2.

1INTRODUCTION TO DERIVATIVE MARKET:DERIVATIVES:

The emergence of the market for derivative products, most
notably forwards, futures and options, can be traced back to the
willingness of risk-averse economic agents to guard themselves
against uncertainties arising out of fluctuations in asset prices. By
their very nature, the financial markets are marked by a very high
degree of volatility. Through the use of derivative products, it is
possible to partially or fully transfer price risks by locking in asset
prices. As instruments of risk management, these generally do not
influence the fluctuations underlying prices. However, by locking in
asset prices, derivative products minimizes the impact of fluctuations
in asset prices on the profitability and cash flow situation of risk
averse investors.

2.1.1 DEFINITION:
Understanding the word itself, Derivatives is a key to mastery
of the topic. The word originates in mathematics and refers to a
variable, which has been derived from another variable. For example,
a measure of weight in pound could be derived from a measure of
weight in kilograms by multiplying by two.
In financial sense, these are contracts that derive their value
from some underlying asset. Without the underlying product and
market it would have no independent existence. Underlying asset can
be a Stock, Bond, Currency, Index or a Commodity. Some one may
take an interest in the derivative products without having an interest
in the underlying product market, but the two are always related and
may therefore interact with each other.

The term Derivative has been defined in Securities Contracts

(Regulation) Act 1956, as:

A. A security derived from a debt instrument, share, loan

whether secured or unsecured, risk instrument or
contract for differences or any other form of security.

B. A contract, which derives its value from the prices, or

index of prices, of underlying securities.

2.1.2 IMPORTANCE OF DERIVATIVES:

Derivatives are becoming increasingly important in world
markets as a tool for risk management. Derivatives instruments can
be used to minimize risk. Derivatives are used to separate risks and
transfer them to parties willing to bear these risks. The kind of
hedging that can be obtained by using derivatives is cheaper and
more convenient than what could be obtained by using cash
instruments. It is so because, when we use derivatives for hedging,
actual delivery of the underlying asset is not at all essential for
settlement purposes.

Moreover, derivatives would not create any risk. They simply

manipulate the risks and transfer to those who are willing to bear
these risks. For example,

Mr. A owns a bike If he does not take insurance, he runs a big

risk. Suppose he buys insurance [a derivative instrument on the bike]
he reduces his risk. Thus, having an insurance policy reduces the risk
of owing a bike. Similarly, hedging through derivatives reduces the
risk of owing a specified asset, which may be a share, currency, etc.

2.1.3 RATIONALE

BEHIND

THE

DEVELOPMENT

DERIVATIVES:
Holding portfolio of securities is associated with the risk of the
possibility that the investor may realize his returns, which would be
much lesser than what he expected to get. There are various
influences, which affect the returns.

1. Price or dividend (interest).

2. Sum are internal to the firm like:
Industry policy
Management capabilities
Consumers
preference Labour
strike, etc.

OF

These forces are to a large extent controllable and are termed as

Non-systematic Risks. An investor can easily manage such nonsystematic risks by having a welldiversified portfolio spread across
the companies, industries and groups so that a loss in one may easily
be compensated with a gain in other.

There are other types of influences, which are external to the firm,
cannot be controlled, and they are termed as systematic risks.
Those are

Economic

Political

Sociological changes are sources of Systematic Risk

Their effect is to cause the prices of nearly all individual stocks to

move together in the same manner. We therefore quite often find
stock prices falling from time to time in spite of companys earnings
rising and vice versa.
Rational behind the development of derivatives market is to manage
this systematic risk, liquidity. Liquidity means, being able to buy & sell
relatively large amounts quickly without substantial price
concessions.
In debt market, a much larger portion of the total risk of
securities is systematic. Debt instruments are also finite life securities
with limited marketability due to their small size relative to many
common stocks. These factors favor for the purpose of both portfolio
hedging and speculation.

India has vibrant securities market with strong retail

participation that has evolved over the years. It was until recently a
cash market with facility to carry forward positions in actively traded
A group scripts from one settlement to another by paying the
required margins and borrowing money and securities in a separate
carry forward sessions held for this purpose. However, a need was felt
to introduce financial products like other financial markets in the
world.

