upload

HDFC HUL ITC SBI TCS

1,073.90 0.47 % 741.25 0.91 % 355.15 0.79 % 2460.45 V - 1.70 % 2524.60 + 5.05 + 6.65 + 2.80 -42.55

ANALYSIS OF MARKET INDICES ANDCOMPONENT STOCKS

1

Chapter No. Chapter Name

Page No.

1 Market Index- Meaning, Example 2

1.1 Importance of an Index 3

1.2 Essentials of an Index 4

2 BSE INDICES 5

2.1 BSE MID CAP 6

2.1 BSE MID CAP- SECTORIAL WEIGHTAGE

7

2.3 BSE SMALL CAP 8

2.5 BSE SMALL CAP- SECTORIAL WEIGHTAGE

9

2.6 THREE YEARLY COMPARISON AGAINST SENSEX

10

Index

3 SECTORIAL INDICES 11

3.1 S&P BSE AUTO INDEX 12

3.2 S&P BSE BANEx INDEX 16

3.3 S&P BSE IT INDEX 20

3.4 S&P BSE CD INDEX 24

3.5 S&P BSE CG INDEX 28

3.6 S&P BSE OIL & GAS INDEX 32

3.7 S&P BSE FMCG INDEX 36

3.8 S&P BSE HEALTHCARE INDEX 40

3.9 S&P BSE METAL INDEX 44

3.10 S&P BSE POWER INDEX 47

3.11 S&P BSE REALTY INDEX 50

3.12 S&P BSE TECK INDEX 54

3.13 SECTORS WITH HIGEST & LOWEST RETURN

57

4 BROAD INDICES 58

4.1 THEMATIC INDICES 59

4.2 S&P BSE PSU INDEX 60

4.3 VOLATILITY INDICES 61

4.4 STRATEGY INDICES 62

5 PERSONAL INTERVIEW 64

6 CONCLUSION (OBSERVATION) 67

Bibliography/Reference 68

Meaning: An aggregate value produced by combining several stocks or other investment vehicles together and expressing their total values against a base value from a specific date.

Market indices are intended to represent an entire stock market and thus track the market's changes over time.

An index is a sample of stocks that provide a glimpse at the broader market. When someone says that market is up 100 points, they are actually referring to the index.

The market indices are classified as Global & National.

A 'world' or 'global' stock market index includes typically large companies without regard for where they are domiciled or traded.

A 'national' index represents the performance of the stock market of a given nation—and reflects the investor sentiment on the state of its economy. The most regularly quoted market indices are national indices composed of the stocks of large & heavily traded companies listed on a nation's largest stock exchanges, such as the Sensex & Nifty.

Other indices may be regional such as the FTSE Developed Europe Index or the FTSE Developed Asia Pacific Index.

A stock market index or just ‘index’ is a number that measures the relative value of a group of stocks. As the stocks in this group change value, the index also changes value. If an index goes up by 1% then that means the total value of the securities which make up the index have gone up by 1% in value.

The most common index such as the SENSEX, is made up of stocks but there are indices of bonds, real estate and others. Usually the index value is in terms of ‘points’ – as in “the SENSEX dropped 500 points today”. This means that the index went from a value of perhaps 25000 points to a value of 24500 points. The points don’t mean anything – the best way to look at an index number is to compare it with a previous value such as the previous day’s number.

EXAMPLE

The ABC index is made up of four companies. As of the end of yesterday’s trading day the ABC index was set at 4,123 points. Today, two of the companies went up in value, one company dropped in price and the fourth company stayed the same – the total value of those stocks went up by 2% so the ABC index is now 2% higher or 4205 point.

Chp.1M

arket Ind

ex

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http://www.abcsofinvesting.net/what-is-a-stock-equity/

http://www.abcsofinvesting.net/what-are-bonds/

1.1 IMPORTANCE OF MARKET INDEX

Stock market indices are vital to macroeconomists, financial economists as well as actors in financial world. Consistent indices are essential to assess long term regularities that help in understanding the behaviour of financial actors, the evolution of the economy, and to make international comparisons. Financial indices are also useful for traders and investors seeking for summary, accurate, easily and rapidly available information on stock markets. History shows that a great variety of indices has been created in order to measure the performance of stock markets. This variety grew especially rapidly in the recent years.

Although the stock market is much more dynamic than the indexes suggest, along with the fact that there are different ways to calculate the indexes, causing calculation bias, the stock market indexes are useful in a number of ways to stock investors.

First, the market indexes provide an historical perspective of stock market performance, giving investors more insight into their investment decisions. Investors who do not know which individual stocks to invest in can use indexing as a method of choosing their stock investments. By wanting to match the performance of the market, investors can invest in index mutual funds or index exchange-traded funds (ETFs) that track the performance of the indexes with which they are aligned. This form of investing gives investors the opportunity to do as well as the markets and not significantly underperform the markets.

The second benefit of stock market indexes is that they provide a yardstick with which investors can compare the performance of their individual stock portfolios. Individual investors with professionally managed portfolios can use the indexes to determine how well their managers are doing in managing their money.

The third major use of stock market indexes is as a forecasting tool. Studying the historical performance of the stock market indexes, you can forecast trends in the market.

Stock indices are termed as leading economic indicators as they indicate what is going to happen in the economy in the future. The returns generated in the stock market are based on future expectations. The future streams of expected returns from the companies are discounted to arrive at their present value known as market price.

Traditionally, indices have been used as information sources. By looking at an index we know how the market is faring. This information aspect also figures in the applications of stock market indices in economic research. This is particularly valuable when an index reflects highly updated information and the index is a lead indicator of how the overall portfolio will fare. In recent years, indices have shown direct applications in finance, in the form of index funds and index derivatives.

Hedging using index derivatives has become a central part of risk management in the modern economy. These applications are now a multi-trillion dollar industry worldwide, and they are critically linked up to market indices.

3

A stock market index should capture the behaviour of the overall equity market.

Movements of the index should represent the returns obtained by “typical” portfolios in the country. The ups & downs reflect the changing expectations of the stock market about future dividends of India's corporate sector. When the index goes up, it is because the stock market thinks that the prospective returns in the future will be better than previously thought.

When prospects of returns in the future become pessimistic, the index drops. The ideal index gives us instant-to-instant readings about how the stock market perceives the future of India's corporate sector.

The basic idea of an index is that every stock price moves for two possible reasons: news about the company (e.g. a product launch, or the closure of a factory, etc.) or news about the country (e.g. nuclear bombs, or a budget announcement, etc.). The job of an index is to purely capture the second part, the movements of the stock market as a whole (i.e. news about the country). This is achieved by averaging. Each stock contains a mixture of these two elements - stock news and index news. When we take an average of returns on many stocks, the individual stock news tends to cancel out. On any one day, there would be good stock specific news for a few companies and bad stock-specific news for others. In a good index, these will cancel out, and the only thing left will be news that is common to all stocks. The news that is common to all stocks is news about India. That is what the index will capture.

The most important type of market index is the broad-market index, consisting of the large, liquid stocks of the country. In most countries, a single major index dominates benchmarking, index funds, index derivatives and research applications.

In addition, more specialised indices often find interesting applications. In India, we have seen situations where a dedicated industry fund uses an industry index as a benchmark. In India, where clear categories of groups exist, it becomes interesting to examine the performance of classes of companies sorted by such group.

The indices are basically divided into the following types:

1. Benchmark Indices. For instance, Sensex & Nifty.2. Indices based on Market Capitalization. Ex. Large Cap, Mid Cap & Small Cap.3. Indices based on the different Sectors/Industries. Ex. Automobiles, Banks, etc.4. Indices based on the stocks they hold. Ex. BSE 100, BSE 200 & BSE 500.5. Indices based on the types of companies that form it. Ex. BSE PSU Index, CNX MNC index.6. Benchmark Global Indices. Ex. MSCI Global Index.

Indices can also be differed based on the methodology by which they are calculated.

1.2 Essentials of an Index

1.3 Types of an Index

4

• THE ABOVE GIVEN FLOWCHART DESCRIBES THE SEGREGATION OF INDICES BY THE BSE. THESE INDICES ARE ACTIVELYCALCULATED & COMPUTED.

BSE INDICES

BROAD

SENSEX

MID CAP

SMALL CAP

BSE 100

BSE 200

BSE 500

THEMATIC

BSE PSU

INFRASTRUCTURE

BSE CPSE

BSE 500 SHARIAH

SECTORAL

BSE AUTO

BSE BANKEX

BSE CD

BSE CG

BSE FMCG

BSE IT

BSE METAL

BSE POWER

BSE REALTY

BSE TECK

VOLATILITY

REAL VOL MTH 1

REAL VOL MTH 2

REAL VOL MTH 3

STRATEGY

BSE IPO

BSE SME IPO

BSE DOLLEX 30

BSE DOLLEX 100

BSE DOLLEX 200

BSE DOLLEX 100

FUTURES

BSE SENSEX FUTURES TR

BSE SENSEX FUTURES (USD)

5

Chp. 2

The constituent stocks of the S&P BSE MID CAP Index lie between large cap stocks and small cap stocks. Mid cap stocks are those that generally have a market capitalization within the range of Rs.50 and Rs.200 billion.

These represent mid-sized companies that are relatively more risky than large cap as investment options yet, they are not considered as risky as small cap companies.

They rank between the two extremes on all the important parameters like size, revenues, employee and client base. . When one invests in mid cap for the long term, he may be investing in companies that could become tomorrow's runaway success stories.

*The above given chart shows the performance of the S&P BSE MID CAP Index over the period oflast one year. The following table shows the returns by the MID Cap Index over different tenures.

Duration Returns Duration Returns 1 Year 63.20% 3 Years 71.10% 2 Years 69.40% YTD 62.22%

• The Index has given considerably good returns over different tenures. The same can beexpected for the coming time.

