An order to broker to buy or sell a specified security when a specified price (called stop price) is reached.

When used in connection with dividend or interest, means that the dividend or interest will be paid after deduction of tax payable by the company on its profits.

Condition of market created by various internal factors, and opposed to external forces.

An Individual/Institution guaranteeing procurement of subscription in part or in full of securities issue made to the public.

Dividend yield.
The dividend expressed as a percentage of current price.

Illustration : Rs. 32 is the purchase price of a share of Rs. 10/- face value

Annual Dividend per share; Rs. 4/-
Yield = 4/32 x 100 = 12.5%

Market Capitalisation is quite different from its authorised and paid up capital.

Authorised Capital of a Company may be 50,00,000 equity shares of Rs. 10/- each or Rs. 5,00,00,000.

Its paid up capital may be 30,00,000 equity shares of Rs. 10/- each of Rs. 3,00,00,000 i.e. it has issued 30,00,000 shares of Rs. 10/- each which are held by various individuals or organisation.

If the market value of the share is Rs. 50/- an any day, then the market capitalisation of the Company will be Rs. 15,00,00,000 i.e. the number of issued shares multiplied by the marked price Rs. 50/-.

Insider Training is related to price – sensitive corporate informations which are available to a privileged few who are called insiders for their exclusive gains against the knowledge of large number of share holders of the company. The insiders are company directors, company executives, company’s auditor and bankers and business associates. These informations are dividend declaration, bonus and rights issue, new projects, amalgamation and take over. Insider information is illegal and the insiders may be penalised for the same.

Shares which are given to sharp fluctuations in prices are called volatile shares. Volatile shares show a large variation between the highest and lowest recorded prices in any period. Volatility is generally measured by the percentage of variation of the highest recorded price over the lowest recorded price.

Highest Price – Lower Price

Volatility = _________________________

Lowest Price

Volatile shares present opportunities for quick and large profit. Price is the value that the market puts on the entire company volatile shares have a low market capitalisation.

The closure of membership register of a company to take a record of the shareholders who is entitled to dividends or rights or bonus issue. No transfer of membership is registered during the book closing period. Book closing is now not compulsory for rights issue or bonus issue and interim dividend. For AGM book closing is compulsory. Book closing can be done maximum for 30 days and not more than 45 days in a year. No minimum period. New transfer deed is compulsory after the book closure in case of AGM. All documents floating around the market should be lodged with the company at least one day before the book closing.

It is the cut off date for determination on members for payment of interim dividend rights and bonus. New transfer deed is not compulsory. The term indicates that there is no closure of Register of members and the document can be lodged with the company on that day before the booking hours.

The operators in the specified group of shares are divided into Bulls and Bears. These operators who believe that the share prices will rise in the near future are called Bulls. He first buys and then sells. He purchases at a lower price at the beginning of the settlement period in expectation of a price rise and sells before the end of the settlement period. When the price moves up, the balance of purchase and sale is his profit. If the price does not rise as expected, the bull can postpone taking delivery till the next settlement period, by paying contango or seedha badla charges to the seller. It is the interest charged by the badla financier and borne by the buyer for the seller. The Bear is an operator who expects that the price will decrease in the future. He is a pessimist. He first sells and then purchases at the end of the settlement period. He sells first at a higher price and then purchases at a lower price and the margin is his profit. In most of the cases, the bears sell the shares without having actual physical possession as per stock exchange rules and this is called short selling. At the end of the settlement period he purchases from the market to make good the delivery and it is called short covering. If the bear postpones his transaction till the next settlement period, he has to pay badla interest to the buyer which is called backwardation charges. This happens when the shares are over-sold and the buyers are in a demanding position. Usually a bear does not have to pay interest on his carryforward business. On the contrary he receives a payment identical to that paid by the bull operator. This is because a bull who has purchased shares but cannot pay for them is glad to pay a small charges to a bear who has sold shares but cannot deliver them.

Speculative activity of the specified group of shares is useful for the stock market in the sense that daily transaction becomes voluminons and the scrips remain very liquid.

When prices register a fall in an otherwise rising market, the fall is called a reaction. It is caused by bulls offloading their holding to book profit and is referred to as bull liquidation or profit taking.

The reverse position applies in a rally i.e. when prices register a rise in a generally falling market. This is caused by squaring up their sales and is called ‘bear covering or squaring up.’