2.1.4 CHARACTERISTICS OF DERIVATIVES:

1. Their value is derived from an underlying instrument such as

stock index, currency, etc.

2. They are vehicles for transferring risk.

3. They are leveraged instruments.

2.1.5 MAJOR PLAYERS IN DERIVATIVE MARKET:

There are three major players in the derivatives trading.

1. Hedgers
2. Speculators
3. Arbitrageurs
Hedgers: The party, which manages the risk, is known as Hedger.
Hedgers seek to protect themselves against price changes in a
commodity in which they have an interest.
Speculators: They are traders with a view and objective of making
profits. They are willing to take risks and they bet upon whether the
markets would go up or come down. Arbitrageurs: Risk less profit
making is the prime goal of arbitrageurs. They could be making
money even with out putting their own money in, and such
opportunities often come up in the market but last for very short time
frames. They are specialized in making purchases and sales in
different markets at the same time and profits by the difference in
prices between the two centers.

2.1.6 TYPES OF DERIVATIVES:

Most commonly used derivative contracts are:

Forwards: A forward contract is a customized contract between two

entities where settlement takes place on a specific date in the futures
at todays pre-agreed price. Forward contracts offer tremendous
flexibility to the partys to design the contract in terms of the price,
quantity, quality, delivery, time and place. Liquidity and default risk
are very high.
Futures: A futures contract is an agreement between two parties to
buy or sell an asset at a certain time in the future at a certain price.
Futures contracts are special types of forward contracts in the sense,
that the former are standardized exchange traded contracts.
Options: Options are two types - Calls and Puts. Calls give the buyer
the right but not the obligation to buy a given quantity of the
underlying asset at a given price on or before a given future date.
Puts give the buyer the right but not the obligation to sell a given
quantity of the underlying asset at a given price on or before a given
date.
Warrants: Longer dated options are called warrants and are
generally traded over the counter. Options generally have life up
to one year, the majority of options traded on options exchanges
having a maximum maturity of nine months.
LEAPS: The acronym LEAPS means Long Term Equity Anticipation
Securities. These are options having a maturity of up to three years.
Baskets: Basket options are options on portfolios of underlying
assets. The underlying asset is usually a moving average of a basket
of assets. Equity index options are a form of basket options
Swaps: Swaps are private agreements between two parties to
exchange cash flows in the future according to a pre-arranged
formula. They can be regarded as portfolios of forward contracts. The
two commonly used swaps are: Interest rare swaps: These entail swapping only the interest
related cash flows between the parties in the same currency.
Currency swaps: These entail swapping both the principal and
interest between the parties, with the cash flows in one direction
being in a different currency than those in opposite direction.

2.1.7 RISKS INVOLVED IN DERIVATIVES:

Derivatives are used to separate risks from traditional instruments
and transfer these risks to parties willing to bear these risks. The
fundamental risks involved in derivative business includes

A. Credit Risk: This is the risk of failure of a counterpart to

perform its obligation as per the contract. Also known as
default

or

counterparty

risk,

it

differs

with

different

instruments.

B. Market Risk: Market risk is a risk of financial loss as a result of

adverse

movements

of

prices

of

the

underlying

asset/instrument.

C. Liquidity Risk: The inability of a firm to arrange a transaction

at prevailing market prices is termed as liquidity risk. A firm
faces two types of liquidity risks:
Related to liquidity of separate products.
Related to the funding of activities of the firm including
derivatives.

D. Legal Risk: Derivatives cut across judicial boundaries,

therefore the legal aspects associated with the deal should be
looked into carefully.