No. Of Constituents 279 Launch Date April 11, 2005

S&P BSE MID CAP

7000

7500

8000

8500

9000

9500

10000

10500

11000

11500

12000

12500

13000

DATES

MID CAP

6

2.1

Banking & Finance, 19.54%,

Engineering, 11.21%

Chemicals, 8.41%

Pharmaceuticals, 7.21%,

Services, 6.79%

Automotive, 6.50%

Telecom, 5.66%

Manufacturing, 4.86%

Technology, 4.46%

Cement, 3.70%

Consumer Non Durables, 3.19%

Real Estate, 3.17%, 3%

Utilities, 2.56%, 3%

Media, 2.49%, 3%

Oil & Gas, 2.21%, 2%

Conglomorates, 1.94%, 2%

Food & Beverages, 1.70%, 2%

Miscellaneous, 1.69%, 2% Consumer Durables, 1.68%, 2%

Metaks & Mining, 0.24%, 0%

Tobaco, 0.29%, 0%

SECTORAL WEIGHTAGE

Banking & Finance Engineering Chemicals PharmaceuticalsServices Automotive Telecom ManufacturingTechnology Cement Consumer Non Durables Real EstateUtilities Media Oil & Gas ConglomoratesFood & Beverages Miscellaneous Consumer Durables Metaks & MiningTobaco

7

2.2

Small cap companies have smaller revenue and client bases, and usually include the start-ups or companies in the early stage of development. Small cap stocks are potentially big gainers as they are yet to be discovered within the sector and can show growth potential in large numbers once unfurled in the market. However, as these enterprises are small ventures, these should be researched properly.

This is considering that a lot of small companies do not have the financial strength to survive bad times and some of them might be mismanaged businesses run by greedy promoter

*The above given chart shows the performance of the S&P BSE MID CAP Index over theperiod of last one year.

The following table shows the returns by the MID Cap Index over different tenures.


• This Index like the MID Cap Index has given considerably good or even returns over differenttenures. The same can be expected for the coming time.

No. Of Constituents 485 Launch Date April 11, 2005

S&P BSE SMALL CAP

60006500700075008000850090009500

100001050011000115001200012500

DATES

SMALL CAP

8

2.3

Manufacturing, 12.68%

Banking & Finance, 9.47%,

Cement, 9.15%

Engineering, 8.53%

Chemicals, 7.83%

Technology, 7.12%Pharmaceuticals, 6.13%,

Automotive, 6.05%

Metaks & Mining, 5.88%, 6%

Services, 5.44%

Miscellaneous, 5.22%, 5%

Food & Beverages, 4.07%, 4%

Real Estate, 3.25%, 3%

Media, 2.98%, 3%

Consumer Durables, 1.72%, 2%

Conglomorates, 1.44%, 1%

Telecom, 1.26%

Utilities, 0.78%, 1%

Consumer Non Durables, 0.57%Oil & Gas, 0.31%, 0%

Tobaco, 0.08%, 0%

SECTORAL WEIGHTAGE

Manufacturing Banking & Finance Cement EngineeringChemicals Technology Pharmaceuticals AutomotiveMetaks & Mining Services Miscellaneous Food & BeveragesReal Estate Media Consumer Durables ConglomoratesTelecom Utilities Consumer Non Durables Oil & GasTobaco

9

2.4

75

95

115

135

155

175

3 Yearly Comparison against Sensex

SENSEX SMALL CAP MID CAP

10

2.5

Sector indices enable investors to benchmark the performance of stocks grouped by specific market sectors or industries. It empowers investors to make more selective choices, and listed companies to better track progress relative to their respective peer group.

SECTORIAL INDICES

AUTOThe Auto Index is designed to reflect the behaviour and performance of the Automobiles sector which includes manufacturers of cars & motorcycles, heavy vehicles, auto ancillaries, tyres, etc. The Index comprises of 13 stocks that are listed on the Bombay Stock Exchange. FMCGFMCGs (Fast Moving Consumer Goods) are those goods and products, which are non-durable, mass consumption products and available off the shelf. The S&P BSE FMCG Index comprises of 12 companies who manufacture such products which are listed on the Bombay Stock Exchange.

BANKEXThe Bank Index is an index comprised of the most liquid and large capitalised Indian Banking stocks. It provides investors and market intermediaries with a benchmark that captures the capital market performance of Indian Banks.The index will have 12 stocks from the banking sector which trade on the Bombay Stock Exchange.

REALTYReal estate sector in India is witnessing significant growth. Further necessitated, one can witness plenty of opportunities in real estate sector backed by favorable tax regime. IISL has developed the CNX Realty Index to synergize these emerging opportunities along with their Index expertise creating new investment avenues for investors.

METALThe Metal Index is designed to reflect the behavior and performance of the Metals sector including mining. The Index comprises of 15 stocks that are listed on the Bombay Stock Exchange.

Pharmaceuticals sector is one of the key sectors where Indian companies have created a global brand for themselves besides software. BSE has developed the Healthcare Index to capture the performance of the 17 companies in this sector.

HEALTHCARE

IT Companies in this index are those that havemore than 50% of their turnover from IT related activities like IT Infrastructure , IT Education and Software Training , Telecommunication Services and Networking Infrastructure, Software Development, Hardware Manufacturer’s, Vending, Support and Maintenance.

OIL&GASOil & Gas sector is universally recognized as one of the most significant inputs for economic growth. The Index will include companies belonging to Petroleum & Gas production & processing. The BSE Oil & Gas Index comprises of 10 such companies.

11

Chp.3

The Auto Index is designed to reflect the behaviour and performance of the Automobiles sector which includes manufacturers of cars & motorcycles, heavy vehicles, auto ancillaries, tyres, etc. The Index comprises of 13 stocks that are listed on the Bombay Stock Exchange.

The BSE Auto Index is computed using free float market capitalization method with a base date of February 1, 1999 indexed to a base value of 1000, wherein the level of the index reflects the total free float market value of all the stocks in the index relative to particular base market capitalization value. The method also takes into account constituent changes in the index and importantly corporate actions such as stock splits, right issue, new issue of shares etc. without affecting the index value.

Index Details INDEX NAME AUTOMOTIVE ESTABLISHMENT DATE FEBRUARY 1, 1999 LISTING DATE AUGUST 23, 2004 NO. OF CONSTITUENTS (COMPANIES) THIRTEEN (13)

The constituents of the S&P BSE Auto Index are as follows:

COMPANY WEIGHT MARKET CAP TATA MOTORS 22.95% 170,953.60

MARUTI SUZUKI INDIA 14.94% 111,311.95 BOSCH 11.50% 85,679.45

MAHINDRA & MAHINDRA 10.37% 77,270.10 BAJAJ AUTO 8.07% 60,126.75

HERO MOTOCORP 7.08% 52,773.72 EICHER MOTORS 5.94% 44,229.33

MOTHERSON SUMI SYSTEMS 5.82% 43,358.61 BHARAT FORGE 4.17% 31,047.37

CUMMINS INDIA 3.39% 25,234.90 MRF 2.37% 17,640.71

EXIDE INDUSTRIES 2.19% 16,349.75 APOLLO TYRES 1.21% 8,933.38

*The above table indicates the constituents with their respective market capitalization & the weightthat they currently hold in the index.

S&P BSE AUTO INDEX

12

3.1

Auto Index Weightage

Auto Index Performance

*The above given chart indicates the performance of the Auto Index/Sector during the previous one year.

TATA MOTORS, 22.95%

MARUTI SUZUKI, 14.94%

BOSCH, 11.50%M&M, 10.37%BAJAJ AUTO, 8.07%

HERO MOTOCORP, 7.08%

EICHER, 5.94%

MOTHERSON SS, 5.82%

BHARAT FORGE, 4.17%

CUMMINS INDIA, 3.39% MRF, 2.37% EXIDE IND., 2.19%

APOLLO TYRES, 1.21%

WEIGHT

12000

13000

14000

15000

16000

17000

18000

19000

20000

21000

DATES

AUTO

13

Auto Index Sub Sectorial Weightage

Auto Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the Auto Index in comparison to BSE’s BenchmarkIndex SENSEX.

2 & 3 WHEELER, 14.94%

CARS & JEEPS, 24.96%

LCVs & HCVs, 29.88%

TRACTORS, 7.46%

ANCILLARIES, 19.24%

TYRES, 3.52%WEIGHT

100

110

120

130

140

150

160

170

DATES

AUTO (TR) SENSEX (TR)

14

*The values are in terms of Billion USD.

Growth Potential

By 2020, India's share in the global passenger vehicle market to double to 8 per cent from 4 per cent over 2010–11.

Two–wheeler sales to rise from 15.9 million in FY2013 to 34.0 million by FY 2020.

Passenger vehicle sales to increase from 3.2 million in FY2013 to 8.6 million in FY 2021/

Cost Efficiency

India has significant cost advantages; auto firms save 10-25 per cent on operations vis-à-vis Europe and Latin America.

A large pool of skilled manpower and a growing technology base would induce greater investments.

Opportunities

The large ultra low-cost car segment has opened up potentially. Innovation is likely to intensify among engine technology and alternative fuels.

Policy Support

The government aims to develop India as a global manufacturing as well as R&D hub.

There has been a wide array of policy support in the form of sops, taxes and FDI encouragement.

Auto market in India

Key Factors

30.1

39.9 42.4 40.6

0

10

20

30

40

50

2010 2011 2012 2013

Revenue Of Auto Industry

REVENUE

1.8

2.4

3

3.1

3.2

2009

2010

2011

2012

2013

0 1 2 3 4

FDI Trends

15

The Indian banking Industry has been undergoing major changes, reflecting a number of underlying developments. Advancement in communication and information technology has facilitated growth in internet-banking, ATM Network, Electronic transfer of funds and quick dissemination of information. Structural reforms in the banking sector have improved the health of the banking sector. The reforms recently introduced include the enactment of the Securitization Act to step up loan recoveries, establishment of asset reconstruction companies, initiatives on improving recoveries from Non-performing Assets (NPAs) and change in the basis of income recognition has raised transparency and efficiency in the banking system. Spurt in treasury income and improvement in loan recoveries has helped Indian Banks to record better profitability. BSE BankEx Index is an index comprised of the most liquid and large capitalised Indian Banking stocks. It provides investors and market intermediaries with a benchmark that captures the capital market performance of Indian Banks. The index comprises of 12 stocks from the banking sector which trade on the Bombay Stock Exchange.

Index Details INDEX NAME BANKEX ESTABLISHMENT DATE JANUARY 1, 2002 LISTING DATE AUGUST 9, 2003 NO. OF CONSTITUENTS (COMPANIES) ELEVEN (11)

The constituents of the S&P BSE BANKEX Index are as follows:

COMPANY WEIGHT MARKET CAP HDFC BANK LTD. 23.90% 261,265.37

STATE BANK OF INDIA LTD. 19.18% 209,674.18 ICICI BANK LTD. 17.51% 191,404.98 AXIS BANK LTD. 12.35% 134,996.19

KOTAK MAHINDRA BANK LTD. 9.48% 103,581.90 INDUSIND BANK LTD. 4.24% 46,318.60

BANK OF BARODA LTD. 3.52% 38,432.65 YES BANK LTD. 3.07% 33,552.56

PUNJAB NATIONAL BANK LTD. 2.75% 30,078.97 CANARA BANK LTD. 1.68% 18,385082 BANK OF INDIA LTD. 1.27% 13,879.24 FEDERAL BANK LTD. 1.06% 11,634.33


S&P BSE BANKEX INDEX

16

3.2

BankEx Index Weightage

BankEx Index Performance

*The above given chart indicates the performance of the BankEx Index/Sector during the previous one year.