A non-member cannot enter the trading hall of the stock exchange and therefore, can purchase and sell share’s and securities only through members. The relationship between the client and the member is just like an agent and the principal. The member acts as a custodian and handles the shares and securities of his clients.

• The first step is to select a broker who will buy or sell on behalf of the client.
• If you do not have any broker of your own, you can visit the stock exchange office and they will give you a list of brokers and you may select one.
• An investor has to place the order with the broker by telephone, telegram or personal visit.
• The following are the methods of placing the order.
1. Fixed price or at Limit order, when the client instructs the broker to buy or sell certain shares at a fixed price mentioned in the order, it is called a Fixed Price. For example.

Buy 100 Tisco shares at Rs. 250

Sell 100 Tisco shares at Rs. 252 or more.

2. At the best prevailing price in the market. It is an order which does not specify any price and should be executed immediately at the best prevailing price in the market. For example sell 100 ITC shares at best.
• Entry in broker’s order book has been changed, now the clients order entered into the C-STAR and a slip comes out which is also included in the C-STAR system.
• On the day the broker buys or sells shares for you, he will give you a Contract Note by hand or by post under certificate of posting. Once it is posted under COP it is a proof that the client has received the document. It is a legal document and the best evidence of the transaction. Both the parties are bound to accept the terms included in it. It includes the number of shares, name of the company, prices, brokerage and the transaction whether purchase or sale.
• The broker will buy or sell shares on client’s behalf against a nominal fee which is called brokerage. It is fixed by the stock exchange authorities.
• If the client is a buyer, he must pay the broker in time as per stock exchange rules.
• The seller must put his signature on the transfer deed and it must be authenticated by a witness. He will hand over the share or debenture certificate along with the transfer deed to his broker before the delivery day. The buyer’s broker will hand over the cheque to the seller’s broker.

It is the best evidence about the transaction between buyer or his broker and the seller and his broker. The court will not accept any petition without the valid Contract Note. This document must be presented to the Arbitration Sub-Committee as a proof for transaction. Contract Notes are of two types. Form A Contract Note is issued by the broker for his transaction with his client. Form B is the Contract Note between a member and another member. Validity period of a Contract Note is 3 years from the date of the transfer deed stamped by the prescribed authority. It is 29 days for Form B. All Contract Notes must be affixed with the broker’s stamp for 50 paisa. Contract Notes without the broker’s stamps are not valid documents. The SEBI’s guideline has directed at the brokerage must be shown separately on the Contract Note.

What is CSE Index ?

In addition to the CSE 50 index, The Calcutta Stock Exchange introduced from 6^th April 1998 a more sensitive index, the CSE 40 index, with 40 scrips in the index basket. The 31^st day of March, 1996 is the Base Date for both the Index. The Base Value of the CSE 50 index is 100 and the Base Value of the CSE 40 index is 2000. The CSE 40 index was introduced since it was felt that it will have good investors recall and will indicate values which are co-related to the existing popular indices such as BSE Sensex, NSE Nifty. The basket of CSE 40 was selected from Specified Group scrips of the Exchange, having reasonably high market capitalisation covering all major industry leaders. The index is based on the Standard & Poor’s model.

The Central Trading Engine computes the Current Market Capitalisation based on the current market rate of the scrips comprising the index basket and compares it with the base date market capitalisation and calculates the index using the following formula (Based on Standard & Poor).

The Scrips which are in the CSE 40 index basket are :-

ACC, Bajaj Auto, Balarampur Chini Mills, Bata, BSES, Castrol, CESC, Colgate, EIH, Eveready Industries, Great Eastern Shipping, Glaxo, Grasim, Gujarat, Ambuja Cement, Housing Development Finance Corporation, Hindalco, Hindustan Lever, HPCL, IPCL, ICI, ICICI, India Hotels, Indian Rayon, Indo Gulf Corporation, ITC, ITC Bhadrachalam, Larsen & Toubro, LML, UTI Master Share, MTNL, Reliance Industries, Reliance Petroleum, SAIL, Satyam Computers, SBI, SPIC, Tata Chemicals, Tata Tea, TELCO, TISCO.

The Base Year Market Capitalisation of these 40 Scrips was Rs. 1,40,141.74 Crores.

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