2.1.8 DERIVATIVES IN INDIA:

Indian capital markets hope derivatives will boost the nations
economic prospects. Fifty years ago, around the time India became
independent men in Mumbai gambled on the price of cotton in New
York. They bet on the last one or two digits of the closing price on the
New York cotton exchange. If they guessed the last number, they got
Rs.7/- for every Rupee layout. If they matched the last two digits they
got Rs.72/- Gamblers preferred using the New York cotton price
because the cotton market at home was less liquid and could easily
be manipulated.
Now, India is about to acquire own market for risk. The country,
emerging from a long history of stock market and foreign exchange
controls, is one of the vast major economies in Asia, to refashion its
capital market to attract western investment. A hybrid over the
counter, derivatives market is expected to develop along side. Over
the last couple of years the National Stock Exchange has pushed
derivatives trading, by using fully automated screen based exchange,
which was established by India's leading institutional investors in
1994 in the wake of numerous financial & stock market scandals.

Derivatives Segments in NSE & BSE

On June 9, 2000 BSE and NSE became the first exchanges in
India to introduce trading in exchange traded derivative products,
with the launch of index Futures on Sensex and Nifty futures
respectively. Index Options was launched in June 2001, stock options
in July 2001, and stock futures in November 2001.
NIFTY is the underlying asset of the index futures at the futures
and options segment of NSE with a market lot of 50 and Sensex is the
underlying stock index in BSE with a market lot of 30. This difference
of market lot arises due to a minimum specification of a contract
value of Rs.2 Lakhs by Securities and Exchange Board of India. For
example Sensex is 18000 then the contract value of a futures index
having Sensex as underlying asset will 30x18000 = 540000. Similarly,
If Nifty is 5200 its futures contract value will be 50x5200=260000.
Every transaction shall be in multiples of market lot. Thus, index
futures at NSE shall be traded in multiples of 50 and a BSE in
multiples of 30.

Contract Periods:
At any point of time there will be always be available nearly
3months contract periods in Indian Markets. These were

1) Near Month
2) Next Month
3) Far Month
For example in the month of September 2007 one can enter
into September futures contract or October futures contract or
November futures contract. The last Thursday of the month specified
in the contract shall be the final settlement date for the contract at
both NSE as well as BSE; it is also known as Expiry Date.

Settlement:
The settlement of all derivative contracts is in cash mode.
There is daily as well as final settlement. Outstanding positions of a
contract can remain open till the last Thursday of that month. As long
as the position is open, the same will be marked to market at the
daily settlement price, the difference will be credited or debited

accordingly and the position shall be brought forward to the next day
at the daily settlement price. Any position which remains open at the
end of the final settlement day (i.e. last Thursday) shall be closed out
by the exchange at the final settlement price which will be the closing
spot value of the underlying asset.

Margins:
There are two types of margins collected on the open position,
viz., initial margin which is collected upfront which is named as SPAN
MARGIN and mark to market margin, which is to be paid on next day.
As per SEBI guidelines it is mandatory for clients to give margins,
failing in which the outstanding positions are required to be closed
out.

Members of F&O segment:

There are three types of members in the futures and options
segment. They are trading members, trading cum clearing members
and professional clearing members. Trading members are the
members of the derivatives segment and carrying on the transactions
on the respective exchange.
The clearing members are the members of the clearing corporation
who deal with payments of margin as well as final settlements.
The professional clearing member is a clearing member who is not a
trading member. Typically, banks and custodians become professional
clearing members.
It is mandatory for every member of the derivatives segment to have
approved users who passed SEBI approved derivatives certification test,
to spread awareness among investors.

Exposure limit:
The national value of gross open positions at any point in time
for index futures and short index option contract shall not exceed
33.33 times the liquid net worth of a clearing member. In case of
futures and options contract on stocks the notional value of futures
contracts and short option position any time shall not exceed 20
times the liquid net worth of the member. Therefore, 3 percent
notional value of gross open position in index futures and short index
options contracts, and 5 percent of notional value of futures and short
option position in stocks is additionally adjusted from the liquid net
worth of a clearing member on a real time basis.

Position limit:
It refers to the maximum no of derivatives contracts on the
same underlying security that one can hold or control. Position limits
are imposed with a view to detect concentration of position and
market manipulation. The position limits are applicable on the
cumulative combined position in all the derivatives contracts on the
same underlying at an exchange. Position limits are imposed at the
customer level, clearing member level and market levels are
different.