HDFC BANK LTD., 23.90%

SBI LTD., 19.18%

ICICI BANK, 17.51%

AXIS BANK, 12.35%

KOTAK MAHINDRA, 9.48%

INDUSIND BANK, 4.24%

BANK OF BARODA , 3.52%

YES BANK, 3.07%

PNB LTD., 2.75%

CANARA BANK LTD., 1.68% BOI LTD., 1.27%

FEDERAL BANK LTD., 1.06%

WEIGHT

130001400015000160001700018000190002000021000220002300024000

DATES

AUTO

17

BankEx Index Sub Sectorial Weightage

BankEx Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the BankEx Index in comparison to BSE’s BenchmarkIndex SENSEX.

100

110

120

130

140

150

160

170

180

DATES

BANKEX (TR) SENSEX (TR)

PRIVATE SECTOR, 71.59%

PUBLIC SECTOR, 28.41%

WEIGHT

18

*The values are in terms of USD Billion.

Growing Demand

Increase in working population and growing disposable incomes will raise demand for banking and related services.

Housing and personal finance are expected to remain key demand drivers.

Rural banking is expected to witness growth in the future.

Opportunities

Mobile, Internet banking and extension of facilities at ATM stations to improve operational efficiency.

Vast un-banked population highlights scope for innovation in delivery.

Policy Support

Healthy regulatory oversight and credible Monetary Policy by the Reserve Bank of India (RBI) have lent strength and stability to the country’s banking.

Bank market in India

Key Factors

742

896

916

991

1029

0 500 1000 1500

FY 10

FY 11

FY 12

FY 13

FY 14

Growth In Credit Off- Take in India

489665

822763 1030

11801170

1274 1312

0200400600800

100012001400

2006 2007 2008 2009 2010 2011 2012 2013 2014

Growth In Deposits

GROWTH

19

Information Technology (IT) industry has played a major role in the Indian economy during the last few years. A number of large, profitable Indian companies today belong to the IT sector and a great deal of investment interest is now focused on the IT sector. In order to have a good benchmark of the Indian IT sector, BSE has developed the BSE IT sector index. BSE IT provides investors and market intermediaries with an appropriate benchmark that captures the performance of the IT segment of the market. Companies in this index are those that have more than 50% of their turnover from IT related activities like IT Infrastructure , IT Education and Software Training , Telecommunication Services and Networking Infrastructure, Software Development, Hardware Manufacturer’s, Vending, Support and Maintenance.

Index Details INDEX NAME INFORMATION TECHNOLOGY ESTABLISHMENT DATE (BASE YEAR) FEBRUARY 1, 1999 LISTING DATE AUGUST 9, 1999 NO. OF CONSTITUENTS (COMPANIES) SEVENTEEN (17)

The constituents of the S&P BSE IT Index are as follows:

COMPANY WEIGHT MARKET CAP TATA CONSULTANCY SERVICES LTD. 42.62% 505,550.26

INFOSYS LTD. 21.46% 254.553.15 WIPRO LTD. 13.27% 157,398.89

HCL TECH. LTD. 11.93% 141,437.61 TECH MAHINDRA LTD. 5.71% 67,706.35

ORACLE FS SOFTWARE LTD. 2.34% 27,773.21 MINDTREE LTD. 0.98% 11,586.20 MPHASIS LTD. 0.69% 8,173.43

VAKRANGEE LTD. 0.51% 6,014.31 CMC LTD. 0.49% 5,855.48


The following table shows the returns by the IT Index over different tenures.


S&P BSE IT INDEX

20

3.3

IT Index Weightage

Information Technology Index Performance

*The above given chart indicates the performance of the IT Index/Sector during the previous one year.

TCS, 42.62%

INFOSYS, 21.46%

WIPRO, 13.27%

HCL TECH., 11.93%

TECH MAHINDRA , 5.71%

ORACLE FS SOFTWARE, 2.34%

MINDTREE, 0.98% MPHASIS, 0.69%VAKRANGEE, 0.51%

CMC, 0.49%

WEIGHT

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IT

21

IT Index Sub Sectorial Weightage

IT Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the IT Index in comparison to BSE’s Benchmark IndexSENSEX.

90

100

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130

140

DATES

IT (TR) SENSEX (TR)

SOFTWARE, 99.00%

HARDWARE, 1.00%WEIGHT

22


Growth Potential

The IT-BPM sector in India expanded at a CAGR of 25 per cent over 2000â€“13, which is 3â€“4 times higher than the global IT-BPM spend, and is estimated to expand at a CAGR of 9.5 per cent to USD300 billion by 2020

India is the world’s largest sourcing destination, accounting for approximately 52 per cent of the USD124–130 billion market. The country’s cost competitiveness in providing IT services, which is approximately 3-4 times cheaper than the US continues to be its USP in the global sourcing market.

India’s highly qualified talent pool of technical graduates is one of the largest in the world, facilitating its emergence as a preferred destination for outsourcing, Computer science/information technology accounts for the biggest chunk of India' fresh engineering talent pool, with more than 98 per cent of the colleges offering this stream.

Cost Efficiency

Cost savings of 60–70 per cent over source countries.

A preferred destination for IT & ITeS in the world; continues to be a leader in the global sourcing industry with 52 per cent market share.

Policy Support

Tax holidays extended to the IT sector

SEZ scheme since 2005 to benefit IT companies with single window approval mechanism, tax benefits, etc.

Setting up Information Technology Investment Regions (ITIRs).

IT market in India

Key Factors

47 50 59 69 76

2224

2932

32

020406080

100120

2010 2011 2012 2013 2014

Market Size Of IT Industry

Export Import

57.923.5

18.6

Sector Wise Break Up of Export Revenue (%)

IT Services BPM Software & Engg.

23

India is expected to become the fifth largest consumer durables market in the world by 2025. Also, the consumer electronics market is expected to increase to US$ 400 billion, while production could reach US$ 104 billion by 2016. The expected market size of consumer durables in India by 2015 is US$ 12.5 billion. Urban markets account for about 65 per cent of total revenues in the consumer durables sector in the country. The rural and semi-urban markets are likely to contribute a majority of consumer sales as the rural consumer durables market is growing at the compound annual growth rate (CAGR) of 25 per cent. The index comprises of 10 stocks from the banking sector which trade on the Bombay Stock Exchange.

Index Details

INDEX NAME CD ESTABLISHMENT DATE (BASE YEAR) FEBRUARY 1, 1999 LISTING DATE AUGUST 9, 1999 NO. OF CONSTITUENTS (COMPANIES) ELEVEN (11)

The constituents of the S&P BSE CD Index are as follows:

COMPANY WEIGHT MARKET CAP TITAN COMPANY LTD. 44.65% 35,472.05 WHIRPOOL INDIA LTD. 11.21% 8908.18

SYMPHONY LTD. 9.65% 7663.44 RAJESH EXPORTS LTD. 7.10% 5643.18

PC JEWELLER LTD. 6.86% 5450.91 VIDEOCON INDUSTRIES LTD. 6.50% 5160.70

BLUE STAR LTD. 5.30% 4210.07 TTK PRESTIGE LTD. 3.67% 2913.93

BAJAJ ELECTRICALS LTD. 2.75% 2185.03 VIP INDUSTRIES LTD. 1.74% 1386.15

GITANJALI GEMS 0.58% 458.71 *The above table indicates the constituents with their respective market capitalization & the weightthat they currently hold in the index.

The following table shows the returns by the CD Index over different tenures.


S&P BSE CD INDEX

24

3.4

CD Index Weightage

CD Index Performance

*The above given chart indicates the performance of the CDIndex/Sector during the previous one year.

TITAN, 44.65%

WHIRPOOL, 11.21%

SYMPHONY, 9.65%

RAJESH EXPORTS, 7.10%

PC JEWELLER, 6.86%

VIDEOCON, 6.50%

BLUE STAR, 5.30%

TTK PRESTIGE, 3.67%

BAJAJ ELECTRICALS, 2.75%

VIP INDUSTRIES, 1.74% WEIGHT

6000

6500

7000

7500

8000

8500

9000

9500

10000

10500

11000

DATES

CD

25

CD Index Sub Sectorial Weightage

CD Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the CD Index in comparison to BSE’s Benchmark IndexSENSEX.

100

110

120

130

140

150

160

170

180

DATES

CD (TR) SENSEX (TR)

MISCELLANEOUS, 44.89%

CONSUMER GOODS, 24.66%

DIAMOND CUTTING & JEWELLERY, 14.04%

DOMESTIC APPLIANCES, 8.12%

ELECTRONIC GOODS, 6.53% PLASTICS, 1.76%

WEIGHT

26


Growth Potential & Growing Demand

By 2025, India would rise from the twelfth position to the fifth position in the consumer durables market in the world. The market is expected to reach USD 12.5 billion by the end of FY 15.

India has become one of the largest growing electronics market in the world.

By 2020, the electronics market in India is expected to increase to USD 400 billion from USD 69.6 billion in 2012. The production is expected to reach USD 104 billion by 2016.

Demand growth is likely to accelerate with rising disposable incomes and easy access to credit.

Increasing electrification of rural areas and wide usability of online sales would also aid growth in demand.

Opportunities

Huge untapped rural market; currently there is only 2 per cent penetration for refrigerators and 0.5 per cent for washing machines.

Rural and semi-urban markets currently contribute 35 per cent to total sales; their combined size is set to post a CAGR of 25 per cent over 2010-15.

Policy Support

100 per cent FDI allowed in the electronics hardware-manufacturing sector under the automatic route; Approval of 51 per cent in multi-brand would further fuel the growth in this sector.

National Electronic policy (2012) to boost investment in the sector.

15.7 17.8 21.3 24.2 30.2 34.8 36.8

47.3

103.7

0

20

40

60

80

100

120

2006 2007 2008 2009 2010 2011 2012 2015 2020

REVENUE

CD market in India

Key Factors

65%

35%

Share in the CD Market in India

Urban Rural

27

The Indian Capital Goods sector has witnessed a remarkable growth over the last few years driven by increased investments in infrastructure and industrial production. The engineering sector, being closely associated with the manufacturing and infrastructure sectors of the economy, is of strategic importance to India’s economy.

