Business Plan Report On Stock Market Industry

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Business Plan Report

On
Stock Market Industry

By:-
Nikhilkumar Tejani

Shanti Business School


Stock trend in Share Markets during Bear or Bull market 
Investors have to check the broker's terms and conditions and decide about
opening a trading 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. 
Only few stock brokers provide, SMS trade tips, pre market analysis, post
market analysis, portfolio management.

Role of Stock Exchanges


Stock exchanges have multiple roles in the economy, this may include the
following:

Raising capital for businesses


The Stock Exchange provides companies with the facility to raise capital for
expansion through selling shares to the investing public.

Mobilizing savings for investment


When people draw their savings and invest in shares, it leads to a more
rational allocation of resources because funds, which could have been consumed, or
kept in idle deposits with banks, are mobilized and redirected to promote business
activity with benefits for several economic sectors such as agriculture, commerce and
industry, resulting in stronger economic growth and higher productivity levels and
firms.

Facilitating company growth


Companies view acquisitions as an opportunity to expand product lines,
increase distribution channels, hedge against volatility, increase its market share, or
acquire other necessary business assets. A takeover bid or a merger agreement
through the stock market is one of the simplest and most common ways for a
company to grow by acquisition or fusion.

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Profit sharing
Both casual and professional stock investors, through dividends and stock
price increases that may result in capital gains, will share in the wealth of profitable
businesses.

Corporate Governance
By having a wide and varied scope of owners, companies generally tend to
improve on their management standards and efficiency in order to satisfy the demands
of these shareholders and the more stringent rules for public corporations imposed by
public stock exchanges and the government.

Creating investment opportunities for small investors


As opposed to other businesses that require huge capital outlay, investing in
shares is open to both the large and small stock investors because a person buys the
number of shares they can afford.

Government capital-raising for development projects


Governments at various levels may decide to borrow money in order to
finance infrastructure projects such as sewage and water treatment works or housing
estates by selling another category of securities known as bonds. These bonds can be
raised through the Stock Exchange whereby members of the public buy them, thus
loaning money to the government.

Barometer of the economy


At the stock exchange, share prices rise and fall depending, largely, on market
forces. Share prices tend to rise or remain stable when companies and the economy in
general show signs of stability and growth. An economic recession, depression, or
financial crisis could eventually lead to a stock market crash. Therefore the movement
of share prices and in general of the stock indexes can be an indicator of the general
trend in the economy.

Capital Market is divided into two categories.


1. Primary Market.
2. Secondary Market.

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These exchange do not work of its own, rather, these are run by some persons
and with the help of some persons and institution. All these are down as functionaries
on stock exchange. These are
1. Stockbrokers
2. Sub-broker
3. Market makers
4. Portfolio consultants etc.

1.) Stockbrokers
A Stock broker is a member of a recognized stock exchange, who is permitted
to do trades on the screen-based trading system of different stock exchanges. He is
enrolled as a member with the concerned exchange and is registered with SEBI.
Total no. of registered brokers as on 31.03.2009
9000 Approx

2.) Sub-broker
Sub broker is a person who is registered with SEBI as such and is affiliated to
a member of a recognized stock exchange.
Total no. of sub-brokers as on 31.03.2009
2,40,000 Approx

3.) Market Makers


Market maker is a designated specialist in the specified securities. They make
both bid and offer at the same time.

4.) Portfolio consultants


A combination of securities such as stocks, bonds and money market
instruments is collectively called as portfolio.

It is basically a stock brokering company which deals in security and


derivative market, Commodity market, mutual funds and Insurance etc.

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SWOT Analysis

STRENGTHS:
Investments are the oxygen of growth. Within the larger context of the
country’s.
Increasing investments in Securities Market, the Company is also investing in
multiple spheres - people, technology, capacity expansion and brand building.
This is essential for sustaining the growth momentum and continuous Value
creation. Due to Demutualization of regional stock exchanges and favourable terms of
SEBI, different investors can be a part of the Exchange.
Talent acquisition and retention is one of the key result areas for our senior
managers. On an on-going basis, the Company endeavors to ensure a vibrant and
motivated workforce. The Company is constantly people management leadership
skills of the employees and is increasingly investing in Innovative human resource.
Stock Exchange is contributing to a great extent in terms of turn over as also
building up the economy of the country.

WEAKNESSES:
No trading by trading members on screen of Stock Exchange Limited.
Due to change in technology the role of regional stock exchange needs to be
reinvented.

OPPORTUNITIES:
A large global market that is still into traditional fixed income and other
government savings is all buy bound to enter the market sooner if not later.

THREATS:
Global Economic slowdown, Currency mismanagement, High global
commodity prices. Over valuation in Index scripts, Non Liquidity in non-derivatives
related scripts. Change in government focus on controlling inflation.

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Five Force Model on Stock Market Industry

1. Threat of entry.
This is how easy it is for a firm to enter the industry that your company is in.
This is important because any industry worth looking at should earn above average
returns. Those returns ultimately attract competitors who want to earn those high
returns as well.

2. Bargaining power of buyers:


This is affected by how big your customers are and how much revenue they
constitute as well as other things. For instance Wal-Mart has a lot of power with
suppliers because it buys so much of their inventory and is thus a large percent of
those companies revenues.

3. Bargaining power of suppliers:


Companies who have only a few suppliers can't bargain with them or play one
off another for better prices. This leads to higher priced inputs and dilutes returns (like
airlines).

4. Availability of substitutes:
This is how easily people can find something else if you were to raise prices or
if they somehow found your offering unfavorable.

5. Rivalry among competitive


This is how competitive an industry is. For instance, if there are lots of
companies selling essentially the same products there will always end up being a price
war which will severely hurt the company' profits. The wireless companies have had
this problem for years and fierce competition has made it tough for them to make a
profit.

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