Regulatory Framework:
Considering the constraints in infrastructure facilities the
existing stock exchanges are permitted to trade derivatives subject to
the following conditions:

Trading should take place through an online screen

based trading system

An independent clearing corporation should do the

clearing of the derivative market

The

exchange

must

have

an

online

surveillance

capability, which monitors positions, price and volumes

in real time so as to detect market manipulations.
Position limits be used for improving market quality

Information about traded quantities and quotes should

be disseminated by the exchange in the real time over
at least two information-vending networks, which are
accessible to the investors in the country

The exchange should have at least 50 members to start

derivatives trading

The derivatives trading should be done in a separate

segment with a separate membership. The members of
an

existing

automatically
segment

segment

of

become

the

the

exchange

members

of

will

not

derivatives

The

derivatives

market

should

have

separate

governing council and representation of trading/clearing

members shall be limited to maximum of 40% of total
members of the governing council

The chairman of the governing council of the derivative

division/exchange should be a member of the governing
council. If the chairman is broker/dealer, then he should
not carry on any broking and dealing on any exchange
during his tenure

2.2Introduction to stock broking/broker:-

A stockbroker is an individual / organization who are specially given license to participate

in the securities market on behalf of clients. The stockbroker has the role of an agent.
When the Stockbroker acts as agent for the buyers and sellers of securities, a
commission is charged for this service.
As an agent the stock broker is merely performing a service for the investor. This means
that the broker will buy for the buyer and sell for the seller, each time making sure that
the best price is obtained for the client.
An investor should regard the stockbroker as one who provides valuable service and
information to assist in making the correct investment decision. They are adequately
qualified to provide answers to a number of questions that the investor might need
answers to and to assist in participating in the regional market.
Are they governed by any Rules and Regulations?

Of course, yes. Stock brokers are governed by SEBI Act, 1992, Securities Contracts
(Regulation) Act, 1956, Securities and Exchange Board of India [SEBI (Stock brokers
and Sub brokers) Rules and Regulations, 1992], Rules, Regulations and Bye laws of
stock exchange of which he is a member as well as various directives of SEBI and stock
exchange issued from time to time. Every stock broker is required to be a member of a
stock exchange as well as registered with SEBI. Examine the SEBI registration number
and other relevant details can be found out from the registration certificate issued by
SEBI.
How do I know whether a broker is registered or not?

Every broker displays registration details on their website and on all the official
documents. You can confirm the registration details on SEBI website. The SEBI
website provides the details of all registered brokers. A brokers registration number
begins with the letters INB and that of a sub broker with the letters INS.
What are the documents to be signed with stock broker?

Before start of trading with a stock broker, you are required to furnish your details such
as name, address, proof of address, etc. and execute a broker client agreement. You are
also entitled to a document called Risk Disclosure Document, which would give you a
fair idea about the risks associated with securities market. You need to go through all
these documents carefully.
SUB BROKERS
According to the BSE website Sub-broker means any person not being a member of
a Stock Exchange who acts on behalf of a member-broker as an agent or otherwise for
assisting the investors in buying, selling or dealing in securities through such memberbrokers.
All Sub-brokers are required to obtain a Certificate of Registration from SEBI without
which they are not permitted to deal in securities. SEBI has directed that no broker shall
deal with a person who is acting as a sub-broker unless he is registered with SEBI and it
shall be the responsibility of the member-broker to ensure that his clients are not acting
in the capacity of a sub-broker unless they are registered with SEBI as a sub-broker.
It is mandatory for member-brokers to enter into an agreement with all the sub-brokers.
The agreement lays down the rights and responsibilities of member-brokers as well as
sub-brokers.

STOCK BROKERS IN INDIA.