The index comprises of 10 stocks from the banking sector which trade on the Bombay Stock Exchange.

Index Details

INDEX NAME CG ESTABLISHMENT DATE (BASE YEAR) FEBRUARY 1, 1999 LISTING DATE AUGUST 9, 1999 NO. OF CONSTITUENTS (COMPANIES) TWENTY ONE (21)

The constituents of the S&P BSE CG Index are as follows:

COMPANY WEIGHT MARKET CAP LARSEN & TUBRO 34.90% 157,425.98

BHEL LTD. 13.81% 62,315.90 SIEMENS LTD. 11.33% 51,102.13

ABB INDIA LTD. 6.20% 27,978.22 BHARAT ELECTRONICS LTD. 5.90% 26,601.60

HAVELLS INDIA LTD. 4.06% 18,803.74 THERMAX LTD. 3.34% 15,065.33

AISTOM T&D INDIA LTD. 3.21% 14,493.71 OTHERS (12 Companies) 17.24% 77,821.19


The following table shows the returns by the CG Index over different tenures.


S&P BSE CG INDEX

28

3.5

CG Index Weightage

CG Index Performance

*The above given chart indicates the performance of the CD Index/Sector during the previous one year.

L&T, 34.90%

BHEL, 13.81%SIEMENS, 11.33%

ABB INDIA, 6.20%

BHEL, 5.90%

HAVELLS, 4.06%

THERMAX, 3.34%

AISTOM T&D, 3.21%

OTHERS (12 Cos), 17.24% WEIGHT

11000115001200012500130001350014000145001500015500160001650017000175001800018500

DATES

CG

29

CG Index Sub Sectorial Weightage

CG Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the CG Index in comparison to BSE’s Benchmark IndexSENSEX.

100

110

120

130

140

150

160

170

DATES

CG (TR) SENSEX (TR)

INFRASTRUCTURE, 72.76%

ELECTRIC EQUIPMENT, 6.42%

ENGINE & ABRASIVES, 5.88%

BEARINGS, 3.21%

HEAVY ENGINEERING, 2.62% ELECTRICALS, 2.30%TUBES & PIPES, 1.36%

WEIGHT

30


Growth Potential Capital goods & engineering turnover expected to reach USD125.4 billion by 2017 from USD57.6 billion in 2012.

Electrical equipment market size forecasted to reach USD105 billion by 2022 from USD24.2 billion in 2011.

ER&D revenues projected to reach USD45 billion in 2020 from USD11.2 billion in 2012.

Construction equipment market projected to reach USD22.7 billion by 2020 from USD3 billion in 2012.

Telecom equipment market to reach USD37 billion by 2020 from USD16 billion in 2011.

Production of CPSE under DHI to aggregate USD10.7 billion by 2015 from USD9.3 billion in 2012-13.

Opportunities

Nuclear capacity expansion to provide significant business opportunities to the electrical machinery industry.

Rapid increase in infrastructure investment and industrial production to fuel further growth.

Policy Support Cumulative FDI at USD19.4 billion over April 2000–March 2014 due to policy support.

De-licensed engineering sector; 100 per cent FDI permitted.

CG market in India

Key Factors

33.740.5

32.649.8

58.656.8

62.33

0 20 40 60 80

2008200920102011201220132014

India's Engineering Exports

Export

32.5

26.8

17.7

9

14.1

Sector Wise Break Up of Export Revenue (%)

Transport Equipment

MachineryEquipmentMaanufactures ofmetalsPrimary iron & steel

others

31

Oil & Gas sector is universally recognized as one of the most significant inputs for economic growth. The Index will include companies belonging to Petroleum & Gas production & processing. The BSE Oil & Gas Index comprises of 10 such companies.

Index Details INDEX NAME OIL & GAS ESTABLISHMENT DATE (BASE YEAR) FEBRUARY 1, 1999 LISTING DATE AUGUST 23, 2004 NO. OF CONSTITUENTS (COMPANIES) TEN (10)

The constituents of the S&P BSE OIL & GAS Index are as follows:

COMPANY WEIGHT MARKET CAP RELIANCE INDUSTRIES LTD. 32.10% 275,082.08

OIL & NATURAL GAS CORP. LTD. 31.34% 268,513.74 INDIAN OIL CORP. LTD. 9.59% 82,186.11

BHARAT PETROLEUM CORP. LTD. 6.17% 56,540.46 GAIL INDIA LTD. 5.73% 49,115.55

CAIRN INDIA LTD. 4.94% 42,315.00 OIL INDIA LTD. 3.41% 29,211.91

CASTROL INDIA LTD. 2.74% 23,449.62 HINDUSTAN PETROLEUM CORP. LTD. 2.46% 21,062.79

PETRONET LNG LTD. 1.52% 13,053.75 *The above table indicates the constituents with their respective market capitalization & the weightthat they currently hold in the index.

The following table shows the returns by the OIL & GAS Index over different tenures.


S&P BSE OIL & GAS INDEX

32

3.6

Oil & Gas Index Weightage

Oil & Gas Index Performance

*The above given chart indicates the performance of the OIL&GAS Index/Sector during the previous oneyear.

RIL, 32.10%

ONGC, 31.34%INDIAN OIL, 9.59%

BPCL, 6.17%

GAIL, 5.73%

CAIRN INDIA, 4.94%

OIL INDIA, 3.41%

CASTROL INDIA, 2.74%

HPCL, 2.46%PETRONET LNG, 1.52% WEIGHT

8500

9000

9500

10000

10500

11000

11500

12000

12500

DATES

OIL & GAS

33

Oil & Gas Index Sub Sectorial Weightage

Oil&Gas Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the Oil & Gas Index in comparison to BSE’s BenchmarkIndex SENSEX.

100

110

120

130

140

DATES

OIL & GAS (TR) SENSEX (TR)

OIL DRILLING & EXPLORATION, 48.63%

REFINERIES, 51.37%

WEIGHT

34

*The values are in terms MBPD (Million BarrelsPer Day).

Growth Potential

India’s energy demand is expected to double to 1,464 MTOE by 2035 from 595 MTOE in 2013. Moreover, the country’s share in global primary energy consumption is projected to increase two fold by 2035.

Oil consumption is estimated to reach 4.0 mbpd by FY16, expanding at a CAGR of 3.2 per cent during FY08–FY16F. By 2025, India is expected to overtake Japan to become the third-largest consumer of oil.

LNG imports accounted for about one-fourth of total gas demand. India's gas demand is estimated to more than double over the next five years.

Supply & Demand

Due to the expected strong growth in demand, India’s dependency on oil imports is likely to increase further. With rising income levels, demand for automobile is estimated to increase.

In FY14, imports accounted for approximately 80 per cent of the country’s total oil demand.

Backed by new oil fields, domestic oil output is anticipated to grow to 1.0 mbpd by FY16.

Demand is not likely to simmer down any time soon, given strong economic growth and rising urbanisation. Gas consumption is likely to expand at a CAGR of 21.0 per cent during FY 2008– 2017.

Policy Support

Government has enacted various policies such as the New Exploration Licensing Policy

(NELP) and Coal Bed Methane (CBM) policy to encourage investments across the industry’s value chain.

Oil & Gas market in India

Key Factors

4

3.7

3.7

3.5

3.3

0 1 2 3 4 5

2016

2014

2013

2012

2011

Oil Consumption (MBPD)

REVENUE

3.5 3.6 3.8 4 4.1 2.9 3

1.1 1.2 0.8

1.7 1.8 1.21

0

2

4

6

8

2010 2011 2012 2013 2014 2015

Imports & Domestic Oil Production

IMPORTS OIL PRODUCTION

35

FMCGs (Fast Moving Consumer Goods) are those goods and products, which are non-durable, mass consumption products and available off the shelf. The S&P BSE FMCG Index comprises of 12 companies who manufacture such products which are listed on the Bombay Stock Exchange.

The index is computed using free float market capitalization method with the base period as December, 1995 indexed to a base value of 1000 wherein the level of the index reflects total free float market value of all the stocks in the index relative to a particular base market capitalization value. The method also takes into account constituent changes in the index and importantly corporate actions such as stock splits, rights, new issue of shares etc. without affecting the index value.

Index Details INDEX NAME FMCG ESTABLISHMENT DATE FEBRUARY 1, 1999 LISTING DATE AUGUST 9, 1999 NO. OF CONSTITUENTS (COMPANIES) TWELVE (12)

The constituents of the S&P BSE FMCG Index are as follows:

COMPANY WEIGHT MARKET CAP ITC 33.73% 271,592.95

HINDUSTAN UNILEVER LTD. 25.31% 203,805.32 NESTLE INDIA LTD. 8.73% 70,262.70

UNITED SPIRITS LTD. 6.39% 51,466.44 DABUR INDIA LTD. 5.93% 47,706.87

GODREJ CONSUMER PRODUCTS LTD. 4.75% 38,267.64 COLGATE PALMOLIVE LTD. 3.49% 28,122.76

BRITANNIA INDIA LTD. 3.21% 25,877.41 EMAMI LTD. 3.03% 24,385.48 MARICO LTD. 2.93% 23,609.57

JUBILANT FOODWORKS LTD. 1.29% 10,418.06 TATA GLOBAL BEVERAGES 1.19% 9,575.92


S&P BSE FMCG INDEX

36

3.7

FMCG Index Weightage

FMCG Index Performance

*The above given chart indicates the performance of the FMCG Index/Sector during the previous one year.

ITC, 33.73%

HUL, 25.31%NESTLE, 8.73%

UNITED SPIRITS, 6.39%

DABUR INDIA, 5.93%

GSPL, 4.75%

COLGATE PALMOLIVE, 3.49%

BRITANNIA, 3.21%

EMAMI, 3.03%

MARICO, 2.93% JUBILANT FOODWORKS, …

TATA GLOBAL BEVERAGES, 1.19%

WEIGHT

6500

7000

7500

8000

8500

9000

DATES

FMCG

37

FMCG Index Sub Sectorial Weightage

FMCG Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the Auto Index in comparison to BSE’s Benchmark IndexSENSEX.

100

110

120

130

140

DATES

FMCG (TR) SENSEX (TR)

PERSONAL CARE, 45.47%

BREWERIES & DISTELLERIES, 6.40%

TOBACCO, 33.73%

FOOD PROCESSING, 11.92%

PLANTATIONS, 1.19%MISCELLANEOUS,

1.29%WEIGHT

38


Growth Potential

Overall FMCG market expected to increase at a CAGR of 14.7 per cent to USD110.4 billion during 2012– 2020.

