of the index with a value set to 100.
  • Suppose at that time (1978-79), the total free float market capitalization of the stock was said 11,000.

By using simple maths,

Today Free-float Market Cap Index-Value
1978-79 11,000 100
Today 4,40,000 X

X = (100/11000) * 440000 = 4,000

  • Thus, the value of index today is 4000.
  • THIS IS HOW SENSEX IS CALCULATED.
  • The factor (100/11000) is called index divisor.
Index Formula:

INDEX = Base * (Current market capitalization/ Base market capitalization) 

Here, is the Sensex from 1991 to 2013. Note, the dip at 2008-09 during the great Indian recession.

If you are new to Indian stock market, I will highly recommend you to read this book: How to Avoid Loss and Earn Consistently in the Stock Market: An Easy-To-Understand and Practical Guide for Every Investor by Prasenjit Paul

how is sensex calculated

What are stocks? And what is a Stock Market?

What are stocks?

What is a stock market?

What is Bombay stock exchange (BSE)?

What is National stock exchange (NSE)?

What is Sensex?

What is Nifty?

What is meant be Sensex/Nifty is up or down?

How does upward or downward movement of Sensex/Nifty affect the growth of the country?

What is bull and bear market?

 These are the major questions that are repeatedly asked by the common people of India whenever they hear the financial news of the television or the newspapers or magazines. Although a simple definition of all the above terms can be found easily in a book or internet, it would be simpler and more interesting if we explain the whole scenario in the story form. Later, we will give the standard definition for all the above terms for your better understanding.

It all starts with a company. Let’s say there is a company X. It is a manufacturing company and is doing well in its sector. Now it wants to expand by doing some project or research and development(R&D) in his field. For this company requires capital (money).

 

At first, the company will try to get the capital from all the owners to expand the company. Further, when the owners aren’t able to meet the capital needs, it will go the biggest money source, the banks. But this will only increase his debts along with the interests. So, what options the company X has now? Where can the company X get such a large capital from?

 

The answer is public. The company can collect a large sum of money by giving a little ownership of the company to the public.

 

And here begins the journey of the company in the stock market. A stock market (ex BSE, NSE) is a place where the company will be able to present his ownership (in the form of the stocks) to the public. And why will the people buy the stocks of the company X? It totally depends on how positive the people is about the growth of the company in terms of sales, earnings, revenue etc. If the people think that the company will be able to grow to new heights, or if the people believe in the visions of the company X, then, they will buy the stocks to trade their money with the ownership of the company.

 

Thus by giving the portion of the ownership, the company is able to pool a great amount of money for its growth and development.

 

Generally, the company does not offer its complete shares to the public. Almost all of the times the owners (promoters) keep a portion of the stock with them to keep the ownership in their hands.

 

For example, let’s say the company X decided to provide 10,00,000 shares. Out of the total, it decides to offer 7,00,000 shares to the public and remaining 3,00,000 shares with them. Here, the promoters share will be 30%.

 

 (Here, we would also like to define the term free-float market capitalization here. It is the product of the total shares offered to the public and the price of per equity share. Let’s say the company X each share price costs Rs 50 and it offers 7,00,000 public shares. Then, the free float market capitalization here will be equal to 50*7,00,000. The total market capitalization (not-free float) will be 50*10,00,000).

 

Now that the company X has decided to enter the stock market. When, the first time the company enters the market, it has to provide an offering price for the shares. This is called initial public offering i.e. IPO (we will discuss IPO in details in later sections). The IPO is offered in the primary market, where the seller is the company and the buyer is the public.

 

After the IPO, the stock goes to the secondary market, where the buyer and sellers both are the public. Here, the public generally exchanges the ownership of the company.

That’s the story of the stock and the company X. In the next section, we will discuss the two stock markets in India i.e. Bombay stock exchange (BSE) and National stock exchange (NSE) and their indexes (Sensex/Nifty).

If you want to learn Indian Stock market from scratch, I will highly recommend you to read this book: Bulls, Bears and Other Beasts: A Story of the Indian Stock Market by Santosh Nair

What are stocks? What is the stock market? -Summary

Stock:  A stock is a general term used to describe the ownership of any company. Stock represents a claim on the company’s assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Shares, equity, or stock, all basically mean the same thing.

Stock Market: The stock market is the market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets. It is a place where shares of publicly listed companies are traded.

The stock market can be split into two main sections: the primary market and the secondary market.

  1. Primary Market: It’s where new issues are first sold through initial public offerings. Retail Investors, mutual funds, domestical, and foreign institutional investors buy the share from the promoters. Institutional investors typically purchase most of these shares during this first-time issue by the company.
  2. Secondary Market: All subsequent trading goes on in the secondary market where participants include both institutional and individual investors.

Initial Public Offering (IPO): An IPO is the first time that the stock of a private company is offered to the public. It is a source of collecting money from the public for the first time in the market to fund its projects. In return, the company gives the share to the investors in the company. IPOs are often issued by smaller, younger companies seeking capital to expand, but they can also be done by large privately-owned companies looking to become publicly traded.

Market Capitalization: Market Cap or Market capitalization refers to the total market value of a company’s outstanding shares. It is calculated by multiplying a company’s shares outstanding by the current market price of one share. The investment community uses this figure to determine a company’s size, as opposed to using sales or total asset figures.