There are a number of broking houses all over India. Many of them have International
presence too. Following are some of the leading Stock Broking firms in India.
IndiaInfoline
ICICIdirect
Share khan
India bulls
Geojit Securities
HDFC
Reliance Money
Religare
Angel Broking
Investors have to check the brokers terms and conditions and decide about opening
atrading account. Only Govt. tax rates like, security transaction tax, stamp duty and
service tax are uniform other charges like brokerage for delivery trades, intraday trades,
minimum transaction charge, statement charges, DP charges, annual maintenance
charges etc., may vary from one broker to another.
You may like these posts:

1.

What are Demat accounts?

2.

What is a trading account?

3.

Stock markets in india

1.WHAT IS A DEMAT ACCOUNT?

Demat refers to a dematerialized account.
Demat is very similar to your savings bank account. You have to open an account with a
bank if you want to save your money, make cheque payments etc. Similarly, you open a
demat account if you want to buy or sell stocks. So it is just like a bank accountwhere
actual money is replaced by shares.
A dematerialised account holds shares in electronic form, saving you the bother of
holding shares in paper form. Possessing ademat account is now a prerequisite for stock
market investments.
so, while your bank account keeps your money safe and transfers it from account to
account according to your instructions without bothering you , your demat accountkeeps
your shares safe and transfers it to the next owner when you sell it.

WHO PROVIDES THE SERVICE?

Demat services are provided by banks, financial institutions and stock broking houses.
The broking houses in such cases also act as DPs (depository participants)
intermediating between the depositories CDSL or NSDL and the investor. To open a
demat account, you have to make an application to a DP and submit required
documents. Once you have a demat account to your name, you can open a trading
account with a broker of your choice.
The shares bought and sold by you will be reflected in your demat account. Any
previously held physical share can also be dematerialised and transferred to the
account. The DP, at regular intervals, would provide you with an account statement
showing the balance of shares in your demat account and transactions during a period.
In short, to start trading in shares you have to open two accounts1.
A
trading
account
-with
the
broker
and
2.A de-mat account Either you choose a bank/financial institution or a stock broker
who could provide you the DP services.

CHARGES

The fees charged for DP services differ across the industry. Though the rates change,
the charges normally go under the following heads:
1.Account
opening
2.Annual
maintenance
3.Transaction
Besides the above, depository participants also charge service tax as applicable.

fee
fee
fee

DOCUMENTS REQUIRED
For opening a demat account one needs to provide a set of documents to the agent.
They are:
1. Duly completed account opening form and passport size photos;
2.A
copy
of
PAN
card
as
proof
of
identity;
3.Personalised
cheque/Copy
of
the
bank
passbook
4.A copy of passport/voter ID/ ration card as a proof of address
5.Signing of the DP-investor agreement.
On giving the above papers, the agent would complete the other formalities with the
depository and facilitate opening of the account. You would then be given a unique
account number (BO ID- Beneficiary Owner Identity), which would serve as a reference
number for all further transactions.
A set of delivery instruction (DI) slips will be give to you from the DP. This is almost
similar to he cheque book you get when you open your bank account. A DI slip has to be
filled and sent to the DP on every delivery (sale of shares) you make. DI slip is an
instruction to the DP to debit your account and credit the brokers account with the
specific stock.
Take note that the DI instruction has to reach the DP the very next day after the sale,
failing which the securities wont reach the broker and hence the exchange. This could
result in auction of the security.
When you open a demat account with your stockbroker, you also sign and deliver a
standing instruction for delivery of stocks that you sell.Hence, the broker handles the
delivery system and you need not worry about all this.

2.TRADING ACCOUNT:-

Some of the beginners do not understand relationship between Share Trading account
and Demat Account. This short lesson will explain the relationship between Demat
account, trading Account and your Bank Account. We will also see how many trading or
Demat account you can have in total.
Trading account is an interface between your Bank account and your Demat

account. To buy shares, the first step is to transfer money from your bank account to
trading account. For example , if you want to buy 100 shares at Rs 50 , you have to
transfer Rs 5000 from your bank account to the trading account.
The shares that you buy will be stored in the demat account.
When you sell, your trading account takes back the shares from your Demat

account and Sells them in Stock Market and get back the money.
If you want your money back into your bank account, you have to give a request