The rural FMCG market expected to increase at a CAGR of 17.7 per cent to USD100 billion during 2012–2025. The overall rural FMCG consumption continues to grow at 12.5 per cent during 2013-14.

Total consumption expenditure to reach nearly USD 3,600 billion by 2020 from USD 1,328 billion in 2012.

Organised retail share is expected to double to 14-18 per cent of the overall retail market by 2015.

Opportunities

Low penetration levels in rural market offers room for growth.

Growing demand for premium products.

Exports is another growth segment.

Policy Support

Investment approval of up to 10 percent foreign equity in Single brand retail & 51 percent in multi brand retail.

Initiatives like Food Security Bill & Direct Cash Transfer subsidies reach about 10% of households in India.

The minimum capitalisation for foreign FMCG companies to invest in India is USD 100 million.

FMCG market in India

Key Factors

647

824.9

544.1

1131.7

1176.7

774.3

829.6

827.7

1102

1011.9

0 200 400 600 800 1000 1200 1400

ITC(Foods)

HUL (F&B)

MARICO

DABUR

GCPL

Increasing Sales of Top FMCG Cos.

FY 13 FY 14

411

516

631

0

200

400

600

800

Annual Per Capita Disposable Income level in Rural Region

(USD)

2010 2015 2020

Rise in rural consumption to drive the FMCG market

39

Pharmaceuticals sector is one of the key sectors where Indian companies have created a global brand for themselves besides software. Indian companies have taken advantage of the opportunities in the regulated generics market in the western countries and made deep inroads especially in providing low cost equivalents of expensive drugs. Pharma outsourcing into India and low cost Healthcare services are expected to be the key areas of growth in the near future. In addition, the inherent potential of biotechnology has also attracted many new companies and this is also a key growth area for Indian companies. BSE has developed BSE Healthcare Index to capture the performance of the companies in this sector.

Index Details INDEX NAME HEALTHCARE ESTABLISHMENT DATE (BASE YEAR) FEBRUARY 1, 1999 LISTING DATE AUGUST 9, 1999 NO. OF CONSTITUENTS (COMPANIES) SEVENTEEN (17)

The constituents of the S&P BSE HEALTHCARE Index are as follows:

COMPANY WEIGHT MARKET CAP SUN PHARMA LTD. 30.91% 209,636.51

CUPIN LTD. 12.44% 84,392.01 Dr. REDDY’s INDUSTRIES LTD. 8.48% 57,479.31

CIPLA LTD. 8.34% 56,540.46 RANBAXY LAB. LTD. 4.98% 33,770.01

AURBINDO PHARMA LTD. 4.94% 33,481.61 CARDILA HEALTHCARE LTD. 4.78% 32,391.92

GSK PHARMA LTD. 4.12% 27,975.14 DIVIS LAB. LTD. 3.47% 23,548.52

GLENMARK PHARMA LTD. 3.37% 22,832.15 WOCKHARDT LTD. 2.91% 19,709.65

APOLLO HOSPITALS LTD. 2.83% 19,172.82 TORRENT PHARMA LTD. 2.73% 18,484.75

PIRAMAL ENTERPRISES LTD. 2.16% 14,665.02 IPCA LABS. LTD. 1.36% 9,224.59

BIOCON LTD. 1.26% 8,529.00 STRIDES ACROLAB LTD. 0.94% 6,372.02


S&P BSE HEALTHCARE INDEX

40

3.8

Healthcare Index Weightage

Healthcare Index Performance

*The above given chart indicates the performance of the Health Index/Sector during the previous one year.

SUN PHARMA, 30.91%

CUPIN, 12.44%

Dr. REDDY’s Ind., 8.48%CIPLA, 8.34%

RANBAXY LAB., 4.98%

AURBINDO PHARMA, 4.94%

CARDILA HEALTHCARE, 4.78%

GSK PHARMA, 4.12%

DIVIS LAB., 3.47%

GLENMARK PHARMA, 3.37%

WOCKHARDT, 2.91%

APOLLO HOSPITALS, 2.83%

TORRENT PHARMA, 2.73%

PIRAMAL ENT., 2.16%

IPCA LABS., 1.36%

BIOCON, 1.26%

STRIDES ACROLAB, 0.94%

WEIGHT

90009500

10000105001100011500120001250013000135001400014500150001550016000165001700017500

DATES

HEALTHCARAE

41

Healthcare Index Sub Sectorial Weightage

Healthcare Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the Healthcare Index in comparison to BSE’s BenchmarkIndex SENSEX.

100

110

120

130

140

150

160

170

180

DATES

HEALTHCARE (TR)

PHARMACEUTICALS, 97.18%

MEDICAL SERVICES, 2.82%

WEIGHT

42


Growth Potential

Indian pharmaceutical sector accounts for about 2.4 per cent of the global pharmaceutical industry in value terms and 10 per cent in volume terms.

The country’s pharmaceutical industry is expected to expand at a CAGR of 14.5 per cent over to reach USD55 billion by 2020.

The generics market is expected to grow to USD26.1 billion by 2016 from USD11.3 billion in 2011; India’s generics market has immense potential for growth.

Indian healthcare sector, one of the fastest growing sectors, is expected to advance at a CAGR of 17 per cent to reach USD280 billion over 2011–20.

Cost Efficiency

India’s cost of production is approximately 60 per cent lower than that of the US and almost half of that of Europe

Due to lower cost of treatment, India is emerging as a leading destination for medical tourism.

Policy Support

Government unveiled ‘Pharma Vision 2020’ aimed at making India a global leader in end-to-end drug manufacture.

Reduced approval time for new facilities to boost investments.

In this sector, 100 per cent FDI is allowed under automatic route.

Healthcare market in India

Key Factors

614

55

0102030405060

2004 2014 2020

REVENUE GROWTH

REVENUE

5

7

910

8

1.1 1.2 1.7 1.8 1.2

02468

1012

2010 2011 2012 2013 2014

TRADE GROWTH

EXPORTS IMPORTS

43

The BSE Metal Index is designed to reflect the behavior and performance of the Metals sector including mining. The Index comprises of 15 stocks that are listed on the Bombay Stock Exchange.

Index Details INDEX NAME METAL ESTABLISHMENT DATE (BASE YEAR) FEBRUARY 1, 1999 LISTING DATE AUGUST 23, 2004 NO. OF CONSTITUENTS (COMPANIES) NINE (09)

The constituents of the S&P BSE METAL Index are as follows:

COMPANY WEIGHT MARKET CAP COAL INDIA LTD. 41.83% 230,57.65

HINDUSTAN ZINC LTD. 12.94% 71,238.56 SESA STERLITE LTD. 10.53% 57,989.42

NMDC LTD. 9.45% 52,056.51 TATA STEEL LTD. 5.76% 31,715.04

SAIL LTD. 5.10% 28,108.22 HINDALCO INDUSTRIES LTD. 4.94% 27,195.79

JSW STEEL LTD. 4.13% 22,766.40 JINDAL STEEL & POWER 3.10% 17,044.66

NACL LTD. 2.21% 12,164.57 *The above table indicates the constituents with their respective market capitalization & the weightthat they currently hold in the index.

The following table shows the returns by the Metal Index over different tenures.

Duration Returns Duration Returns 1 Year 9.60% 3 Years -18.80% 2 Years 5.20% YTD -2.55%

S&P BSE METAL INDEX

44

3.9

Metal Index Weightage

Metal Index Performance

*The above given chart indicates the performance of the Metal Index/Sector during the previous one year.

COAL INDIA LTD., 41.83%

HINDUSTAN ZINC LTD., 12.94%

SESA STERLITE LTD., 10.53%

NMDC LTD., 9.45%

TATA STEEL LTD., 5.76%

SAIL LTD., 5.10%

HINDALCO INDUSTRIES LTD., 4.94%

JSW STEEL LTD., 4.13%

JINDAL STEEL & POWER, 3.10% NACL LTD., 2.21%WEIGHT

850090009500

10000105001100011500120001250013000135001400014500

DATES

METAL

45

Metal Index Sub Sectorial Weightage

Metal Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the Metal Index in comparison to BSE’s Benchmark IndexSENSEX.

100

110

120

130

140

150

160

170

DATES

METAL (TR) SENSEX (TR)

MINING & MINERALS, 61.92%

STEEL LARGE, 15.02%

NON FERROUS METAL, 12.80%

ALUMINIUM, 7.16%

SPONGE STEEL, 3.10%WEIGHT

46

At Present in power sector nearly half i.e., 49.15% is under State electricity Boards, which is followed by Public Sector Unit’s like NTPC, NHPC, etc. The role of private sector is about 19.85%, which is at present least among the three sectors, but private sector is growing at a far greater pace than any other sector, the latest advancements in this direction are allotment of UMPP’s to private sector.

Energy sector is universally recognized as one of the most significant inputs for economic growth. The growth of a nation, encompassing all sectors of the economy and all sections of society, is contingent on meeting its energy requirements adequately. As a fast-growing economy, India has become one of the largest energy intensive countries in the World. Energy is a crucial input for India's development process. The need of the hour, therefore, is to meet the energy needs of all segments of India's population in the most efficient and cost-effective manner while ensuring long-term sustainability.

Index Details

INDEX NAME POWER ESTABLISHMENT DATE (BASE YEAR) JANUARY 3, 2005 LISTING DATE JANUARY 9, 2007 NO. OF CONSTITUENTS (COMPANIES) NINETEEN (29)

The constituents of the S&P BSE POWER Index are as follows:

COMPANY WEIGHT MARKET CAP NTPC LTD. 24.75% 131,556.31 PGCI LTD. 14.43% 76,695.11 BHEL LTD. 11.72% 62,315.90

SIEMENS LTD. 9.61% 51,102.13 ABB INDIA LTD. 5.26% 27,978.22

NHPC LTD. 4.09% 21,753.87 TATA POWER LTD. 4.06% 21,555.86 JSW ENERGY LTD. 3.57% 18,958.98

RELIANCE POWER LTD. 3.06% 16,276.37 OTHERS (10 Companies) 19.45% 103,382.44

*The above table indicates the constituents with their respective market capitalization & the weightthat they currently hold in the index

The following table shows the returns by the POWER Index over different tenures.

Duration Returns Duration Returns 1 Year 37.40% 3 Years -2.20% 2 Years 26.20% YTD 30.35%

S&P BSE POWER INDEX

47

3.10

Power Index Weightage

Power Index Performance

*The above given chart indicates the performance of the Power Index/Sector during the previous one year.

NTPC, 24.75%

PGCI, 14.43%

BHEL, 11.72%SIEMENS, 9.61%ABB INDIA, 5.26%

NHPC, 4.09%

TATA POWER, 4.06%

JSW ENERGY , 3.57%

RELIANCE POWER , 3.06%

OTHERS (10 Cos), 19.45% WEIGHT

1400

1600

1800

2000

2200

2400

2600

DATES

POWER

48

Power Index Sub Sectorial Weightage

Power Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the Power Index in comparison to BSE’s BenchmarkIndex SENSEX.

100

110

120

130

140

150

DATES

POWER (TR) SENSEX (TR)

GENERATION & DISTRIBUTION, 63.92%

INFRASTRUCTURE, 30.92%

EQUIPMENT & TRANSMISSION, 4.73%

WEIGHT

49

Real estate sector in India is witnessing significant growth. Recent dynamics of the market reflected the opportunity of creating wealth across real estate companies, as proven by recent listings of real estate companies resulting into prominent growth in public funds and private equity. The main growth thrust is coming due to favorable demographics, increasing purchasing power, existence of customer friendly banks & housing finance companies, professionalism in the real estate sector and favourable reforms initiated by the government to attract global investors. Further necessitated by the thrust of redevelopment of old buildings, building townships and redeveloping mill lands, one can witness plenty of opportunities in real estate sector backed by favourable tax regime. BSE has developed the BSE Realty Index to synergize these emerging opportunities along with their Index expertise creating new investment avenues for investors.

Index Details INDEX NAME REALTY ESTABLISHMENT DATE (BASE YEAR) FEBRUARY 2, 2005 LISTING DATE JULY 9, 2007 NO. OF CONSTITUENTS (COMPANIES) THIRTEEN (13)

The constituents of the S&P BSE BANKEX Index are as follows:

COMPANY WEIGHT MARKET CAP DLF LTD. 30.28% 28,065.36

NBCC LTD. 13.03% 12,072.00 PRESTIGE ESTATE LTD. 10.63% 9,851.25 OBEROI REALTY LTD. 9.96% 9,230.05

GODREJ PROPERTIES LTD. 5.71% 5,287.72 PHOENIX MILLS LTD. 5.69% 5,271.66

UNITECH LTD. 5.49% 5,088.70 HDIL LTD. 5.02% 4,650.90

SOBHA LTD. 4.62% 4,279.34 INDIABULLS REAL ESTATE LTD. 3.39% 3,138.46

OMAXE LTD. 2.63% 2,438.06 MAHINDRA LIFESPACES LTD. 2.21% 2,049.58

ANANT RAJ LTD. 1.35% 1,248.27 *The above table indicates the constituents with their respective market capitalization & the weightthat they currently hold in the index.

S&P BSE REALTY INDEX

50

3.11

Realty Index Weightage

Realty Index Performance

*The above given chart indicates the performance of the REALTY Index/Sector during the previous one year.

DLF LTD., 30.28%

NBCC LTD., 13.03%PRESTIGE ESTATE,

10.63%

OBEROI REALTY, 9.96%

GODREJ PROPERTIES, 5.71%

PHOENIX MILLS, 5.69%

UNITECH LTD., 5.49%

HDIL LTD., 5.02%

SOBHA LTD., …

INDIABULLS RE LTD., 3.39%

OMAXE LTD., 2.63%

MAHINDRA LIFESPACES, 2.21%

ANANT RAJ LTD., 1.35%WEIGHT

10001100120013001400150016001700180019002000210022002300

DATES

REALTY

51

Realty Index Sub Sectorial Weightage

Realty Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the Realty Index in comparison to BSE’s BenchmarkIndex SENSEX.

100

110

120

130

140

150

160

170

180

DATES

REALTY (TR) SENSEX (TR)

CONSTRUCTION & CONTRACTING,

73.60%

CIVIL CONSTRUCTION, 7.70%

GENERAL INFRASTRUCTURE, 13.30%

WEIGHT

52

*The values are in terms MBPD (Million Barrels Per Day).

Growth Potential FDI in the sector is estimated to grow to USD25 billion in 10 years.

The number of Indians living in urban areas will increase from the current 377 million to about 600 million by 2031.

India construction market is expected to more than double to USD649.5 billion by 2020 from USD360 billion in 2010.

Supply & Demand Growing requirements of space from sectors such as education and healthcare.

Growth in tourism providing opportunities in the hospitality sector.

Policy Support Allocation of USD1.3 billion for rural housing and USD0.7 billion for NHB to increase the flow of cheaper credit for affordable housing for urban poor as per Budget 2014-15.

The government has allowed FDI of up to 100 per cent in development projects for townships and settlements.

Realty market in India

Key Factors

230

165

400

775

105

245

270

315

0 500 1000

AhemdabadPune

BengaluruNCR

KolkataMumbai

HydrebadChennai

Demand Analysis 2014- 2017 ('000 units)

5.9

9.28.6

0

2

4

6

8

10

FY 13FY 12FY 11

FDI in Realty Sector (%)

53

The decade of 1990s saw the emergence of the TMT sector as a major force in the Indian economy. The remarkable growth of this sector was reflected in the financial markets. Going by the trading pattern, around 19% of the turnover on the stock exchanges is taking place in TMT sector stocks. These stocks collectively account for 15% of the total market capitalization. The investment interest in technology stocks continues unabated. Recognizing the growing importance of the TMT sector, S&P BSE TECk index was launched in 2001.

Index Details

INDEX NAME TECK ESTABLISHMENT DATE (BASE YEAR) APRIL 2, 2001 LISTING DATE JULY 11, 2001 NO. OF CONSTITUENTS (COMPANIES) TWENTY NINE (29)

The constituents of the S&P BSE TECK Index are as follows:

COMPANY WEIGHT MARKET CAP TATA CONSULTANCY SERVICES LTD. 31.33% 505,550.26

INFOSYS LTD. 15.78% 254.553.15 BHARTI AIRTEL LTD. 9.92% 160,035.91

WIPRO LTD. 9.76 157,398.89 HCL TECH. LTD. 8.77% 141,437.61

BHARTI INFRATEL LTD. 4.55% 42,315.00 TECH MAHINDRA LTD. 4.20% 67,706.35 IDEA CELLULAR LTD. 4.06% 23,449.62

ZEE ENTERTAINMENT ENTERPRISE LTD. 2.05% 21,062.79 OTHERS (20 Companies) 9.62% 153,224.96


The following table shows the returns by the TECK Index over different tenures.


S&P BSE TECK INDEX

54

3.12

TECK Index Weightage

Teck Index Performance

*The above given chart indicates the performance of the Teck Index/Sector during the previous one year.

TCS, 31.33%

INFOSYS, 15.78%BHARTI AIRTEL,

9.92%

WIPRO, 9.76%

OTHERS (20 Cos.), 9.62%

HCL TECH., 8.77%

BHARTI INFRATEL , 4.55%

TECH MAHINDRA, 4.20%

IDEA CELLULAR, 4.06%

ZEE ENT., 2.05% WEIGHT

4500

5000

5500

6000

6500

7000

DATES

TECK

55

TECK Index Sub Sectorial Weightage

TECK Index Performance (Returns) in comparison to SENSEX

*The above given chart indicates the performance of the TECK Index in comparison to BSE’s Benchmark IndexSENSEX.

90

100

110

120

130

140

DATES

TECK (TR) SENSEX (TR)

COMPUTER SOFTWARE, 73.26%

TELECOM SERVICE, 16.00%

MEDIA & ETERTAINMENT,

5.27%

TELECOM EQUIPMENT, 4.70% CABLES, 0.28%WEIGHT

56

#Figures in Percentage. # Data for past three years ending February, 2015.

#Figures in Percentage. # Data for past three years ending February, 2015.

HEALTHCARE, 66.5

AUTO, 53.4

IT, 29.5

CG, 52.5

BANKEx, 55.4

109.1

82.4

70

78.9

59.2

160.2

92.4

90

63.9

74.9

0 20 40 60 80 100 120 140 160 180

HEALTHCARE

AUTO

IT

CG

BANKEx

THREE YEARS

TWO YEARS

ONE YEAR

Sectors that gave the highest return

Sectors that lagged in the past years

Oil & Gas, 2.5

Metals, 9.6

Realty, 26.6

Power, 37.4

6.1

5.2

-15.7

26

8.8

-18.8

-8

-2.2

-20 -15 -10 -5 0 5 10 15 20 25 30 35 40

Oil & Gas

Metals

Realty

Power

Three Year

Two Year

One Year

57

3.13

S&P BSE 100 Index is a broad based Index. This Index has 1983-84 as the base year and was launched in 1989. In line with the shift of the S&P BSE Indices to the globally accepted Free-Float methodology, S&P BSE 100 was shifted to Free-Float methodology effective from April 5, 2004. The method of computation of Free-Float index and determination of free-float factors is similar to the methodology for S&P BSE SENSEX.

Over the years, the number of companies listed on BSE continued to register a phenomenal increase; from 992 in to over 3,200 companies by March 1994, with combined market capitalization rising from Rs.5,421 crore to Rs. 3,98,432 crore as on 31st March, 1994.

Though S&P BSE SENSEX (1978-79=100) was serving the purpose of quantifying the price movements as also reflecting the sensitivity of the market in an effective manner, the rapid growth of the market necessitated compilation of a new broad-based index series reflecting the market trends in a more effective manner and providing a better representation of the increased equity stocks, market capitalization as also to the new industry groups. As such, BSE launched on 27th May 1994, two new index series S&P BSE 200 and S&P Dollex 200.

The equity shares of 200 selected companies from the specified and non-specified lists of BSE were considered for inclusion in the sample for `S&P BSE 200'. The selection of companies was primarily been done on the basis of current market capitalization of the listed scrips. Moreover, the market activity of the companies as reflected by the volumes of turnover and certain fundamental factors were considered for the final selection of the 200 companies.

BSE Limited constructed a new index, christened S&P BSE-500, consisting of 500 scrips w.e.f. August 9, 1999. The changing pattern of the economy and that of the market were kept in mind while constructing this index.

S&P BSE 500 index represents nearly 93% of the total market capitalization on BSE. S&P BSE 500 covers all 20 major industries of the economy. In line with other S&P BSE indices, effective August 16, 2005 calculation methodology was shifted to the free-float methodology.