online to the broker to transfer it to Bank account. The money gets credited in your bank
account in 2 or 3 working days.
Just as every person is allowed to open as many savings account as he likes,
there are no restrictions of the number of Demat Accounts a person can have. You can
have any number of demat accounts.
SELECTING A DEMAT AND TRADING ACCOUNT
The key criteria for selecting these accounts are:
1. Your purpose/usage. In short, how frequently are you going to buy/sell and is it
intraday or delivery based. You may have to choose the Broker whose charges are
lowest according to your transaction style.
2. Look at a complete solution and not just one individual product like a demat account.
After all, the money in the savings account will be linked to your trading account for
buying/selling shares and the trading account will be linked to your demat account for
storing the shares. Suppose you have a Savings account with Bank A, and the trading
account with Broker B and Broker B trading account does not have a partnering
arrangement with Bank A, you will be forced to open a new savings account with a bank
which has partnering arrangement with broker B. Usually, most non-bank brokerages
have tie-ups with the popular banks for savings bank accounts and demat accounts, but
brokerages in a banking group company may have only the same bank as its partner.
3. Think long term. In case you have got yourself a demat account and you have existing
shares in it and you want to move to another demat account, transfer of shares is
chargeable. Brokers may charge based on number of shares or amount worth or
anything. Please find out what this amount is, in case you are ever tired of bad service
and you want to change the demat account. These transfer rates are never mentioned
anywhere.
4. Technology. Some online stock brokers do a great job in making sure that their clients
can always access their accounts, and in turn buy and sell as quickly as possible. But on
the other side of things, not all brokers run this smoothly. Due to excess demands on the
system, some brokers have a slower load time than others. In fact, this can lead to the

server becoming bogged down. This is not common as it once was, but still this can
happen.
5. Service. With the demand increasing on discount stock brokers, it is common for
errors to occur from time to time. Hopefully this never happens to you, but you never
know what the future holds. If you notice a mistake on your account, it is important that
you contact the customer support team right away. This will help to ensure that you get
the issue worked out before it causes a snowball effect on your account. In most cases,
the broker you are working with will be apologetic for the mistake, and will do whatever it
takes to get the issue resolved within a matter of minutes. Also, Gauge the level of
personal service that a stockbroker provides as a final step in the selection process.
Every investor should be assigned a specific broker or representative to contact at any
time.

3.Stock markets in india:THE HISTORY OF BOMBAY STOCK EXCHANGE

The Bombay stock exchange traces its history back to the 1850s, when 4 Gujarati and 1
Parsi stock broker would gather under a banyan tree in front of mumbais Town hall.The
location of these meetings changed many times, as the number of brokers constantly
increased.The group eventually moved to Dalal Street in 1874 and in 1875 became an
official organization known as The Native Share stock Brokers association.
THE PRESENT SCENARIO
There are 19 recognized stock exchanges in India. The Bombay stock exchange
(popularly known as The BSE ) and The National stock exchange (popularly known as
The NSE ) are the most prominent in terms of volume and popularity.
The Bombay Stock Exchange Popularly called The BSE is the oldest stock exchange
in Asia and has the third largest number of listed companies in the world, with 4900
listed as of Feb 2010. It is located at Dalal Street , Mumbai , India . National Stock
Exchange comes second to BSE in terms of popularity.
Over the decades, the stock market in the country has passed through good and bad
periods. Till the decade of eighties, there was no measure or scale that could precisely
measure the various ups and downs in the Indian stock market. BSE, in 1986, came out
with a Stock Index-SENSEX- (SENSitive indEX) that subsequently became the
barometer of the Indian stock market.
WHAT IS A STOCK MARKET INDEX?
Stock market indexes provide a consolidated view of how the market is performing.
Stock indexes are updated constantly throughout the trading day to provide instant
information.