BSE 100 INDEX

BSE 200 INDEX

BSE 500 INDEX

BROAD INDICES

58

4.0

BSE PSU Index consists of major Public Sector Undertakings listed on Bombay Stock Exchange (BSE). BSE PSU Index was launched on June 4, 2001 to track the performance of listed equity of PSU companies. A benchmark for the Indian Central Government to monitor its wealth in PSUs.

The index uses base date of February 1, 1999 and a base value of 1000. The index consists of all Public Sector Undertaking (PSUs) companies in BSE-500 index. BSE PSU Index shows change in the wealth of Indian Central Government in PSUs.

Companies in which Indian Central Government has greater than or equal to 51% stake that are listed in the BSE PSU Index and they should also be a part of BSE-500 Index.

The S&P BSE India Infrastructure Index is designed to measure the performance of the top 30 Indian infrastructure companies that meet benchmarking and investMENT ability requirements, with the goal of providing liquid and tradable exposure to this sector comprising of five infrastructure clusters:

• ENERGY• TRANSPORTATION• NON BANKING FINANCIAL INSTITUTIONS• TELECOMMUNICATIONS• UTILITIES

The CPSE Index tracks returns generated by the state-owned companies, barring public sector banks. The CPSE Index will track returns generated by state-owned companies where the direct holding of the government is 51 per cent or more. The indices were developed by Asia Index Private Ltd, a joint venture between BSE and the S&P Dow Jones Indices.

BSE PSU

BSE INFRASTRUCTURE

BSE CPSE

THEMATIC INDICES

59

4.1

http://www.wikinvest.com/wiki/Bombay_Stock_Exchange

http://www.wikinvest.com/wiki/BSE-500_index?action=edit

http://www.wikinvest.com/wiki/BSE-500_Index?action=edit

Different types of Public Enterprises

1. CPSEs (Central Public Sector Enterprises) – Companies where the direct holding of the CentralGovernment or of other CPSEs is 51% or more

2. PSBs (Public Sector Banks) – Banks where the direct holding of the Central/State Government orother PSBs is 51% or more

3. SLPEs (State Level Public Enterprises) – Companies where the direct holding of the StateGovernment or other SLPEs is 51% or more

Background and History In 1947, when India became independent, there were various socio-economic problems confronting the country which needed to be dealt with in a planned and systematic manner. India at that time was primarily an agrarian economy with a weak industrial base, low level of savings, inadequate investments and lack of infrastructure facilities. There existed considerable inequalities in income and levels of employment, glaring regional imbalances in economic development and lack of trained manpower. As such, the State’s intervention in all the sectors of the economy was desirable and inevitable since private sector neither had the resources, managerial and scientific skill, nor the will to undertake the risks associated with large, long-gestation investments. Given the type and range of problems faced by the country on the economic, social and strategic fronts, it became a pragmatic compulsion to use the public sector as an instrument for self-reliant economicgrowth.

The dominant consideration for the continued large investments in public sector enterprises was to accelerate the growth of core sectors of economy; to serve the equipment needs of strategically important sectors like Railways, Telecommunications, Nuclear Power, Defense etc. and to provide a springboard for the economy to achieve a significant degree of self-sufficiency in the critical sectors. The rationale for setting up public enterprises was to ensure easier availability of vital articles of mass consumption, to introduce checks on prices of important products, help promote emerging areas like tourism, etc. A large number of enterprises were created out of "Sick Units" taken over from the private sector inter alia, to protect the interests of the workers. A number of public enterprises were created to operate in national and international trade, consultancy, contract and construction services.

INDEX NAME PSU ESTABLISHMENT DATE (BASE YEAR) FEBRUARY 1, 1999 LISTING DATE JUNE 4, 2001 NO. OF CONSTITUENTS (COMPANIES) SIXTY (60)

The following table shows the returns by the PSU Index over different tenures.


BSE PSU INDEX

60

4.2

The first of its kind in India, the SENSEX Realized Volatility (REALVOL) Index provides market participants with an accurate measure of the historic volatility of the SENSEX over fixed 1-, 2-, and 3-month time horizons, which are synchronized with BSE’s 1-, 2-, and 3- month futures & options expiration cycles. Each index is reset at the end of its respective cycle.

The SENSEX REALVOL will be a useful tool for option writers attempting to manage their risk, as their P&L is driven by the difference between realized volatility and implied volatility over the life of options written. Products based on the REALVOL family of indices will allow Indian traders to hedge against sudden price movements (i.e. reducing Gamma exposure) and to take directional bets on the realized volatility of the SENSEX.

Volatility modelling has traditionally relied on complex econometric procedures in order to accommodate the inherent latent character of volatility. Realized volatility is an important metric that provides market participants an accurate measure of the historical volatility of the underlying over the life cycle of the derivative contract. Over the last decade, investors have extensively used volatility as a trading asset. The negative correlation between equity market returns and volatility has been well documented and thus volatility provides a significant diversification benefit to an investment portfolio. The mechanics of the realized vol. index are simple – we compute daily realized variance simply by summing squared returns. The theory of quadratic variation reveals that, under suitable conditions, realized volatility is not only an unbiased ex-post estimator of daily return volatility, but also asymptotically free of measurement error.

• RVI Is considered a useful complement to the VIX because RVI captures realized volatility whilethe VIX measures implied volatility. • Derivative contracts on RVI can be used for hedging gamma exposures and for directional bets on volatility. • The skew needed to price out-of-the-money options can now be computed on a realized vs. implied basis • With the advent of volatility and covariance swaps in the OTC market, realized volatility itself is now the underlying. Such swaps are useful for, among others, holders of options who wish to hedge their holdings, i.e., offset the impact of changes in volatility on the value of their positions. • Improved volatility and correlation forecasts will also be useful for portfolio allocation and risk management. • Swap contracts on realized variance have now been trading over the counter for some years with a fair degree of liquidity. More recently, derivatives whose payoffs are nonlinear functions of realized variance have also begun to trade over the counter. In particular, a natural outgrowth of the variance swap market is an interest in volatility swaps, which are essentially forward contracts written on the square root of realized variance.

BSE REAL VOL MTH 1,2,3

VOLATILITY INDICES

Applications of Realized Volatility Index

61

4.3

BSE introduced the new index series - S&P BSE IPO index to track the current primary market conditions in the Indian capital market and measure the growth in investor’s wealth within a period of two years after listing of a company subsequent to successful completion of initial public offering (IPO). Robust growth of the Indian economy, 6.7% in 2008-09, and the expectation of higher growth in the future are expected to boost the primary market. For this and other reasons, it was an appropriate time to introduce to the market an indicator that will track primary market conditions in the Indian capital market.

BSE on August 24, 2009 announced the launch of S&P BSE IPO index to track the value of companies for two years after listing subsequent to successful completion of their initial public offering (IPO).

BSE continued to introduce index innovations with the launch of the IPO index, by introducing ceiling (capping) on weightings of index constituents. Market capitalisation weightings of index constituents is limited to 20%. If a constituent’s market capitalization results in a higher weighting, the company’s weight is suitably adjusted to ensure that all constituents are restricted to 20% in the index. However, between any rebalancing, weightage of any index constituent can exceed 20%.

The Micro, Small and Medium Enterprises (MSMEs) segment in India plays a pivotal role in the overall growth and development of economy of the country. In recent years the MSME segment has consistently registered higher growth rate compared to the overall industrial sector. With its agility and dynamism, the segment has shown admirable innovativeness and adaptability to survive the recent economic downturn and recession.

BSE has introduced BSE SME IPO index on December 14, 2012. It will enable investors to track performance of the SME companies listed at BSE.

All BSE indices reflect the growth in the market value of the constituent stocks over the base period in Rupee terms. A need was felt to design a yardstick by which these growth values are also measured in Dollar terms. Such an index would reflect, in one value, the changes in both the stock prices and the foreign exchange variation.

This was facilitated by the introduction of a dollar-linked index in which the formula for calculation of the index is suitably modified to express the current and the base market values in dollar terms. The scope for the dollar-linked index emerged from the background of the Indian equity markets increasingly getting integrated with the global capital markets and the need to assess the market movements in terms of international benchmarks.

BSE IPOSTRATEGY INDICES

BSE SME IPO

BSE DOLLEX 30, 100, 200, 500

62

4.4

The dollar-linked indices are useful to overseas investors, as it helps them measure their ‘real returns’ after providing for the exchange rate fluctuations. Dollex-30, a dollar linked version of SENSEX, was launched on July 25, 2001 whereas Dollex-200, a dollar version of BSE 200 was launched on May 27, 1994. These indices were initially calculated at the end of the trading session by taking into consideration day’s rupee/US$ reference rate as announced by India’s Central Bank i.e. Reserve bank of India.

BSE introduced Dollex-100, a dollar linked version of BSE-100, on May 22, 2006.

Dollex-30, Dollex-100 and Dollex-200 are calculated and displayed through BSE On-line trading terminals (BOLT) by taking into account real-time rupee/US$ Exchange rate. The formula for calculating the index is:

Dollex = (Index Value (In local currency) X Base rupee-US$ rate) ÷ Current rupee-US$ rate

63

PERSONAL INTERVIEWINTERVIEWEE DETAILS: NAME PANKAJ TUKARAM BAGAL OCCUPATION STOCK BROKER, TRADER, TECHNICAL ANALYST DESIGNATION FRANCHISEE OWNER ORGANIZATION SHAREKHAN PVT. LTD. CONTACT 97681 69958 ADDRESS S 07/ SHOP No. 31, SECOND FLOOR, HAWARE CENTURION MALL,

SECTOR 19 A, SEAWOODS, NERUL, NAVI MUMBAI- 400706.

1. SHOULD INDIVIDUAL STOCKS BE TRACKED ON THE BASIS OF THEIR INDICES?Pankaj. You can’t track an individual stock based on the basis of their indices, because every single stock moves based on the information/news that is available in the market and according to the price to volume action in the market. However, a news about a particular sector/industry can definitely affect all or most of the stocks in that sectors index.

2. PEOPLE CONSIDER SOME INDICES TO BE EFFECTIVE & OTHERS NOT. WHAT IS YOUR TAKE ONIT?

Pankaj. Every index is effective. Each index, is basically, a group of companies which represent the entire market. So every index is important. Since they represent various segments of the market. Every index has its process of calculation. I mean, not every stock can be considered according to the index movement because if we take Sensex as an example, if suppose today, Sensex is up 290 points. You will still find some companies closing with the negative mark. Which has got nothing to do with the index movement.

3. DOES AN INDEX PROVIDE AN ACCURATE BENCHMARK?Pankaj. Absolutely. You can always compare your stocks with the index, considering it as the benchmark to test your returns, your growth. There is something called as Beta or people call it High Beta stock. You can compare the PE Ratio of the index, which is benchmark, to the PE Ratio of your stock and can take your decisions accordingly. This will help you know whether the stock is valued right.

4. THERE ARE SEVERAL NUMBER OF INDICES IN THE MARKET. IS IT NECESSARY TO HAVE ALL OFTHEM?

Pankaj. Actually, no. You can only have Sensex & Nifty. These are two indices which are very effective for you to judge the markets movement.

5. THERE ARE INDICES BASED ON THE NUMBER OF STOCKS THEY HOLD. SUCH AS, BSE 100, BSE 200.WHAT DIFFERENCE DO THE NUMBERS MAKE?

Pankaj. It means, those number of stocks are part of that index. Like BSE Sensex has 30 stocks, same way, BSE 100 has the top 100 stocks. They make these indices because what people find that if you have a broader range of stocks then you can better track the markets movements. Since more companies are involved in those indices, it will give you data from a broader perspective.

6. FOR BEGINNERS, ARE BENCHMARK INDICES THE RIGHT GROUND TO START WITH?Pankaj. Yes, because the companies which are listed in the index are the safest for people to invest in the market.

7. AN INDEX IS MORE OR LESS AN AVERAGE, OR IS THERE ANY OTHER RELEVANCE TO IT?Pankaj. Its not an average, it is an altogether different & very complex set of calculations. From a lay man’s eye, they could think it as an average. But it depends on the market cap of the company, the base year, the base value & a lot of mathematical calculation.

64

5.0

8. CONSIDERING THE MARKET SENTIMENTS THIS YEAR, DO YOU THINK THAT THE SENSEX & NIFTYCOULD APPRECIATE FURTHER?

Pankaj. If you ask me, I have a personal target of 9500 for nifty and 30000 for Sensex.

9. ACCORDING TO YOU, WHICH OF THE TWO IS BETTER, SENSEX OR NIFTY?Pankaj. I personally don’t follow Sensex much. Why nifty, that is because, since I m a trader, many of my trades are in futures & options market, the trade on NSE is I feel better than that of BSE. In the end, everyone has their own choice, own taste. Nothing anti- Sensex. And NSE was the first one to start the online trade & other innovations on the trading grounds. BSE has just played the catch- up game. Earlier BSE was just controlled by a dozen or handful of share brokers but adhering to the increased competition they had to convert into a company be responsible to investors. NSE has really taken the initiative to take things up.

10. ARE THE PRICES OF THE SAME COMPANY, QUOTED DIFFERENTLY ON NSE & BSE?Pankaj. It doesn’t happen. Both places, the price moves in the same manner. Earlier there used to be some difference in price. People used to enter into an arbitrage position in such situations. But I feel it’s a waste of time. Hardly you get to earn anything except when the volumes are very high.

11. IT IS OBSERVED THAT DIVERSIFICATION YIELD DIMINISHING RETURNS & ILLIQUID STOCKS ARE BESTKEPT OUT OF AN INDEX. WHAT IS THE MIDDLE ROAD FORWARD?

Pankaj. Illiquid stocks will never be a part of an index. Liquidity means that if I now placed the order, it got executed. So definitely if it is illiquid it won’t be a part of an index. Whereas, diversification does help reduce risk for those who want to stay invested for long.

12. WON’T SPECULATORS TRY TO PUSH A STOCK INTO THE INDEX OR REMOVE ONE WHEN THEYARE GOING SHORT ON IT?

Pankaj. No. Nobody can do that. Speculators cannot do such a thing to put a stock in or out of an index. Like I’ll give you an example, L&T is a stock that is listed on both the stock exchanges, their indices. This stock is currently trading at Rs. 1600 & it has huge volumes of trade around it. The free float equity available in the market for investors to trade is huge. So for someone to remove it out from Sensex or Nifty, they will need huge money to do so. In literal terms, it is not possible. The company will have to itself erode its equity market cap to come out of the index. So no single person or a group of people can do it.

13. WHAT MEASURES DO THE STOCK EXCHANGE TAKE WHEN THE INDICES BECOME VOLATILE?Pankaj. They apply their measures called Circuit Breakers. But it has to really move that much for the circuits to apply. As far as I remember, there has been only one occasion when this had happened, sone 7 years back in 2008, that the markets had crashed terribly & the circuit breakers were applied & the trading was stopped. That was the time when Sensex had dropped from nearly 20,000 to 8,000.

14. ON WHAT GROUNDS ARE THE INDICES COMPARED WITH EACH OTHER?Pankaj. For an investor like me, I will just add different sectors to my portal & see the chart movements as to which one is moving with the Nifty. It is simple, that markets move with the cash flow. If money is moving into a particular sector, then that sector is gaining. Even sectors have a stock cycle. In our markets every cycle lasts for around 6 or 7 years, wherein they go through growth phase then they are at peak, then they slow down & finally end up at lows. Then there are phases like they will move sideways, then they will move up. These are cycles, so every company, every sector has to go through these cycles. When you look at them, you can actually see which index the money is flowing to & which sector the money is being taken out. Based on that you can select.

15. ANY TRIGGERS THAT YOU ARE LOOKING FOR, WHICH COULD GIVE THE MARKETS A BOOST?Pankaj. There are two things that I’ll be looking for. The first is, the inflation rate & the rate cuts in the lending rates. The logic is, that when inflation goes down, people money to spend, that is extra cash, this cash is used for investing in some or the other thing like mutual funds or other instruments, which ultimately comes to the markets. That will be one of the triggers. Secondly, the interest rates, RBI has recently come up with rate cuts. They have reduced it to about 75 basis points. Now when the interest

65

rate is cut short, again the same thing happens, your EMIs go down, again you remain with excess cash. This if you look at for the whole country, that gives you a lot of money, a lot of cash that is saved. When you have cash in your pocket, you look for investments. When you don’t, you can’t even think about investing. So these are basically two triggers that I would look for.

16. AT THIS POINT OF TIME, WHAT ADVICE WOULD YOU GIVE TO THE RETAIL INVESTORS?Pankaj. At this point, the market looks very good. Two people who are driving this market, politically we have a stable government in the centre & at the same time our RBI governor is a very aggressive man & has taken some good decisions to boost this market. At the same time, the country’s GDP & other things are expected to show very good numbers. I’m very confident that since it’s a stable government for four more years, so we can expect four more financial budgets, which is the biggest event for any market & the economy. This budget was good, we expect four better budgets to come. Reforms will certainly happen & a better picture of our markets will be seen. So this market will be in a bull run for a longer period of time.

17. NOW SINCE THE RALLY IS CONTINUING, ACCORDING TO YOUR EXPERIENCE & YOUR OUTLOOK,TILL WHAT TIME WILL THE RALLY SUSTAIN?

Pankaj. No one can actually tell you the exact time period. As I understand it, everything has got a cycle. Any business, any sector, any market has it. In Nifty, the cycle for five years from 2003 to 2008 has been an uptrend, then for two years it was down, Nifty had an upward breakout again in 2014, so now four more years are remaining. In the earlier rally, it has been three times up that is from 2200 to 6000. If you calculate in terms of percentage, it is 300%. Consider 300% from 2014. I see nifty going at 18000 levels in the next coming 5 to 6 years. I keep on telling my clients since last year but everyone tells me that this market won’t grow more, it will slide. People kept on telling me 7000, or 7400 then 8000 is the end, but they are the ones who are missing the bus.

The interview was a very knowledgeable experience. I want to thank Mr. Pankaj T. Bagal for all the knowledge & experience that he shared & for the time he provided for this interview. Mr.Bagal not just gave the answers but also showed how the trades are done, like a live trading session. He also suggested few investment avenues like Nifty Bees & Gold Bees. In the end, knowledge is what I derived from it.

- Abhipray Kumbhare

66

CONCLUSION (OBSERVATION)

While it is time to rejoice at the booming Indian economy and the historical journey of the Sensex & Nifty, the foremost question in the minds of all investors is whether it is the right time to buy, hold sell stocks now.

The main things to keep in mind are:

1. Don't be greedy: Invest smartly, with some professional help and some study on your own.

2. Avoid 'hot tips': Use your own judgement.

3. Avoid trading/timing the market: 'timing' leads to huge monetary losses and mental tension.

4. Avoid actions based on sentiments: Don't be emotionally attached to stocks.

5. Don't panic if the market drops: Be patient and hold on to the scrip until some stability prevailsin the market. Consult a professional and then act accordingly.

6. Stay invested, possibly continue to invest more: It is natural to book profits with the markets athigher levels. This should be done, but we suggest people should also stay invested in the equity markets. Indian stocks do not appear overstretched at present.

7. Diversify: diversify a bit, looking at stocks, mutual funds, commodities and gold (for a longer-term). If equities pick up some of these stocks again.

8. Sell when value is realized: Some stocks may rise sooner than you may have anticipated. In afrenzied bull run, investors may see their target prices being met in a matter of days. Here time should not be of any consequence.

9. Keep a watch on relative valuations: The real cost of a stock is not the price you pay for it, butthe opportunity cost of not putting your money in another stock with a greater potential to rise.

10. If you realize a mistake, exit: experts emphasize that if investors make mistakes, they shouldexit immediately even at a loss.

67

6.0

Bibliography

The various sources of information that were used, are as follows:

Article/Study:

I. Benchmark Indices of Indian Economy; by Rouf Mohommed Mir & Arshad Nabi Wani.

II. A survey of factors influencing investment decisions: The case of individualinvestors at the BSE; by Dr. Vincent Mutswenje

III. Forecasting of Indian stock market index using artificial neural network; byManna Majumdar & MD Anwar Hussain.

IV. Analysis of stock indices & their impact on market index; by Piyush KumarSingh & Keyur Thaker.

Websites:

i. www.moneycontrol.comii. www.ndtvprofit.comiii. www.bseindia.comiv. www.edelweiss.inv. www.asiaindex.co.in

Applications:

Bing Finance Moneycontrol BSE India

Newspapers: Economic Times ET Wealth

News Channels: ET Now

Radio Channel: 100.7 FM Gold (Money Mantra)

68

http://www.moneycontrol.com/

http://www.ndtvprofit.com/

http://www.bseindia.com/

http://www.edelweiss.in/

http://www.asiaindex.co.in/

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