The SENSEX and other indexes

The BSE SENSEX (Sensitive index)is a basket of 30 stocks representing a sample of

large, liquid and representative companies. The base year of SENSEX is 1978-79 and
the base value is 100. The index is widely followed by investors who are interested in
Indian stock markets. During market hours, prices of the index scrip, at which trades are
executed, are automatically used by the trading computer to calculate the SENSEX
every 15 seconds and continuously updated on all trading workstations connected to the
BSE trading computer in real time
30 stocks that represent SENSEX.(Updated on 7/7/2010)

ACC Ltd.
Bharti Airtel Ltd.
DLF Ltd.
HDFC
Hero Honda Motors Ltd.
Hindustan Unilever Ltd.
Infosys Technologies Ltd.
Jaiprakash Associates Ltd.
Mahindra & Mahindra Ltd.
NTPC Ltd.
Reliance Communications Limited
Reliance Infrastructure Ltd.
Sterlite Industries (India) Ltd.
Tata Motors Ltd.
Tata Steel Ltd.

Bharat Heavy Electricals Ltd.

Cipla Ltd.
Jindal Steel & Power Ltd.
HDFC Bank Ltd.
Hindalco Industries Ltd.
ICICI Bank Ltd.
ITC Ltd.
Larsen & Toubro Limited
Maruti Suzuki India Ltd.
ONGC Ltd.
Reliance Industries Ltd.
State Bank of India
Tata Consultancy Services Limited
Tata Power Company Ltd.
Wipro Ltd.

The BSE Sensex is not the only stock market index in India. The NSE has The NSE S&P
CNX Nifty 50 index a well diversified 50 stock index accounting for 24 sectors of the
economy. While both SENSEX and NIFTY would give you an overall direction of the
stock market there are other indices which track a particular sector.
For example The NSE CNX IT Sector Index tracks companies that have more than
50% of their turnover (or revenues) from IT related activities like software development,
hardware manufacture, vending, support and maintenance. So for those who are
tracking the performance of IT Sector this index would become a benchmark for
investing. Yet another example is the BSE BANKEX index which tracks the banking
sector shares.
WHATS GOOD ABOUT INDEXES

Indexes provide useful information including:

Trends and changes in investing patterns.
Snapshots, even if they are out of focus.
Yardstick for comparison.
KNOW IT

A stock market index is a statistical indicator which gives an idea about how the

stock market is performing. In India the main indexes to be tracked are The BSE
SENSEX and The NSE NIFTY.
The SENSEX comprises of 30 companies representing different sectors and the

broader NIFTY comprises of 50 companies from 24 sectors. There are many other
indexes that track particular sectors of the economy. These indexes would give you an
idea about how that particular sector is performing.
World over, there are a number of indexes as there are stock markets. DOW
JONES INDUSTRIAL AVERAGE and NASDAQ COMPOSITE INDEX both track US
stock markets. NIKKEI 225 is the stock market index of Japan, HANG SENG index for
Hong Kong, FTSE 100 For UK, KOSPI for Korea, SHANGHAI for China etc. All these
indexes serve the same purpose. It gives an idea about where the financial growth of a
country is headed to.

Corporate Identification
Number

U65990MH1994PLC07777
1

Company Name

SEVENHILL SECURITIES
LTD

Active director

Suresh Satyanarayan
Kabra,
Gireesh Satyanarayan
Kabbra,
And Dilip Kabra.

RoC

RoC-Mumbai

Registration Number

77771

Activity

Other financial
intermediation.
Company limited by
shares
Indian Non-Government
Company
Public Company

Company Category
Company Sub Category
Class of Company

Authorised Capital (in Rs.)

15,000,000

Paid up capital (in Rs.)

14,249,000

Number of Members
(Applicable
only in case of company
without Share Capital)
Date of Incorporation

18 April 1994

Email ID

vinod.avs@gmail.com

Address 1

MAKER BHAVAN NO.1,

2ND
FLOOR,NEW MARINE
LINES,
MUMBAI

City
State

Maharashtra

Country

INDIA

PIN

400020

Whether listed or not

Unlisted

Date of Last AGM

29 September 2012

Date of Balance sheet

31 March 2012

Company Status (for eFiling)

Active